BioLineRx Ltd.
Annual Report 2015

Plain-text annual report

As filed with the U.S. Securities and Exchange Commission on March 10, 2016 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 20-F (Mark One) ooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ooSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report For the transition period from __________ to __________ Commission file number _______________ BioLineRx Ltd.(Exact name of Registrant as specified in its charter)(Translation of Registrant’s name into English) Israel(Jurisdiction of incorporation or organization) 2 HaMa’ayan StreetModi’in 7177871, Israel(Address of principal executive offices) Philip Serlin+972 (8) 642-9100+972 (8) 642-9101 (facsimile)phils@biolinerx.com2 HaMa’ayan StreetModi’in 7177871, Israel(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)  Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredAmerican Depositary Shares, each representing 1ordinary share, par value NIS 0.10 per share Nasdaq Capital Market Ordinary shares, par value NIS 0.10 per share Nasdaq Capital Market**Not for trading; only in connection with the registration of American Depositary Shares. Securities registered or to be registered pursuant to Section 12(g) of the Act. None(Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None(Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by theannual report. 54,818,057 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934. Yes o No x Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities ExchangeAct of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 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 filingrequirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). N/A Yes o No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer x Non-accelerated filer o Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP o International Financial Reporting Standards as issued by theInternational Accounting Standards Board x Other o If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. N/A o Item 17 o Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. N/A Yes o No o  TABLE OF CONTENTS Page INTRODUCTION ii PART I ITEM 1.Identity of Directors, Senior Management and Advisers 1ITEM 2.Offer Statistics And Expected Timetable 1ITEM 3.Key Information 1ITEM 4.Information on the Company 23ITEM 4AUnresolved Staff Comments 64ITEM 5.Operating and Financial Review and Prospects 64ITEM 6.Directors, Senior Management and Employees 79ITEM 7.Major Shareholders and Related Party Transactions 101ITEM 8.Financial Information 103ITEM 9.The Offer and Listing 104ITEM 10.Additional Information 106ITEM 11.Quantitative And Qualitative Disclosure on Market Risk 120ITEM 12.Description of Securities Other Than Equity Securities 121 PART II ITEM 13.Defaults, Dividends, Arrearages and Delinquencies 124ITEM 14.Material Modifications to the Rights of Security Holders and Use of Proceeds 124ITEM 15.Controls and Procedures 124ITEM 16.[Reserved] 125ITEM 16A.Audit Committee Financial Experts 125ITEM 16B.Code of Ethics 125ITEM 16C.Principal Accountant Fees And Services 125ITEM 16D.Exemptions From The Listing Standards For Audit Committees 126ITEM 16E.Purchases Of Equity Securities By The Issuer And Affiliated Purchasers 126ITEM 16F.Change in Registrations Certifying Accountant 126ITEM 16G.Corporate Governance 126ITEM 16H.Mine Safety Disclosure 128 PART III ITEM 17.Financial Statements 128ITEM 18.Financial Statements 128ITEM 19.Exhibits 129SIGNATURES 131 i INTRODUCTION Certain Definitions In this annual report, unless the context otherwise requires: •references to “BioLineRx,” the “Company,” “us,” “we” and “our” refer to BioLineRx Ltd. (the “Registrant”), an Israeli company, and itsconsolidated subsidiaries; •references to “ordinary shares,” “our shares” and similar expressions refer to the Registrant’s ordinary shares, NIS 0.10 nominal (par) valueper share; •references to “ADS” refer to the Registrant’s American Depositary Shares; •references to “dollars,” “U.S. dollars” and “$” are to United States Dollars; •references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; •references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; and •references to the “SEC” are to the United States Securities and Exchange Commission. Forward-Looking Statements Some of the statements under the sections entitled “Item 3. Key Information – Risk Factors,” “Item 4. Information on the Company,” and “Item 5.Operating and Financial Review and Prospects” and elsewhere in this Annual Report on Form 20-F constitute forward-looking statements. These statementsinvolve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially differentfrom any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,”“projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, but these are not the only ways thesestatements are identified. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risksand uncertainties. In addition, the section of this Annual Report on Form 20-F entitled “Item 4. Information on the Company” contains information obtainedfrom independent industry and other sources that we have not independently verified. You should not put undue reliance on any forward-looking statements.Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-lookingstatements. Readers are encouraged to consult the Company’s filings made on Form 6-K, which are periodically filed with or furnished to the SEC. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but arenot limited to: •the initiation, timing, progress and results of our preclinical studies, clinical trials and other therapeutic candidate development efforts; •our ability to advance our therapeutic candidates into clinical trials or to successfully complete our preclinical studies or clinical trials; •our receipt of regulatory approvals for our therapeutic candidates, and the timing of other regulatory filings and approvals; •the clinical development, commercialization and market acceptance of our therapeutic candidates; •our ability to establish and maintain corporate collaborations; •the interpretation of the properties and characteristics of our therapeutic candidates and of the results obtained with our therapeuticcandidates in preclinical studies or clinical trials; •the implementation of our business model and strategic plans for our business and therapeutic candidates; •the scope of protection we are able to establish and maintain for intellectual property rights covering our therapeutic candidates and ourability to operate our business without infringing the intellectual property rights of others; •estimates of our expenses, future revenues, capital requirements and our needs for additional financing; •competitive companies, technologies and our industry; and •statements as to the impact of the political and security situation in Israel on our business. ii PART I ITEM1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. ITEM2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. ITEM3. KEY INFORMATION A. Selected Financial Data The following table sets forth our selected consolidated financial data for the periods ended and as of the dates indicated. The following selectedhistorical consolidated financial data for our company should be read in conjunction with “Item 5. Operational and Financial Review and Prospects” andother information provided elsewhere in this Annual Report on Form 20-F and our consolidated financial statements and related notes. The selectedconsolidated financial data in this section is not intended to replace the consolidated financial statements and is qualified in its entirety thereby. In June 2015, we effected a 1:10 reverse split of our ordinary shares. All share and per share amounts in this report have been retroactivelyadjusted to reflect the reverse split as if it had been effected prior to the earliest financial statement period referred to herein. Following the reverse split,one ordinary share traded on the TASE is equivalent to one ADS traded on the Nasdaq Capital Market (prior to the split, the ratio of ordinary shares toADSs was 10:1).  The selected consolidated statements of operations data for the years ended December 31, 2015, 2014, and 2013, and the selected consolidatedbalance sheet data as of December 31, 2015 and 2014, have been derived from our audited consolidated financial statements set forth elsewhere in thisAnnual Report on Form 20-F. The selected consolidated statements of operations data for the years ended December 31, 2012 and 2011, and the selectedconsolidated balance sheet data as of December 31, 2013, 2012 and 2011, have been derived from our audited consolidated financial statements not includedin this Form 20-F. Our consolidated financial statements included in this annual report were prepared in accordance with International Financial Reporting Standards(“IFRS”) as issued by the International Accounting Standards Board, and reported in dollars. The amounts in the tables below for the years 2011 through2014 were previously reported in NIS. Due to the change in our functional and reporting currency from the NIS to the dollar, effective January 1, 2015, theamounts for 2011 through 2014 have been restated in dollars using the methodology set forth in Note 2c to our consolidated financial statements for the yearended December 31, 2015. Year Ended December 31, Consolidated Statements of Operations Data:(1) (2) 2011 2012 2013 2014 2015 (in thousands of U.S. dollars, except share and per share data) Research and development expenses, net (11,912) (16,677) (12,208) (11,866) (11,489)Sales and marketing expenses (925) (837) (1,136) (1,589) (1,003)General and administrative expenses (3,556) (3,638) (3,664) (3,800) (3,704)Operating loss (16,393) (21,152) (17,008) (17,255) (16,196)Non-operating income, net – 1,026 1,161 3,061 1,445 Financial income 3,558 2,287 720 3,566 457 Financial expenses (1,191) (1,942) (1,897) (448) (106)Net loss (14,026) (19,781) (17,024) (11,076) (14,400)Other comprehensive income (loss): Currency translation differences (1,830) (7) 1,097 (2,834) – Comprehensive loss (15,856) (19,788) (15,927) (13,910) (14,400)Net loss per ordinary share (1.13) (1.17) (0.76) (0.34) (0.28)Number of ordinary shares used in computing loss per ordinaryshare 12,358,703 16,940,473 22,488,516 32,433,883 51,406,434 As of December 31, Consolidated Balance Sheet Data: 2011 2012 2013 2014 2015 (in thousands of U.S. dollars) Cash and cash equivalents 8,652 18,307 8,899 5,790 5, 544 Short-term bank deposits 17,216 3,070 9,319 28,890 42,119 Property, plant and equipment, net 1,102 850 712 721 2,909 Total assets 29,223 24,325 20,014 36,211 51,302 Total liabilities 6,779 9,343 8,292 4,406 3,692 Total shareholders’ equity 22,444 14,982 11,722 31,805 47,610 (1)Data on diluted loss per share was not presented in the financial statements because the effect of the exercise of the options is either immaterial or isanti-dilutive. (2)In June 2015, we effected a 1:10 reverse split of our ordinary shares. All share and per share amounts above been retroactively adjusted to reflect thereverse split as if it had been effected prior to the earliest financial statement period included herein. 2 B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk FactorsYou should carefully consider the risks we describe below, in addition to the other information set forth elsewhere in this Annual Report on Form20-F, including our consolidated financial statements and the related notes beginning on page F-1, before deciding to invest in our ordinary shares andADSs. These material risks could adversely impact our results of operations, possibly causing the trading price of our ordinary shares and ADSs to decline,and you could lose all or part of your investment. Risks Related to Our Financial Condition and Capital Requirements We are a clinical stage biopharmaceutical development company with a history of operating losses, expect to incur additional losses in the futureand may never be profitable. We are a clinical stage biopharmaceutical development company that was incorporated in 2003. Since our incorporation, we have been focused onresearch and development. Our most advanced therapeutic candidates are in clinical development. We, or our licensees, as applicable, will be required toconduct significant additional clinical trials before we or they can seek the regulatory approvals necessary to begin commercial sales of our therapeuticcandidates. We have incurred losses since inception, principally as a result of research and development and general administrative expenses in support ofour operations. We recorded net losses of approximately $14.4 million in 2015, $11.1 million in 2014 and $17.0 million in 2013. As of December 31, 2015,we had an accumulated deficit of approximately $159.4 million. We anticipate that we will incur significant additional losses as we continue to focus ourresources on prioritizing, selecting and advancing our most promising therapeutic candidates. We may never be profitable and we may never achievesignificant sustained revenues. We cannot ensure investors that our existing cash and investment balances will be sufficient to meet our future capital requirements. As of December 31, 2015, we held cash and short-term investments of approximately $47.7 million. We believe that our existing cash andinvestment balances and other sources of liquidity, not including potential milestone and royalty payments under our existing and future out-licensing andother collaboration agreements, will be sufficient to meet our requirements into 2018. We have funded our operations primarily through public and privateofferings of our securities and, until 2013, grants from the Office of the Chief Scientist of Israel’s Ministry of Economy and Industry, or the OCS. In addition,we have funded our operations through out-licensing arrangements with respect to our therapeutic candidates. The adequacy of our available funds to meetour operating and capital requirements will depend on many factors including: the number, breadth, progress and results of our research, productdevelopment and clinical programs; the costs and timing of obtaining regulatory approvals for any of our therapeutic candidates; the terms and conditions ofin-licensing and out-licensing therapeutic candidates; and costs incurred in enforcing and defending our patent claims and other intellectual property rights. While we will continue to explore alternative financing sources, including the possibility of future securities offerings and continued governmentfunding, we cannot be certain that in the future these liquidity sources will be available when needed on commercially reasonable terms or at all, or that ouractual cash requirements will not be greater than anticipated. We will also continue to seek to finance our operations through other sources, including out-licensing arrangements for the development and commercialization of our therapeutic candidates or other partnerships or joint ventures, as well as grantsfrom government agencies and foundations. If we are unable to obtain future financing through the methods we describe above or through other means, wemay be unable to complete our business objectives and may be unable to continue operations, which would have a material adverse effect on our businessand financial condition. 3 Risks Related to Our Business and Regulatory Matters If we or our licensees are unable to obtain U.S. and/or foreign regulatory approval for our therapeutic candidates, we will be unable tocommercialize our therapeutic candidates. To date, we have not marketed, distributed or sold an approved product. Currently, we have three main clinical-stage therapeutic candidates indevelopment: BL-8040 for the treatment of multiple cancer and hematological indications; BL-7010 for the treatment of celiac disease and glutensensitivity; and BL-5010 for the treatment of benign skin lesions. Our therapeutic candidates are subject to extensive governmental regulations relating todevelopment, clinical trials, manufacturing and commercialization of drugs and devices. We may not obtain marketing approval for any of our therapeuticcandidates in a timely manner or at all. In connection with the clinical trials for BL-8040 and BL-7010, and other therapeutic candidates that we are currentlydeveloping or may seek to develop in the future, either on our own or through out-licensing or co-development arrangements, we face the risk that: ·a therapeutic candidate or medical device may not prove safe or efficacious; ·the results with respect to any therapeutic candidate may not confirm the positive results from earlier preclinical studies or clinical trials; ·the results may not meet the level of statistical significance required by the U.S. Food and Drug Administration, or FDA, or other regulatoryauthorities; and ·the results will justify only limited and/or restrictive uses, including the inclusion of warnings and contraindications, which couldsignificantly limit the marketability and profitability of the therapeutic candidate. Any delay in obtaining, or the failure to obtain, required regulatory approvals will materially and adversely affect our ability to generate futurerevenues from a particular therapeutic candidate. Any regulatory approval to market a product may be subject to limitations on the indicated uses for whichwe may market the product or may impose restrictive conditions of use, including cautionary information, thereby limiting the size of the market for theproduct. We and our licensees, as applicable, also are, and will be, subject to numerous foreign regulatory requirements that govern the conduct of clinicaltrials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process includes all of the risksassociated with the FDA approval process that we describe above, as well as risks attributable to the satisfaction of foreign requirements. Approval by theFDA does not ensure approval by regulatory authorities outside the United States. Foreign jurisdictions may have different approval processes than thoserequired by the FDA and may impose additional testing requirements for our therapeutic candidates. Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive offuture trial results. We have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including FDA approval.Clinical trials are expensive and complex, can take many years and have uncertain outcomes. We cannot necessarily predict whether we or our licensees willencounter problems with any of the completed, ongoing or planned clinical trials that will cause us, our licensees or regulatory authorities to delay orsuspend clinical trials, or delay the analysis of data from completed or ongoing clinical trials. In addition, due to the fact that some of our clinical trials areinvestigator-initiated studies (i.e., we are not the study sponsor), we may have less control over these studies. We estimate that clinical trials of our mostadvanced therapeutic candidates will continue for several years, but they may take significantly longer to complete. Failure can occur at any stage of thetesting and we may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent commercialization ofour current or future therapeutic candidates, including but not limited to: ·delays in securing clinical investigators or trial sites for the clinical trials; ·delays in obtaining institutional review board and other regulatory approvals to commence a clinical trial; 4 ·slower than anticipated patient recruitment and enrollment; ·negative or inconclusive results from clinical trials; ·unforeseen safety issues; ·uncertain dosing issues; ·an inability to monitor patients adequately during or after treatment; and ·problems with investigator or patient compliance with the trial protocols. A number of companies in the pharmaceutical, medical device and biotechnology industries, including those with greater resources and experiencethan us, have suffered significant setbacks in advanced clinical trials, even after seeing promising results in earlier clinical trials. Despite the results reportedin earlier clinical trials for our therapeutic candidates, we do not know whether any Phase 3 or other clinical trials we or our licensees may conduct willdemonstrate adequate efficacy and safety to result in regulatory approval to market our therapeutic candidates. If later-stage clinical trials of any therapeuticcandidate do not produce favorable results, our ability to obtain regulatory approval for the therapeutic candidate may be adversely impacted, which willhave a material adverse effect on our business, financial condition and results of operations. Even if we obtain regulatory approvals, our therapeutic candidates will be subject to ongoing regulatory review and if we fail to comply withcontinuing U.S. and applicable foreign regulations, we could lose those approvals and our business would be seriously harmed. Even if products we or our licensees develop receive regulatory approval or clearance, we or our licensees, as applicable, will be subject to ongoingreporting obligations and the products and the manufacturing operations will be subject to continuing regulatory review, including FDA inspections. Theoutcome of this ongoing review may result in the withdrawal of a product from the market, the interruption of the manufacturing operations and/or theimposition of labeling and/or marketing limitations. Since many more patients are exposed to drugs and medical devices following their marketing approval,serious but infrequent adverse reactions that were not observed in clinical trials may be observed during the commercial marketing of the product. Inaddition, the manufacturer and the manufacturing facilities we or our licensees, as applicable, will use to produce any therapeutic candidate will be subject toperiodic review and inspection by the FDA and other, similar foreign regulators. Later discovery of previously unknown problems with any product,manufacturer or manufacturing process, or failure to comply with regulatory requirements, may result in actions such as: ·restrictions on such product, manufacturer or manufacturing process; ·warning letters from the FDA or other regulatory authorities; ·withdrawal of the product from the market; ·suspension or withdrawal of regulatory approvals; ·refusal to approve pending applications or supplements to approved applications that we or our licensees submit; ·voluntary or mandatory recall; ·fines; ·refusal to permit the import or export of our products; ·product seizure or detentions; ·injunctions or the imposition of civil or criminal penalties; or ·adverse publicity. 5 If we, or our licensees, suppliers, third party contractors, partners or clinical investigators are slow to adapt, or are unable to adapt, to changes inexisting regulatory requirements or the adoption of new regulatory requirements or policies, we or our licensees may lose marketing approval for any of ourproducts, if any of our therapeutic products are approved, resulting in decreased or lost revenue from milestones, product sales or royalties. We generally rely on third parties to conduct our pre-clinical clinical trials and provide other services, and those third parties may not performsatisfactorily, including by failing to meet established deadlines for the completion of such services. We do not have the ability to conduct certain preclinical studies and clinical trials independently for our therapeutic candidates, and we rely onthird parties, such as contract laboratories, contract research organizations, medical institutions and clinical investigators to conduct these studies and ourclinical trials. Our reliance on these third parties limits our control over these activities. The third-party contractors may not assign as great a priority to ourclinical development programs or pursue them as diligently as we would if we were undertaking such programs directly. Accordingly, these third-partycontractors may not complete activities on schedule, or may not conduct the studies or our clinical trials in accordance with regulatory requirements or withour trial design. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, or if their performance is substandard,we may be required to replace them or add more sites to the studies. Although we believe that there are a number of other third-party contractors that we couldengage to continue these activities, replacement of these third parties will result in delays and/or additional costs. As a result, our efforts to obtain regulatoryapprovals for, and to commercialize, our therapeutic candidates may be delayed. The third-party contractors may also have relationships with othercommercial entities, some of whom may compete with us. If the third-party contractors assist our competitors, our competitive position may be harmed. In addition, our ability to bring future products to market depends on the quality and integrity of data that we present to regulatory authorities inorder to obtain marketing authorizations. Although we attempt to audit and control the quality of third-party data, we cannot guarantee the authenticity oraccuracy of such data, nor can we be certain that such data has not been fraudulently generated. The failure of these third parties to carry out their obligationswould materially adversely affect our ability to develop and market new products and implement our strategies. We depend on out-licensing arrangements for late-stage development, marketing and commercialization of our therapeutic candidates. We depend on out-licensing arrangements for late-stage development, marketing and commercialization of our therapeutic candidates. We havelimited experience in late-stage development, marketing and commercializing therapeutic candidates. Dependence on out-licensing arrangements subjects usto a number of risks, including the risk that: ·we have limited control over the amount and timing of resources that our licensees devote to our therapeutic candidates; ·our licensees may experience financial difficulties; ·our licensees may fail to secure adequate commercial supplies of our therapeutic candidates upon marketing approval, if at all; ·our future revenues depend heavily on the efforts of our licensees; ·business combinations or significant changes in a licensee’s business strategy may adversely affect the licensee’s willingness or ability tocomplete its obligations under any arrangement with us; ·a licensee could move forward with a competing therapeutic candidate developed either independently or in collaboration with others,including our competitors; and ·out-licensing arrangements are often terminated or allowed to expire, which would delay the development and may increase thedevelopment costs of our therapeutic candidates. 6 If we or any of our licensees breach or terminate their agreements with us, or if any of our licensees otherwise fail to conduct their development andcommercialization activities in a timely manner or there is a dispute about their obligations, we may need to seek other licensees, or we may have to developour own internal sales and marketing capability for our therapeutic candidates. Our dependence on our licensees’ experience and the rights of our licenseeswill limit our flexibility in considering alternative out-licensing arrangements for our therapeutic candidates. Any failure to successfully develop thesearrangements or failure by our licensees to successfully develop or commercialize any of our therapeutic candidates in a competitive and timely manner, willhave a material adverse effect on the commercialization of our therapeutic candidates. We depend on our ability to identify and in-license technologies and therapeutic candidates. We employ a number of methods to identify therapeutic candidates that we believe are likely to achieve commercial success. In addition to ourinternal research and business developments efforts, we employ a rigorous screening system we developed. In certain instances, our Scientific Advisory Boardand disease-specific third-party advisors evaluate therapeutic candidates, as we deem necessary. In addition, therapeutic candidates expected to be developedunder our collaboration with Novartis are also evaluated within the framework of the Joint Steering Committee established with Novartis for this purpose.However, there can be no assurance that our internal research efforts or our screening system will accurately or consistently select among various therapeuticcandidates those that have the highest likelihood to achieve, and which ultimately achieve, commercial success. As a result, we may spend substantialresources developing therapeutic candidates that will not achieve commercial success and we may not advance those therapeutic candidates with the greatestpotential for commercial success. An important element of our strategy is maintaining relationships with universities, medical institutions and biotechnology companies in order toin-license potential therapeutic candidates. We may not be able to maintain relationships with these entities and they may elect not to enter into in-licensingagreements with us or to terminate existing agreements. Recently, a number of global pharmaceutical companies and life-sciences-focused investment fundshave set up operations in Israel, both with and without Israeli government funding, in order to identify and in-license new technologies. The presence of theseglobal companies with significantly greater resources than we have may increase the competition with respect to the in-licensing of promising therapeuticcandidates. We may not be able to acquire licenses on commercially reasonable terms, or at all. Failure to license or otherwise acquire necessary technologiescould materially and adversely affect our business, financial condition and results of operations. If we cannot meet requirements under our in-license agreements, we could lose the rights to our therapeutic candidates, which could have amaterial adverse effect on our business. We depend on in-licensing agreements with third parties to maintain the intellectual property rights to our therapeutic candidates. Regarding themain therapeutic candidates in clinical trials, we have in-licensed rights from Biokine Therapeutics Ltd., or Biokine, with respect to our BL-8040 therapeuticcandidate; from Gestion Univalor, Limited Partnership, or Univalor, for our BL-7010 therapeutic candidate; and from Innovative Pharmaceutical Concepts,Inc., or IPC, with respect to our BL-5010 therapeutic candidate. See “Item 4. Information on the Company — Business Overview — In-LicensingAgreements.” Our in-license agreements require us to make payments and satisfy performance obligations in order to maintain our rights under theseagreements. The royalty rates and revenue sharing payments vary from case to case but generally range from 20% to 29.5% of the consideration we receivefrom sublicensing the applicable therapeutic candidate. In some instances, we are required to pay a substantially lower percentage (generally less than 5%) ifwe elect to commercialize the subject therapeutic candidate independently. Due to the relatively advanced stage of development of the compound licensedfrom Biokine, our license agreement with Biokine provides for royalty payments of 40% of the consideration we receive from sublicensing and 10% of netsales, subject to certain limitations, should we independently sell products. These in-license agreements last either throughout the life of the patents that arethe subject of the agreements, or with respect to other licensed technology, for a number of years after the first commercial sale of the relevant product. In addition, we are responsible for the cost of filing and prosecuting certain patent applications and maintaining certain issued patents licensed tous. If we do not meet our obligations under our in-license agreements in a timely manner, we could lose the rights to our proprietary technology which couldhave a material adverse effect on our business, financial condition and results of operations. 7 Modifications to our therapeutic candidates, or to any other therapeutic candidates that we may develop in the future, may require new regulatoryclearances or approvals or may require us or our licensees, as applicable, to recall or cease marketing these therapeutic candidates until clearances areobtained. Modifications to our therapeutic candidates, after they have been approved for marketing, if at all, or to any other pharmaceutical product or medicaldevice that we may develop in the future, may require new regulatory clearance, or approvals, and, if necessitated by a problem with a marketed product, mayresult in the recall or suspension of marketing of the previously approved and marketed product until clearances or approvals of the modified product areobtained. The FDA requires pharmaceutical products and device manufacturers to initially make and document a determination of whether or not amodification requires a new approval, supplement or clearance. A manufacturer may determine in conformity with applicable regulations and guidelines thata modification may be implemented without pre-clearance by the FDA; however, the FDA can review a manufacturer’s decision and may disagree. The FDAmay also on its own initiative determine that a new clearance or approval is required. If the FDA requires new clearances or approvals of any pharmaceuticalproduct or medical device for which we or our licensees receive marketing approval, if any, we or our licensees may be required to recall such product and tostop marketing the product as modified, which could require us or our licensees to redesign the product and will have a material adverse effect on ourbusiness, financial condition and results of operations. In these circumstances, we may be subject to significant enforcement actions. If a manufacturer determines that a modification to an FDA-cleared device could significantly affect the safety or efficacy of the device, wouldconstitute a major change in its intended use, or otherwise requires pre-clearance, the modification may not be implemented without the requisite clearance.We or our licensees may not be able to obtain those additional clearances or approvals for the modifications or additional indications in a timely manner, orat all. For those products sold in the European Union, or EU, we, or our licensees, as applicable, must notify the applicable EU Notified Body, an organizationappointed by a member State of the EU either for the approval and monitoring of a manufacturer’s quality assurance system or for direct product inspection, ifsignificant changes are made to the product or if there are substantial changes to the quality assurance systems affecting the product. Delays in obtainingrequired future clearances or approvals would materially and adversely affect our ability to introduce new or enhanced products in a timely manner, which inturn would have a material adverse effect on our business, financial condition and results of operations. If our competitors develop and market products that are more effective, safer or less expensive than our current or future therapeutic candidates,our future prospects will be negatively impacted. The life sciences industry is highly competitive, and we face significant competition from many pharmaceutical, biopharmaceutical andbiotechnology companies that are researching and marketing products designed to address the indications for which we are currently developing therapeuticcandidates or for which we may develop therapeutic candidates in the future. Specifically, we are aware of many other companies which currently marketand/or are in the process of developing products that address AML, celiac disease and gluten sensitivity, and skin lesions. An important element of our strategy for identifying future products is maintaining relationships with universities, medical institutions andbiotechnology companies in order to in-license potential therapeutic candidates, and we compete with respect to this in-licensing with a number of globalpharmaceutical companies, both with and without Israeli government funding. The presence of these global companies with significantly greater resourcesthan we have may increase the competition with respect to the in-licensing of promising therapeutic candidates. Our failure to license or otherwise acquirenecessary technologies could materially and adversely affect our business, financial condition and results of operations. We and our contract manufacturers are, and will be, subject to FDA and other comparable agency regulations. We and our contract manufacturers are, and will be, required to adhere to FDA regulations setting forth cGMP for drugs and Quality SystemRegulations, or QSR, for devices. These regulations cover all aspects of the manufacturing, testing, quality control and recordkeeping relating to ourtherapeutic candidates. We and our manufacturers may not be able to comply with applicable regulations. We and our manufacturers are and will be subjectto unannounced inspections by the FDA, state regulators and similar regulators outside the United States. Our failure, or the failure of our third partymanufacturers, to comply with applicable regulations could result in the imposition of sanctions on us, including fines, injunctions, civil penalties, failure ofregulatory authorities to grant marketing approval of our therapeutic candidates, delays, suspension or withdrawal of approvals, license revocation, seizuresor recalls of our candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect regulatoryapproval and supplies of our therapeutic candidates, and materially and adversely affect our business, financial condition and results of operations. 8 We have no experience selling, marketing or distributing products and no internal capability to do so. We currently have no sales, marketing or distribution capabilities and no experience in building a sales force or distribution capabilities. To be ableto commercialize any of our therapeutic candidates upon approval, if at all, we must either develop internal sales, marketing and distribution capabilities,which will be expensive and time consuming, or enter into out-licensing arrangements with third parties to perform these services. If we decide to market any of our other therapeutic candidates on our own, we must commit significant financial and managerial resources todevelop a marketing and sales force with technical expertise and with supporting distribution capabilities. Factors that may inhibit our efforts tocommercialize our products directly and without strategic partners include: ·our inability to recruit and retain adequate numbers of effective sales and marketing personnel; ·the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our therapeutic candidates; ·the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companieswith more extensive product lines; and ·unforeseen costs and expenses associated with creating and sustaining an independent sales and marketing organization. We may not be successful in recruiting the sales and marketing personnel necessary to sell any of our therapeutic candidates upon approval, if at all,and even if we do build a sales force, it may not be successful in marketing our therapeutic candidates, which would have a material adverse effect on ourbusiness, financial condition and results of operations. Our business could suffer if we are unable to attract and retain key employees. Our success depends upon the continued service and performance of our senior management and other key personnel. The loss of the services ofthese personnel could delay or prevent the successful completion of our planned clinical trials or the commercialization of our therapeutic candidates orotherwise affect our ability to manage our company effectively and to carry out our business plan. We do not maintain key-man life insurance. Although wehave entered into employment agreements with all of the members of our senior management team, members of our senior management team may resign atany time. High demand exists for senior management and other key personnel in the pharmaceutical industry. There can be no assurance that we will be ableto continue to retain and attract such personnel. Our growth and success also depend on our ability to attract and retain additional highly qualified scientific, technical, sales, managerial andfinance personnel. We experience intense competition for qualified personnel, and the existence of non-competition agreements between prospectiveemployees and their former employers may prevent us from hiring those individuals or subject us to suit from their former employers. In addition, if we electto independently commercialize any therapeutic candidate, we will need to expand our marketing and sales capabilities. While we attempt to providecompetitive compensation packages to attract and retain key personnel, many of our competitors are likely to have greater resources and more experiencethan we have, making it difficult for us to compete successfully for key personnel. If we cannot attract and retain sufficiently qualified technical employeeson acceptable terms, we may not be able to develop and commercialize competitive products. Further, any failure to effectively integrate new personnelcould prevent us from successfully growing our company. 9 We expect to rely upon third-party manufacturers to produce therapeutic supplies for Phase 3 clinical trials, and commercialization, of ourtherapeutic candidates. If we manufacture any of our therapeutic candidates in the future, we will be required to incur significant costs and devotesignificant efforts to establish and maintain manufacturing capabilities. We currently have laboratories that are compliant with both current good manufacturing practices, or cGMP, and certified Good LaboratoryPractices, or GLP, and allow us to manufacture drug products for our current clinical trials. If we decide to perform any Phase 3 clinical trial, or commercialize,any therapeutic candidate on our own, we anticipate that we will rely on third parties to produce the therapeutic supplies. We have limited personnel withexperience in drug or medical device manufacturing and we lack the resources and capabilities to manufacture any of our therapeutic candidates on acommercial scale. The manufacture of pharmaceutical products and medical devices requires significant expertise and capital investment, including thedevelopment of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products and medical devices often encounterdifficulties in production, particularly in scaling up initial production. These problems include difficulties with production costs and yields and qualitycontrol, including stability of the therapeutic candidate. We do not currently have any long-term agreements with third party manufacturers for the supply of any of our therapeutic candidates. We believethat our current supply of therapeutic candidates is sufficient to complete our current clinical trials. However, if we require additional supplies of ourtherapeutic candidates to complete our clinical trials or if we elect to commercialize our products independently, we may be unable to enter into agreementsfor clinical or commercial supply, as applicable, with third party manufacturers, or may be unable to do so on acceptable terms. Even if we enter into theseagreements, it is likely that the manufacturers of each therapeutic candidate will be single source suppliers to us for a significant period of time. Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured therapeutic candidates ourselves,including: ·reliance on the third party for regulatory compliance and quality assurance; ·limitations on supply availability resulting from capacity and scheduling constraints of the third parties; ·impact on our reputation in the marketplace if manufacturers of our products, once commercialized, fail to meet customer demands; ·the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and ·the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly orinconvenient for us. The failure of any of our contract manufacturers to maintain high manufacturing standards could result in injury or death of clinical trial participantsor patients being treated with our products. Such failure could also result in product liability claims, product recalls, product seizures or withdrawals, delaysor failures in testing or delivery, cost overruns or other problems, which would have a material adverse effect on our business, financial condition and resultsof operations. Risks Related to Our Industry Even if our therapeutic candidates receive regulatory approval or do not require regulatory approval, they may not become commercially viableproducts. Even if our therapeutic candidates are approved for commercialization, they may not become commercially viable products. For example, if we orour licensees receive regulatory approval to market a product, approval may be subject to limitations on the indicated uses or subject to labeling ormarketing restrictions which could materially and adversely affect the marketability and profitability of the product. In addition, a new product may appearpromising at an early stage of development or after clinical trials but never reach the market, or it may reach the market but not result in sufficient productsales, if any. A therapeutic candidate may not result in commercial success for various reasons, including: ·difficulty in large-scale manufacturing; 10 ·low market acceptance by physicians, healthcare payors, patients and the medical community as a result of lower demonstrated clinicalsafety or efficacy compared to other products, prevalence and severity of adverse side effects, or other potential disadvantages relative toalternative treatment methods; ·insufficient or unfavorable levels of reimbursement from government or third-party payors; ·infringement on proprietary rights of others for which we or our licensees have not received licenses; ·incompatibility with other therapeutic products; ·other potential advantages of alternative treatment methods; ·ineffective marketing and distribution support; ·significant changes in pricing due to pressure from public opinion, NGOs or governmental authorities ·lack of cost-effectiveness; or ·timing of market introduction of competitive products. If we are unable to develop commercially viable products, either on our own or through licensees, our business, results of operations and financialcondition will be materially and adversely affected. Healthcare reforms and related reductions in pharmaceutical pricing, reimbursement and coverage by governmental authorities and third-partypayors may adversely affect our business. The continuing increase in expenditures for healthcare has been the subject of considerable government attention, particularly as public resourceshave been stretched by financial and economic crises in the United States, Western Europe and elsewhere. Both private health insurance funds andgovernment health authorities continue to seek ways to reduce or contain healthcare costs, including by reducing or eliminating coverage for certainproducts and lowering reimbursement levels. In many countries and regions, including the United States, Western Europe, Israel, Russia, certain countries inCentral and Eastern Europe and several countries in Latin America, pharmaceutical prices are subject to new government policies designed to reducehealthcare costs. These changes frequently adversely affect pricing and profitability and may cause delays in market entry. We cannot predict whichadditional measures may be adopted or the impact of current and additional measures on the marketing, pricing and demand for our approved products, if anyof our therapeutic products are approved. Significant developments that may adversely affect pricing in the United States include (i) the enactment of federal healthcare reform laws andregulations, including the Medicare Prescription Drug Improvement and Modernization Act of 2003 and the Patient Protection and Affordable Care Act of2010, or PPACA, and (ii) trends in the practices of managed care groups and institutional and governmental purchasers, including the impact ofconsolidation of our customers. Changes to the healthcare system enacted as part of healthcare reform in the United States, as well as the increased purchasingpower of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, may result in increased pricing pressure by influencing, forinstance, the reimbursement policies of third-party payors. Healthcare reform legislation has increased the number of patients who would have insurancecoverage for our approved products, if any of our therapeutic products are approved, but provisions such as the assessment of a branded pharmaceuticalmanufacturer fee and an increase in the amount of rebates that manufacturers pay for coverage of their drugs by Medicaid programs may have an adverseeffect on us. It is uncertain how current and future reforms in these areas will influence the future of our business operations and financial condition. 11 If third-party payors do not adequately reimburse customers for any of our therapeutic candidates that are approved for marketing, they might notbe purchased or used, and our revenues and profits will not develop or increase. Our revenues and profits will depend heavily upon the availability of adequate reimbursement for the use of our approved candidates, if any, fromgovernmental or other third-party payors, both in the United States and in foreign markets. Reimbursement by a third-party payor may depend upon anumber of factors, including the third-party payor’s determination that the use of an approved product is: ·a covered benefit under its health plan; ·safe, effective and medically necessary; ·appropriate for the specific patient; ·cost-effective; and ·neither experimental nor investigational. Obtaining reimbursement approval for a product from each government or other third-party payor is a time-consuming and costly process that couldrequire us or our licensees to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to each payor. Even when a payordetermines that a product is eligible for reimbursement, the payor may impose coverage limitations that preclude payment for some uses that are approved bythe FDA or comparable foreign regulatory authorities. Reimbursement rates may vary according to the use of the product and the clinical setting in which itused, may be based on payments allowed for lower-cost products that are already reimbursed, may be incorporated into existing payments for other productsor services, and may reflect budgetary constraints and/or imperfections in Medicare, Medicaid or other data used to calculate these rates. Regardless of the impact of the PPACA on us, the U.S. government, other governments and commercial payors have shown significant interest inpursuing healthcare reform and reducing healthcare costs. Any government-adopted reform measures could cause significant pressure on the pricing ofhealthcare products and services, including those biopharmaceuticals currently being developed by us or our licensees, in the United States andinternationally, as well as the amount of reimbursement available from governmental agencies or other third party payors. The continuing efforts of the U.S.and foreign governments, insurance companies, managed care organizations and other payors to contain or reduce healthcare costs may compromise ourability to set prices at commercially attractive levels for our products that we may develop, which in turn could adversely impact how much or under whatcircumstances healthcare providers will prescribe or administer our products, if approved. Changes in healthcare policy, such as the creation of broad limitsfor diagnostic products, could substantially diminish the sale of or inhibit the utilization of diagnostic tests, increase costs, divert management’s attentionand adversely affect our ability to generate revenues and achieve consistent profitability. This could materially and adversely impact our business byreducing our ability to generate revenue, raise capital, obtain additional collaborators and market our products, if approved. Further, the Centers for Medicare and Medicaid Services, or CMS, frequently change product descriptors, coverage policies, product and servicecodes, payment methodologies and reimbursement values. Third-party payors often follow Medicare coverage policy and payment limitations in settingtheir own reimbursement rates, and both CMS and other third-party payors may have sufficient market power to demand significant price reductions. Our business has a substantial risk of clinical trial and product liability claims. If we are unable to obtain and maintain appropriate levels ofinsurance, a claim could adversely affect our business. Our business exposes us to significant potential clinical trial and product liability risks that are inherent in the development, manufacturing andsales and marketing of human therapeutic products. Although we do not currently commercialize any products, claims could be made against us based on theuse of our therapeutic candidates in clinical trials. We currently carry life science liability insurance covering general liability with an annual coverageamount of $20.0 million per occurrence and product liability and clinical trials coverage with an annual coverage amount of $20.0 million each claim and inthe aggregate. The maximum indemnity for a single occurrence, claim or circumstances under this insurance is $20.0 million. However, our insurance maynot provide adequate coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. Asa result, we may be unable to maintain current amounts of insurance coverage or obtain additional or sufficient insurance at a reasonable cost to protectagainst losses that could have a material adverse effect on us. If a claim is brought against us, we might be required to pay legal and other expenses to defendthe claim, as well as damages awards beyond the coverage of our insurance policies resulting from a claim brought successfully against us. Furthermore,whether or not we are ultimately successful in defending any claims, we might be required to direct significant financial and managerial resources to suchdefense, and adverse publicity is likely to result. 12 Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business.A significant invasion, interruption, destruction or breakdown of our information technology systems and/or infrastructure by persons withauthorized or unauthorized access could negatively impact our business and operations. We could also experience business interruption, information theftand/or reputational damage from cyber attacks, which may compromise our systems and lead to data leakage either internally or at our third party providers.Our systems have been, and are expected to continue to be, the target of malware and other cyber attacks. Although we have invested in measures to reducethese risks, we cannot assure you that these measures will be successful in preventing compromise and/or disruption of our information technology systemsand related data. We deal with hazardous materials and must comply with environmental, health and safety laws and regulations, which can be expensive andrestrict how we do business. Our activities and those of our third-party manufacturers on our behalf involve the controlled storage, use and disposal of hazardous materials,including microbial agents, corrosive, explosive and flammable chemicals, as well as cytotoxic, biologic, radio-labeled and other hazardous compounds. Weand our manufacturers are subject to U.S. federal, state, local, Israeli and other foreign laws and regulations governing the use, manufacture, storage, handlingand disposal of these hazardous materials. Although we believe that our safety procedures for handling and disposing of these materials comply with thestandards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In addition, if wedevelop a manufacturing capacity, we may incur substantial costs to comply with environmental regulations and would be subject to the risk of accidentalcontamination or injury from the use of hazardous materials in our manufacturing process. In the event of an accident, government authorities may curtail our use of these materials and interrupt our business operations. In addition, we couldbe liable for any civil damages that result, which may exceed our financial resources and may seriously harm our business. Although our Israeli insuranceprogram covers certain unforeseen sudden pollutions, we do not maintain a separate insurance policy for any of the foregoing types of risks. In addition,although the general liability section of our life sciences policy covers certain unforeseen, sudden environmental issues, pollution in the United States andCanada is excluded from the policy. In the event of environmental discharge or contamination or an accident, we may be held liable for any resultingdamages, and any liability could exceed our resources. In addition, we may be subject to liability and may be required to comply with new or existingenvironmental laws regulating pharmaceuticals or other medical products in the environment. Risks Related to Intellectual Property Our access to most of the intellectual property associated with our therapeutic candidates results from in-license agreements with universities,research institutions and biotechnology companies, the termination of which would prevent us from commercializing the associated therapeuticcandidates. We do not conduct our own initial research with respect to the identification of our therapeutic candidates. Instead, we rely upon research anddevelopment work conducted by third parties as the primary source of our therapeutic candidates. As such, we have obtained our rights to our therapeuticcandidates through in-license agreements entered into with universities, research institutions and biotechnology companies that invent and own theintellectual property underlying our candidates. There is no assurance that such in-licenses or rights will not be terminated or expire due to a material breachof the agreements, such as a failure on our part to achieve certain progress milestones set forth in the terms of the in-licenses or due to the loss of the rights tothe underlying intellectual property by any of our licensors. There is no assurance that we will be able to renew or renegotiate an in-licensing agreement onacceptable terms if and when the agreement terminates. We cannot guarantee that any in-license is enforceable or will not be terminated or converted into anon-exclusive license in the future. The termination of any in-license or our inability to enforce our rights under any in-license would materially andadversely affect our ability to commercialize certain of our therapeutic candidates. 13 We currently have in-licensing agreements relating to our lead therapeutic candidates under clinical development. In September 2012, we in-licensed the rights to BL-8040 under a license agreement from Biokine. Under the BL-8040 license agreement, we are obligated to make commerciallyreasonable, good faith efforts to sublicense or commercialize BL-8040 for fair consideration. In February 2011, we in-licensed the rights to BL-7010 fromUnivalor. Under the BL-7010 license agreement, we are obligated to use commercially reasonable efforts to develop the licensed technology in accordancewith a specified development plan, including meeting certain specified diligence goals. In November 2007, we in-licensed the rights to BL-5010 under alicense agreement with IPC. Under the BL-5010 license agreement, we are obligated to use commercially reasonable efforts to develop the licensedtechnology in accordance with a specified development plan, including meeting certain specified diligence goals. Each of the foregoing in-licensing agreements, or the obligation to pay royalties thereunder, will generally remain in effect until the expiration,under the applicable agreement, of all of the licensing, royalty and sublicense revenue obligations to the applicable licensors, determined on a product-by-product and country-by-country basis. We may terminate the BL-8040 in-licensing agreement upon 90 days’ prior written notice to Biokine. We mayterminate the BL-7010 in-licensing agreement or the BL-5010 in-licensing agreement upon 30 days’ prior written notice to the respective licensor. Any party to any of the foregoing in-licensing agreements may terminate the respective agreement for material breach by the other party if thebreaching party is unable to cure the breach within an agreed upon period, generally 30 days to 90 days, after receiving written notice of the breach from thenon-breaching party. Each of the foregoing in-licensing agreements provide that with respect to any termination for material breach, if the breach is notsusceptible to cure within the stated period and the breaching party uses diligent, good faith efforts to cure such breach, the stated period will be extended byan additional 30 days. In addition, either party to one of the foregoing in-licensing agreements may terminate the agreement upon notice to the other uponthe occurrence of certain bankruptcy events. Patent protection for our products is important and uncertain. Our success depends, in part, on our ability, and the ability of our licensees and licensors to obtain patent protection for our therapeutic candidates,maintain the confidentiality of our trade secrets and know how, operate without infringing on the proprietary rights of others and prevent others frominfringing our proprietary rights. We try to protect our proprietary position by, among other things, filing U.S., European, Israeli and other patent applications related to ourproprietary products, technologies, inventions and improvements that may be important to the continuing development of our therapeutic candidates. As ofDecember 31, 2015 we owned or exclusively licensed for uses within our field of business 19 patent families that, collectively, contain 34 issued patents,three allowed patent applications and over 57 pending patent applications relating to our main clinical candidates. We are also pursuing patent protection forother drug candidates in our pipeline. Because the patent position of biopharmaceutical companies involves complex legal and factual questions, we cannot predict the validity andenforceability of patents with certainty. Our issued patents and the issued patents of our licensees or licensors may not provide us with any competitiveadvantages, or may be held invalid or unenforceable as a result of legal challenges by third parties. Thus, any patents that we own or license from others maynot provide any protection against competitors. Our pending patent applications, those we may file in the future or those we may license from third partiesmay not result in patents being issued. If these patents are issued, they may not provide us with proprietary protection or competitive advantages againstcompetitors with similar technology. The degree of future protection to be afforded by our proprietary rights is uncertain because legal means afford onlylimited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. Patent rights are territorial; thus, the patent protection we do have will only extend to those countries in which we have issued patents. Even so, thelaws of certain countries do not protect our intellectual property rights to the same extent as do the laws of the United States and Israel. For example, thepatent laws of China and India are relatively new and are not as developed as are older, more established patent laws of other countries. Competitors maysuccessfully challenge our patents, produce similar drugs or products that do not infringe our patents, or produce drugs in countries where we have notapplied for patent protection or that do not respect our patents. Furthermore, it is not possible to know the scope of claims that will be allowed in publishedapplications and it is also not possible to know which claims of granted patents, if any, will be deemed enforceable in a court of law. Our technology may infringe the rights of third parties. The nature of claims contained in unpublished patent filings around the world is unknownto us and it is not possible to know which countries patent holders may choose for the extension of their filings under the Patent Cooperation Treaty, or othermechanisms. Any infringement by us of the proprietary rights of third parties may have a material adverse effect on our business, financial condition andresults of operations. 14 If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to competeagainst us. We rely on a combination of patents, trade secrets, know-how, technology, trademarks and regulatory exclusivity to maintain our competitiveposition. We generally try to protect trade secrets, know-how and technology by entering into confidentiality or non-disclosure agreements with parties thathave access to it, such as our licensees, employees, contractors and consultants. We also enter into agreements that purport to require the disclosure andassignment to us of the rights to the ideas, developments, discoveries and inventions of our employees, advisors, research collaborators, contractors andconsultants while we employ or engage them. However, these agreements can be difficult and costly to enforce or may not provide adequate remedies. Anyof these parties may breach the confidentiality agreements and willfully or unintentionally disclose our confidential information, or our competitors mightlearn of the information in some other way. The disclosure to, or independent development by, a competitor of any trade secret, know-how or othertechnology not protected by a patent could materially adversely affect any competitive advantage we may have over any such competitor. To the extent that any of our employees, advisors, research collaborators, contractors or consultants independently develop, or use independentlydeveloped, intellectual property in connection with any of our projects, disputes may arise as to the proprietary rights to this type of information. If a disputearises with respect to any proprietary right, enforcement of our rights can be costly and unpredictable and a court may determine that the right belongs to athird party. Legal proceedings or third-party claims of intellectual property infringement may require us to spend substantial time and money and couldprevent us from developing or commercializing products. The development, manufacture, use, offer for sale, sale or importation of our therapeutic candidates may infringe on the claims of third-partypatents. A party might file an infringement action against us. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, couldbe substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively because of their substantiallygreater financial resources. Uncertainties resulting from the initiation and continuation or defense of a patent litigation or other proceedings could have amaterial adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant managementtime. Consequently, we are unable to guarantee that we will be able to manufacture, use, offer for sale, sell or import our therapeutic candidates in the eventof an infringement action. At present, we are not aware of pending or threatened patent infringement actions against us. In the event of patent infringement claims, or to avoid potential claims, we may choose or be required to seek a license from a third party and wouldmost likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we were able toobtain a license, the rights may be non-exclusive, which could potentially limit our competitive advantage. Ultimately, we could be prevented fromcommercializing a therapeutic candidate or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringementclaims, we are unable to enter into licenses on acceptable terms. This inability to enter into licenses could harm our business significantly. At present, wehave not received any written demands from third parties that we take a license under their patents nor have we received any notice form a third partyaccusing us of patent infringement. Our license agreements with our licensees contain, and any contract that we enter into with licensees in the future will likely contain, indemnityprovisions that obligate us to indemnify the licensee against any losses arising from infringement of third party intellectual property rights. In addition, ourin-license agreements contain provisions that obligate us to indemnify the licensors against any damages arising from the development, manufacture and useof products developed on the basis of the in-licensed intellectual property. 15 We may be subject to other patent-related litigation or proceedings that could be costly to defend and uncertain in their outcome. In addition to infringement claims against us, we may in the future become a party to other patent litigation or proceedings, including interference orre- examination proceedings filed with the U.S. Patent and Trademark Office or opposition proceedings in other foreign patent offices regarding intellectualproperty rights with respect to our products and technology, as well as other disputes regarding intellectual property rights with licensees, licensors or otherswith whom we have contractual or other business relationships. Post-issuance oppositions are not uncommon and we, our licensee or our licensor will berequired to defend these opposition procedures as a matter of course. Opposition procedures may be costly, and there is a risk that we may not prevail. We may be subject to damages resulting from claims that we or our employees or contractors have wrongfully used or disclosed alleged tradesecrets of their former employers. Many of our employees and contractors were previously employed at universities or other biotechnology or pharmaceutical companies, includingour competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that we or any employee orcontractor has inadvertently or otherwise used or disclosed trade secrets or other proprietary information of his or her former employers. Litigation may benecessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectualproperty rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain therapeuticcandidates, which could severely harm our business, financial condition and results of operations. Even if we are successful in defending against theseclaims, litigation could result in substantial costs and be a distraction to management. Risks Related to our Ordinary Shares and ADSs We may be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in 2016 or in any subsequent year. There may benegative tax consequences for U.S. taxpayers that are holders of our ordinary shares or our ADSs. We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% of our gross income is “passiveincome” or (ii) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income forthis purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions andfrom the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investmentof funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assetsof each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. We believe that we were a PFIC duringcertain prior years and, although we have not determined whether we will be a PFIC in 2016, or in any subsequent year, our operating results for any suchyears may cause us to be a PFIC. If we are a PFIC in 2016, or any subsequent year, and a U.S. shareholder does not make an election to treat us as a “qualifiedelecting fund,” or QEF, or make a “mark-to-market” election, then “excess distributions” to a U.S. shareholder, and any gain realized on the sale or otherdisposition of our ordinary shares or ADSs will be subject to special rules. Under these rules: (i) the excess distribution or gain would be allocated ratablyover the U.S. shareholder’s holding period for the ordinary shares (or ADSs, as the case may be); (ii) the amount allocated to the current taxable year and anyperiod prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (iii) the amount allocated to each of theother taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for thedeemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. InternalRevenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late fora U.S. shareholder to make a timely QEF or mark-to-market election. U.S. shareholders who hold our ordinary shares or ADSs during a period when we are aPFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. shareholders who made a timelyQEF or mark-to-market election. A U.S. shareholder can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordancewith the instructions thereto. A QEF election generally may not be revoked without the consent of the IRS. Upon request, we will annually furnish U.S.shareholders with information needed in order to complete IRS Form 8621 (which form would be required to be filed with the IRS on an annual basis by theU.S. shareholder) and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. 16 The market prices of our ordinary shares and ADSs are subject to fluctuation, which could result in substantial losses by our investors. The stock market in general and the market prices of our ordinary shares on the TASE and ADSs on the Nasdaq, in particular, are subject tofluctuation, and changes in these prices may be unrelated to our operating performance. We expect that the market prices of our ordinary shares and ADSswill continue to be subject to wide fluctuations. The market price of our ordinary shares and ADSs are and will be subject to a number of factors, including: ·announcements of technological innovations or new products by us or others; ·announcements by us of significant acquisitions, strategic partnerships, in-licensing, out-licensing, joint ventures or capital commitments; ·expiration or terminations of licenses, research contracts or other collaboration agreements; ·public concern as to the safety of drugs we, our licensees or others develop; ·general market conditions; ·the volatility of market prices for shares of biotechnology companies generally; ·success of research and development projects; ·departure of key personnel; ·developments concerning intellectual property rights or regulatory approvals; ·variations in our and our competitors’ results of operations; ·changes in earnings estimates or recommendations by securities analysts, if our ordinary shares or ADSs are covered by analysts; ·statements about the Company made in the financial media or by bloggers on the Internet; ·changes in government regulations or patent decisions; ·developments by our licensees; and ·general market conditions and other factors, including factors unrelated to our operating performance. These factors and any corresponding price fluctuations may materially and adversely affect the market price of our ordinary shares and result insubstantial losses by our investors. Additionally, market prices for securities of biotechnology and pharmaceutical companies historically have been very volatile. The market for thesesecurities has from time to time experienced significant price and volume fluctuations for reasons unrelated to the operating performance of any onecompany. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation. If we were involved insecurities litigation, it could have a substantial cost and divert resources and attention of management from our business, even if we are successful. Our ordinary shares are traded on the TASE and our ADSs are listed on the Nasdaq Capital Market. Trading in our securities on these markets takesplace in different currencies (dollars on the Nasdaq Capital Market and NIS on the TASE), and at different times (resulting from different time zones, differenttrading days and different public holidays in the United States and Israel). The trading prices of our securities on these two markets may differ due to thesefactors, the factors listed above, or other factors. Any decrease in the price of our securities on one of these markets could cause a decrease in the trading priceof our securities on the other market. 17 Future sales of our ordinary shares or ADSs could reduce the market price of our ordinary shares and ADSs. Substantial sales of our ordinary shares or ADSs, either on the TASE or on the Nasdaq, may cause the market price of our ordinary shares or ADSs todecline. Sales by us or our securityholders of substantial amounts of our ordinary shares or ADSs, or the perception that these sales may occur in the future,could cause a reduction in the market price of our ordinary shares or ADSs. As a result of previous financings, we have warrants outstanding for the purchase of 4.2 million ADSs at a weighted average exercise price of $3.71per ADS. In addition, as of March 1, 2016 we have stock options granted to directors, employees and consultants for the purchase of 4.8 million ordinaryshares with a weighted average exercise price of $2.00 per ordinary share. In May 2014, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC, or LPC, for the sale, from time to time, of up to $20million of our ADSs to LPC. During the 36-month term of this purchase agreement, we control the timing and amount of any sales to LPC, if and when wedecide, in accordance with the agreement. LPC has no right to require us to sell any ADSs to LPC, but LPC is obligated to make purchases as we direct,subject to certain conditions. The purchase price related to any sales to LPC is based on the prevailing market prices of our ADSs immediately preceding thenotice of sale to LPC, without any fixed discount. The agreement may be terminated by us at any time, at our sole discretion, without any cost or penalty. Asof the date of this annual report, we have sold 1,292,601 ADSs to LPC under the purchase agreement. The issuance of any additional ordinary shares, any additional ADSs, or any securities that are exercisable for or convertible into our ordinary sharesor ADSs, may have an adverse effect on the market price of our ordinary shares and ADSs and will have a dilutive effect on our shareholders. Raising additional capital by issuing securities may cause dilution to existing shareholders. We may need to raise substantial future capital to continue to complete clinical development and commercialize our products and therapeuticcandidates and to conduct the research and development and clinical and regulatory activities necessary to bring our therapeutic candidates to market. Ourfuture capital requirements will depend on many factors, including: ·the failure to obtain regulatory approval or achieve commercial success of our therapeutic candidates; ·our success in effecting out-licensing arrangements with third-parties; ·our collaboration with Novartis and the extent that upfront licensing fees and program development costs would be covered by the optionfees and equity investments paid by Novartis under this collaboration; ·our success in establishing other out-licensing or co-development arrangements; ·the success of our licensees in selling products that utilize our technologies; ·the results of our preclinical studies and clinical trials for our earlier stage therapeutic candidates, and any decisions to initiate clinical trialsif supported by the preclinical results; ·the costs, timing and outcome of regulatory review of our therapeutic candidates that progress to clinical trials; ·the costs of establishing or acquiring specialty sales, marketing and distribution capabilities, if any of our therapeutic candidates areapproved, and we decide to commercialize them ourselves; ·the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our issued patents and defending intellectualproperty-related claims; 18 ·the extent to which we acquire or invest in businesses, products or technologies and other strategic relationships; and ·the costs of financing unanticipated working capital requirements and responding to competitive pressures. If we raise additional funds through licensing arrangements with third parties, we may have to relinquish valuable rights to our therapeuticcandidates, or grant licenses on terms that are not favorable to us. If we raise additional funds by issuing equity or convertible debt securities, we will reducethe percentage ownership of our then-existing shareholders, and these securities may have rights, preferences or privileges senior to those of our existingshareholders. See also “— Future sales of our ordinary shares or ADSs could reduce the market price of our ordinary shares and ADSs.” As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC andNasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers. As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required underthe Marketplace Rules of the Nasdaq for domestic issuers. For instance, we may follow home country practice in Israel with regard to, among other things,composition of the Board of Directors, director nomination procedure, composition of the compensation committee, approval of compensation of officers,and quorum at shareholders’ meetings. In addition, we will follow our home country law, instead of the Marketplace Rules of the Nasdaq, which require thatwe obtain shareholder approval for certain dilutive events, such as for the establishment or amendment of certain equity based compensation plans, anissuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interestin the company and certain acquisitions of the stock or assets of another company. Following our home country governance practices as opposed to therequirements that would otherwise apply to a United States company listed on the Nasdaq may provide less protection than is accorded to investors under theMarketplace Rules of the Nasdaq applicable to domestic issuers. See “Item 16G — Corporate Governance — Nasdaq Listing Rules and Home CountryPractices.” In addition, as a foreign private issuer, we are exempt from the rules and regulations under the U.S. Securities Exchange Act of 1934, as amended (the“Exchange Act”), related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from thereporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Actto file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities areregistered under the Exchange Act. If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act as they apply to a foreign private issuer that is listed on a U.S.exchange, or our internal controls over financial reporting are not effective, the reliability of our financial statements may be questioned and our stock priceand ADS price may suffer. Section 404 of the Sarbanes-Oxley Act requires companies subject to the reporting requirements of the U.S. securities laws to do a comprehensiveevaluation of its and its subsidiaries’ internal controls over financial reporting. To comply with this statute, we are required to document and test our internalcontrol procedures, and our management is required to assess and issue a report concerning our internal controls over financial reporting. In addition, ourindependent registered public accounting firm may be required to issue an opinion on management’s assessment of those matters. The continuous process of strengthening our internal controls and complying with Section 404 is complicated and time-consuming. Furthermore, asour business continues to grow both domestically and internationally, our internal controls will become more complex and will require significantly moreresources and attention to ensure our internal controls remain effective overall. During the course of its testing, our management may identify materialweaknesses or significant deficiencies, which may not be remedied in a timely manner to meet the deadline imposed by the Sarbanes-Oxley Act. If ourmanagement cannot favorably assess the effectiveness of our internal controls over financial reporting, or our independent registered public accounting firmidentifies material weaknesses in our internal controls, investor confidence in our financial results may weaken, and the market price of our securities maysuffer. 19 Risks Related to our Operations in Israel We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israeland its region. Our headquarters, all of our operations and some of our suppliers and third party contractors are located in central Israel and our key employees,officers and most of our directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region maydirectly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arabneighbors. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adverselyaffect our operations and results of operations and could make it more difficult for us to raise capital. During the autumn of 2012, Israel was engaged in armedconflicts with Hamas, a militia group and political party operating in the Gaza Strip; during the summer of 2014, another escalation in violence among Israel,Hamas and other groups took place; and since October 2015, Israel has been facing another escalation in violence with the Palestinian population. Theseconflicts involved missile strikes against civilian targets in various parts of Israel, as well as civil insurrection of Palestinians in the West Bank, on the borderwith the Gaza Strip and in Israeli cities, and negatively affected business conditions in Israel. In addition, Israel faces threats from more distant neighbors, inparticular Iran. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah (a Lebanese IslamistShiite militia group and political party), and various rebel militia groups in Syria. Recent political uprisings and social unrest in various countries in theMiddle East and North Africa are affecting the political stability of those countries. The year 2014 saw the rise of an Islamic fundamentalist group known asISIS. Following swift operations, ISIS gained control of large areas in the Middle East, including in Iraq and Syria, which have contributed to the turmoilexperienced in these areas. As a result, the United States armed forces have engaged in limited operations against ISIS and recently, Russia’s armed forceshave also engaged in limited operations to defeat ISIS and other rebel groups operating in Syria. This instability may lead to deterioration of the politicalrelationships that exist between Israel and these countries, and has raised concerns regarding security in the region and the potential for armed conflict. Thesesituations may escalate in the future to more violent events which may affect Israel and us. Among other things, this instability may affect the globaleconomy and marketplace through changes in oil and gas prices. Any armed conflicts, terrorist activities or political instability in the region could adverselyaffect business conditions and could harm our results of operations. For example, any major escalation in hostilities in the region could result in a portion ofour employees being called up to perform military duty for an extended period of time. Parties with whom we do business have sometimes declined to travelto Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary. In addition, the political and securitysituation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform theircommitments under those agreements pursuant to force majeure provisions in the agreements. Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East.Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assureyou that this government coverage will be maintained. Any losses or damages incurred by us could have a material adverse effect on our business. Any armedconflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations. Further, in the past, the State of Israel and Israeli companies have been subjected to an economic boycott. Several countries still restrict businesswith the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financialcondition or the expansion of our business. Our operations may be disrupted as a result of the obligation of management or key personnel to perform military service. Many of our male employees in Israel, including members of our senior management, are obligated to perform one month, and in some cases more, ofannual military reserve duty until they reach the age of 40 (or older, for officers or reservists with certain occupations) and, in the event of a military conflict,may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists, and some of ouremployees have been called up from time to time in connection with armed conflicts. It is possible that there will be military reserve duty call-ups in thefuture. Our operations could be disrupted by the absence of a significant number of our employees or of one or more of our key employees. Such disruptioncould materially adversely affect our business, financial condition and results of operations. 20 Due to a significant portion of our expenses and revenues being denominated in non-dollar currencies, our results of operations may be harmedby currency fluctuations. Effective January 1, 2015, our reporting and functional currency is the dollar. However, we pay a significant portion of our expenses in NIS, and weexpect this to continue. If the dollar weakens against the NIS in the future, there may be a negative impact on our results of operations. The revenues from ourcurrent out-licensing and co-development arrangements are payable in dollars and euros. Although we expect our revenues from future licensingarrangements to be denominated primarily in dollars, we are exposed to the currency fluctuation risks relating to the recording of our revenues in currenciesother than dollars. For example, if the euro strengthens against the dollar, our reported revenues in dollars may be lower than anticipated. From time to time,we engage in currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of the currencies mentionedabove in relation to the dollar. These measures, however, may not adequately protect us from material adverse effects. We have received Israeli government grants and loans for the operation of a biotechnology incubator and for certain research and developmentexpenditures. The terms of these grants and loans may require us to satisfy specified conditions in order to manufacture products and transfertechnologies outside of Israel. We may be required to pay penalties in addition to repayment of the grants and loans. Our research and development efforts, including the operation of a biotechnology incubator which we terminated at the end of 2013, have beenfinanced, in part, through grants and loans that we have received from the OCS. In addition, before we in-licensed BL-8040, Biokine had received funding forthe project from the OCS, and as a condition to OCS consent to our in-licensing of BL-8040, we were required to agree to abide by any obligations resultingfrom such funding. We therefore must comply with the requirements of the Israeli Law for the Encouragement of Industrial Research and Development, 1984,and related regulations, as amended, or the Research Law, with respect to these projects. Through December 31, 2015, we have received approximately $19.5million in funding from the OCS. As of December 31, 2015, we have a contingent obligation to the OCS (other than for BL-8040 – see below) in the totalamount of $0.2 million under all of our approved programs. In connection with the in-licensing of BL-8040 from Biokine, and as a condition to OCS consentto the transaction, we agreed to abide by any obligations resulting from funds previously received by Biokine from the OCS. The contingent liability to theOCS assumed by us relating to this transaction amounts to $2.7 million as of December 31, 2015. We have a full right of offset for amounts payable to theOCS from payments that we may owe to Biokine in the future. Therefore, the likelihood of any payment obligation to the OCS with regard to the Biokinetransaction is remote. The transfer to third parties of know-how or technologies developed under the programs submitted to the OCS and as to which we or our licensorsreceived grants, or manufacturing or rights to manufacture based on and/or incorporating such know-how to third parties, might require the consent of theOCS, and may require certain payments to the OCS. Although such restrictions do not apply to the export from Israel of our products developed with suchknow-how, they may prevent us from engaging in transactions with our affiliates, customers or other third parties outside Israel, involving product or otherasset transfers, which might otherwise be beneficial to us. In July 2015, the Knesset (the Israeli Parliament) enacted Amendment Number 7 to the Research Law, or the R&D Amendment. The R&DAmendment, effective as of January 1, 2016, amends material provisions of the Research Law (including but not limited to royalty rates and changes toroyalty rates upon transfer of manufacturing rights abroad), leaves substantial discretion with the newly established National Authority for TechnologicalInnovation, or the Authority (established to replace the OCS), and includes only guidelines to some of the core issues of the Research Law. Thus the R&DAmendment is currently causing much ambiguity as to its implementation and its effect on companies which developed know-how using funds received fromthe OCS. While it is possible that some of the core issues regulated by the Research Law following the R&D Amendment, including required approvals priorto the transfer abroad of the manufacturing of any OCS or Authority-supported product or technology, will be similar to the regime prior to the R&DAmendment, there is currently no certainty that procedures and requirements will remain similar to the ones in effect prior to the R&D Amendment. See “Item4. Information on the Company — Business Overview — Government Regulation and Funding — Israeli Government Programs.” 21 Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a changeof control, even when the terms of such a transaction are favorable to us and our shareholders. Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals fortransactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions. Forexample, a merger may not be consummated unless at least 50 days have passed from the date that a merger proposal was filed by each merging companywith the Israel Registrar of Companies and at least 30 days from the date that the shareholders of both merging companies approved the merger. In addition, amajority of each class of securities of the target company must approve a merger. Moreover, a full tender offer can only be completed if the acquirer receivesthe approval of at least 95% of the issued share capital (provided that a majority of the offerees that do not have a personal interest in such tender offer shallhave approved the tender offer, except that if the total votes to reject the tender offer represent less than 2% of the company’s issued and outstanding sharecapital, in the aggregate, approval by a majority of the offerees that do not have a personal interest in such tender offer is not required to complete the tenderoffer), and the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completionof the tender offer, claim that the consideration for the acquisition of the shares did not reflect their fair market value and petition the court to alter theconsideration for the acquisition accordingly (unless the acquirer stipulated in the tender offer that a shareholder that accepts the offer may not seek appraisalrights, and the acquirer or the company published all required information with respect to the tender offer prior to the date indicated for response to the tenderoffer). Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence doesnot have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to thesame extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on thefulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which sales and dispositions of shares ofthe participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such timeexpires, the tax becomes payable even if no actual disposition of the shares has occurred. These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such anacquisition or merger would be beneficial to us or to our shareholders. We have received Israeli government grants and loans for certain research and development expenditures. The terms of these grants and loans, asmay be in effect following the R&D Amendment, may require us to satisfy specified conditions in order to manufacture products and transfer technologiesoutside of Israel. We may be required to pay penalties in addition to repayment of the grants and loans. Such grants and loans may be terminated or reducedin the future, which would increase our costs. See “Business — Government Regulation and Funding — Israeli Government Programs.” It may be difficult to enforce a U.S. judgment against us and our officers and directors named in this annual report in Israel or the United States,or to serve process on our officers and directors. We are incorporated in Israel. All of our executive officers and the majority of our directors reside outside of the United States, and all of our assetsand most of the assets of our executive officers and directors are located outside of the United States. Therefore, a judgment obtained against us or any of ourexecutive officers and directors in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not becollectible in the United States and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in theUnited States or to assert U.S. securities law claims in original actions instituted in Israel. 22 Your rights and responsibilities as a shareholder will be governed by Israeli law which may differ in some respects from the rights andresponsibilities of shareholders of U.S. companies. We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our Articles ofAssociation and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S.-basedcorporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain fromabusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to acompany’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiringshareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint orprevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available toassist us in understanding the implications of these provisions that govern shareholders’ actions. These provisions may be interpreted to impose additionalobligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations. ITEM4. INFORMATION ON THE COMPANY A. History and Development of the Company Our legal and commercial name is BioLineRx Ltd. We are a company limited by shares organized under the laws of the State of Israel. Our principalexecutive offices are located at 2 HaMa’ayan Street, Modi’in 7177871, Israel, and our telephone number is +972 (8) 642-9100. We were founded in 2003 by leading institutions in the Israeli life sciences industry, including Teva Pharmaceutical Industries Ltd., or Teva. Wecompleted our initial public offering in Israel in February 2007 and our ordinary shares are traded on the TASE under the symbol “BLRX.” In July 2011, welisted our ADSs on Nasdaq and they are traded under the symbol “BLRX.” Our capital expenditures for the years ended December 31, 2013, 2014 and 2015 were $0.1 million, $0.2 million and $2.7 million, respectively. Ourcurrent capital expenditures involve acquisitions of laboratory equipment, computers and communications equipment. B. Business Overview We are a clinical stage biopharmaceutical development company dedicated to identifying, in-licensing and developing therapeutic candidates thathave advantages over currently available therapies or that address unmet medical needs. Our current development pipeline consists of three main clinical-stage therapeutic candidates: BL-8040, a novel peptide for the treatment of multiple cancer and hematological indications; BL-7010, a novel co-polymer forthe treatment of celiac disease and gluten sensitivity; and BL-5010, a customized, proprietary, pen-like applicator containing a novel, acidic, aqueoussolution, which is being developed in Europe as a medical device for the non-surgical removal of benign skin lesions. In addition, we have three othertherapeutic candidates in various stages of clinical and preclinical development. We generate our pipeline by systematically identifying, rigorouslyvalidating and in-licensing therapeutic candidates that we believe exhibit a relatively high probability of therapeutic and commercial success. None of ourtherapeutic candidates have been approved for marketing and, to date, there have been no commercial sales of any of our therapeutic candidates. Our strategyincludes commercializing our therapeutic candidates through out-licensing arrangements with biotechnology and pharmaceutical companies. We alsoevaluate, on a case-by-case basis, co-development and similar arrangements and the commercialization of our therapeutic candidates independently. In December 2014, we entered into a strategic collaboration with Novartis Pharma AG, or Novartis, for the co-development of selected Israeli-sourced novel drug candidates. Under the agreement, we intend, in collaboration with Novartis, to co-develop a number of pre-clinical and early clinicaltherapeutic projects through clinical proof-of-concept for potential future licensing by Novartis. Our focus is principally on the therapeutic areas of oncology and immunology. However, we may also in-license therapeutic compounds outside ofthese areas in connection with our strategic collaboration with Novartis, as well as to a limited extent for our independent pipeline as the opportunities arise. 23 Our first clinical-stage therapeutic candidate, BL-8040, is a novel, short peptide that functions as a high-affinity antagonist for CXCR4, which weintend to develop for multiple cancer and hematological indications. CXCR4 is a chemokine receptor that is directly involved in tumor progression,angiogenesis (growth of new blood vessels in the tumor), metastasis (spread of tumor to other organs) and cell survival. CXCR4 is over-expressed in morethan 70% of human cancers and its expression often correlates with disease severity. BL-8040 mobilizes cancer cells from the bone marrow and may thereforesensitize these cells to chemo- and bio-based anti-cancer therapy. In addition, BL-8040 has demonstrated a direct anti-cancer effect by inducing apoptosis(cell death) and terminal differentiation. Multiple clinical and pre-clinical studies have shown the safety and efficacy of BL-8040. These studies have shownthat BL-8040 inhibits the growth of various tumor types including multiple myeloma, non-Hodgkin’s lymphoma, leukemia, non-small cell lung carcinoma,neuroblastoma and melanoma. BL-8040 significantly and preferentially stimulates apoptotic cell death of malignant cells (multiple myeloma, non-Hodgkin’s lymphoma and leukemia). BL-8040 also mobilizes stem cells from the bone marrow to the peripheral blood, enabling their collection forsubsequent autologous or allogeneic transplantation in cancer patients. In September 2013, the FDA granted an Orphan Drug Designation to BL-8040 as atherapeutic for the treatment of acute myeloid leukemia, or AML; and in January 2014, the FDA granted an Orphan Drug Designation to BL-8040 as atreatment for stem cell mobilization. In January 2015, the FDA modified this Orphan Drug Designation for BL-8040 for use either as a single agent or incombination with G-CSF. In addition, findings in the field of immuno-oncology suggest that CXCR4 antagonists may be effective in inducing the migrationof anti-tumor T cells into the tumor micro-environment. As such, the combination of BL-8040 with immune checkpoints inhibitors (PD1/PD-L1 monoclonalantibodies) has the potential to expand the benefit of immunotherapy to cancer types currently resistant to immuno-oncology treatments. In June 2013, we commenced a Phase 2 trial for BL-8040 for the treatment of AML. The study is currently being conducted at five sites in the UnitedStates, including MD Anderson Cancer Center in Houston, Memorial Sloan-Kettering Cancer Center in New York, Mayo Clinic in Jacksonville, JohnsHopkins University in Baltimore and Washington University in St. Louis, as well as at five well-known sites in Israel. The study is a multicenter, open-labelstudy under an Investigational New Drug, or IND, approval from the FDA, designed to evaluate the safety and efficacy profile of repeated escalating doses ofBL-8040 in adult subjects with relapsed/refractory AML. At the annual ASH conference in December 2015, we presented data from the dose escalation part ofthe trial. These data showed that BL-8040, as a stand-alone therapy and in combination with high-dose Cytarabine (Ara-C), is safe and well-tolerated at alldoses tested up to and including the highest dose level of 1.5 mg/kg, with no major adverse events. The composite complete remission rate, including bothcomplete remission (CR) and complete remission with incomplete blood count recovery (CRi), was 38% in subjects receiving only one cycle of BL-8040treatment at doses of 1 mg/kg and higher (n=16). Patients included in this part of the study were patients that had undergone a significant number of priortreatment cycles or that were refractory to induction treatment. The data also showed that BL-8040 triggers substantial mobilization of cancer cells from thebone marrow to the peripheral blood, thereby increasing the vulnerability of the cells to chemotherapy treatment. In addition, BL-8040 showed a direct andsignificant apoptotic effect on the immature leukemia progenitor cells in the bone marrow following two days of monotherapy and induced leukemiaprogenitor cells towards differentiation. Topline results of the entire study are expected in the first quarter of 2016. Targeting a second AML treatment line, in August 2015 we announced the commencement of a Phase 2b trial as a consolidation treatment for AMLpatients who have responded to standard induction treatment. The trial is being conducted in collaboration with the German Study Alliance LeukemiaGroup. It is examining BL-8040 as part of a second stage treatment, termed consolidation therapy, to improve outcomes for AML patients who have achievedremission after the standard initial treatment regimen, known as induction therapy. The consolidation therapy is aimed at eliminating the minimal residualdisease left in the bone marrow after induction therapy that can lead to relapse. The study is planned to enroll up to 194 patients at up to 25 sites in Germany.Top-line results of this study are expected in 2018. In addition, we plan to commence a Phase 2a trial for BL-8040 in the second half of 2016 for the treatment of a third population of AML patients,those with the FLT3-ITD mutation. The trial, which will be conducted in collaboration with the MD Anderson Cancer Center, is aimed at improving theresponse of FLT3-ITD mutated AML patients to treatment with a FLT3 inhibitor. This trial follows the presentation at several conferences during 2014 ofpositive preclinical results of BL-8040 as a treatment for AML patients with FLT3 mutations. 24 In March 2015, we announced successful top-line results from a Phase 1 trial for another indication of BL-8040 ‒ as a novel treatment for themobilization of stem cells from the bone marrow to the peripheral blood circulation, where they can be harvested for transplant supporting the treatment ofhematological indications. The study was conducted at the Hadassah Medical Center in Jerusalem. All safety and efficacy endpoints were met, showing thattreatment with BL-8040 as a single agent was safe and well tolerated at all doses and resulted in efficient stem cell mobilization and collection in all studyparticipants. Furthermore, the results support BL-8040 as one-day, single-dose collection regimen, which is a significant improvement in comparison with thecurrent standard of care. In December 2015, we announced the filing of regulatory submissions required to commence a Phase 2 trial at WashingtonUniversity School of Medicine in St. Louis for use of BL-8040 in stem cell mobilization. The trial is expected to commence shortly after receipt of regulatoryapproval, anticipated in the first quarter of 2016. We expect to announce partial results of the trial in the fourth quarter of 2016. In November 2015, we announced the commencement of a Phase 1/2 trial, again in collaboration with the MD Anderson Cancer Center, for a fifthindication of BL-8040 - as a novel treatment for hypoplastic myelodysplastic syndrome, or hMDS, and aplastic anemia, or AA. The study will be open labeland designed to evaluate the safety, tolerability and efficacy of the combination of BL-8040 with immunosuppressive therapies (hATG, cyclosporine andmethylprednisone). Secondary endpoints include assessment of the clinical efficacy (response rate), time and duration of response to the treatment, andoverall survival following treatment. In January 2016, we announced a collaboration with MSD, known as Merck in the U.S. and Canada, in the field of cancer immunotherapy. We planto sponsor and conduct a Phase 2 study investigating BL-8040 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy, in patientswith metastatic pancreatic adenocarcinoma. The study is an open-label, multicenter, single-arm trial designed to evaluate the clinical response, safety andtolerability of the combination of these therapies as well as multiple pharmacodynamic parameters, including the ability to improve infiltration of T cellsinto the tumor and their reactivity. The study is planned to commence by mid-2016. Upon completion of the study, or at any earlier point, both parties willhave the option to expand the collaboration to include a pivotal registration study. Our second clinical-stage therapeutic candidate, BL-7010, is a novel, non-absorbable, orally available, high-molecular-weight co-polymer intendedfor the treatment of celiac disease and gluten sensitivity. It has a high affinity for gliadins, the immunogenic proteins present in gluten that cause an immuneresponse in patients with celiac disease. BL-7010 effectively masks gliadins from enzymatic degradation and prevents the formation and absorption ofimmunogenic peptides that trigger the immune system. BL-7010 is excreted with gliadin from the digestive tract, preventing the absorption of gliadinpeptides. This significantly reduces the immune response triggered by gluten. The safety and efficacy of BL-7010 were demonstrated in pre-clinical andclinical studies. In December 2013, we commenced a Phase 1/2 trial for BL-7010 at Tampere Hospital in Finland, a leading site for celiac research. The trial was atwo-part (single and repeated administration), double-blind, placebo-controlled, dose escalation study of BL-7010 in up to 40 well-controlled celiac patients.The primary objective of the study was to assess the safety of single and repeated ascending doses of BL-7010. Secondary objectives included an assessmentof the systemic exposure, if any, of BL-7010 in the study patients. In November 2014, we reported the final results of the study. Those results confirmed thatBL-7010 is safe and well tolerated in both single and repeated-dose administrations. Based on these results, we selected the dosing regimen of one gram,three times per day, of BL-7010 as the optimal repeated dose in the next efficacy study for celiac patients. In addition, pharmacokinetic analyses revealed nosystemic exposure of BL-7010 in plasma and urine samples from all patients at all doses and time points tested, both in the single- and repeated-doseregimens. In January 2016, we received confirmation regarding the classification of BL-7010 as a Class IIb medical device in the European Union. Webelieve this classification could significantly accelerate the development of BL-7010 in Europe. Over the last year, we have invested considerable efforts in examining alternative development and commercialization pathways for BL-7010, inaddition to the celiac disease pathway, including as a food supplement, in order to potentially address the multi-billion dollar market for gluten sensitivity.We believe the gluten sensitivity market has a significantly shorter time to market than drug or device pathways, especially in the U.S. market, where thedevice pathway is not available for BL-7010. We are currently conducting a number of activities towards the development of BL-7010 as a food supplement,including the development of a suitable product formulation, preparation of the documents necessary for a “generally recognized as safe,” or GRAS,designation submission, and preparations for a relatively small clinical trial to support the marketing efforts we may conduct regarding gluten and/or glutensensitivity. We expect to complete these activities by mid-2017, in order to support partnering discussions for the food supplement market in the U.S. andother relevant territories at that time. We will also continue to evaluate the pathway for celiac disease in Europe and will make a decision about the timingand scope of the next efficacy study for European registration over the next few months. 25 Our third clinical-stage therapeutic candidate, BL-5010, is a novel medical device containing a novel, acidic, aqueous solution and applicator forthe non-surgical removal of benign skin lesions. It offers an alternative to painful, invasive and expensive removal treatments including cryotherapy, lasertreatment and surgery. Since the treatment is non-invasive, it poses minimal infection risk and eliminates the need for anesthesia, antiseptic precautions andbandaging. The pre-filled device controls and standardizes the volume of solution applied to a lesion, ensuring accurate administration directly on the lesionand preventing both accidental exposure of the healthy surrounding tissue and unintentional dripping. It has an ergonomic design, making it easy to handle,and it will be childproofed. The product has completed a Phase 1/2 pilot clinical study for the removal of a skin lesion known as seborrheic keratosis, or SK,which showed excellent efficacy and cosmetic results, and has received confirmation in Europe for the regulatory pathway classification as a Class IIamedical device. Our original development plan for BL-5010 consisted of clinical testing for the treatment of SK. However, during discussions in recent years withpotential partners for the development and commercialization of BL-5010, we learned that they had more interest in the possibilities of BL-5010 for over-the-counter, or OTC, indications. In December 2014, we entered into an exclusive out-licensing arrangement with Omega Pharma, now part of Perrigo Companyplc, for the rights to BL-5010 for OTC indications in the territories of Europe, Australia and additional selected countries. We will retain all OTC rights toBL-5010 in the United States and the rest of the world, as well as all non-OTC rights on a global basis. Under our out-licensing arrangement with OmegaPharma, Omega Pharma is obligated to use commercially reasonable best efforts to obtain regulatory approval in the licensed territory for at least two OTCindications and to commercialize BL-5010 for those two OTC indications. In addition, Omega Pharma will sponsor and manufacture BL-5010 in the relevantregions. Omega Pharma will pay us an agreed amount for each unit sold, and we will be entitled to certain commercial milestone payments. In addition, wewill have full access to all clinical and research and development data generated during the performance of the development plan and may use these data inorder to develop or license the product in other territories and fields of use where we retain the rights. During 2015, Omega Pharma conducted a 30-patient,open-label clinical study in Turkey to evaluate the advantages of BL-5010 in one of the intended OTC indications. Study results indicate that BL-5010 issafe and efficacious. Omega Pharma submitted an application for CE Mark designation for BL-5010 during the third quarter of 2015, and has completed theinitial manufacturing process automation to support the product launch. The commercial launch of the first OTC indication for this product is expectedduring 2016. As a result of this out-licensing arrangement with Omega Pharma, as well as the previous discussions with other potential partners for thisproduct, the development activities for BL-5010 are currently focused on OTC indications. However, we may decide to continue development of BL-5010for non-OTC indications, including, but not limited to, SK, or for OTC indications in territories not out-licensed to Omega Pharma, primarily the U.S. We are required to pay a portion, within the standard range of sublicense receipt consideration paid to our licensors, of the revenues we receive fromour arrangement with Omega Pharma, to Innovative Pharmaceutical Concepts, Inc. or IPC, the party from which we in-licensed BL-5010 in 2007. As part of our business strategy, we continue to actively source, rigorously evaluate and in-license selected therapeutic candidates. We establish andmaintain close relationships with research institutes, academic institutions and biotechnology companies in Israel, including, in some instances, a formalright of first offer for therapeutic compounds in their portfolios. More recently, we have extended our sourcing activities to other countries. Before in-licensing, each therapeutic candidate must pass through our thorough screening process. In certain circumstances, our Scientific Advisory Board and disease-specific third-party advisors are active in evaluating certain therapeutic candidates, as deemed necessary. Our approach is consistent with our objective ofproceeding only with therapeutic candidates that we believe exhibit a relatively high probability of therapeutic and commercial success. To date, we havescreened over 2,300 compounds, presented more than 70 candidates for final internal evaluation, initiated development of 45 therapeutic candidates andterminated 39 development programs. Our Strategy Our objective is to be a leader in developing innovative pharmaceutical and biopharmaceutical products. We continuously identify and in-licensetherapeutic candidates in order to maximize our potential for commercial success. We repeatedly assess compounds by evaluating their efficacy, safety, totalestimated development costs, technological novelty, patent status, market potential and approvability. Our approach to evaluating, in-licensing anddeveloping therapeutic candidates allows us to: •continually build our pipeline of therapeutic candidates; 26 •advance those therapeutic candidates with the greatest potential; •quickly identify, and terminate the development of, unattractive therapeutic candidates; and •avoid dependency on a small number of therapeutic candidates. Using this approach, we have successfully advanced a number of therapeutic candidates into clinical development. Specific elements of our currentstrategy include the following: •Support the successful development and commercialization of therapeutic candidates that have already been partnered. We currentlyhave four programs at various stages of development in our pipeline that have already been partnered or under collaboration. •Commercialize additional therapeutic candidates through out-licensing or co-development arrangements or, where appropriate, byourselves. We intend to commercialize many of our other products through out-licensing or co-development arrangements with thirdparties who may perform any or all of the following tasks: completing development, securing regulatory approvals, securing reimbursementcodes from insurance companies and HMOs, manufacturing and/or marketing. If appropriate, we may also enter into co-development andsimilar arrangements with respect to any therapeutic candidate with third parties or commercialize a therapeutic candidate ourselves. •Design development programs that reach critical decisions quickly. At each step of our screening process for therapeutic candidates, acandidate is subjected to rigorous feasibility testing and potential advancement or termination. We believe our feasibility approach reducescosts and increases the probability of commercial success by eliminating less promising candidates quickly before advancing them intomore costly preclinical and clinical programs. •Use our expertise and proven screening methodology to evaluate in-licensing opportunities. In order to review and select among variouscandidates efficiently and effectively, we employ a rigorous screening system we developed. In certain instances, our Scientific AdvisoryBoard and disease-specific third-party advisors evaluate therapeutic candidates, as deemed necessary. In addition, projects under theNovartis collaboration benefit from additional review and assessment by Novartis. •Leverage and expand our relationships with research institutes, academic institutions and biotechnology companies, including thespecific strategic relationships that we have developed with Israeli research and academic institutions, to identify and in-licensepromising therapeutic candidates. To date, we have successfully in-licensed compounds from many major Israeli universities, as well asfrom many Israeli hospitals, technology incubators and biotechnology companies. We continue to maintain close contacts with universitytechnology transfer offices, research and development authorities, university faculty, and many biotechnology companies to actively seekout early stage compounds. In addition, we actively source and evaluate non-Israeli compounds. •Seek to co-develop certain pre-clinical and early clinical therapeutic projects through clinical proof-of-concept by means of our multi-year strategic collaboration agreement with Novartis. Pursuant to an agreement entered into in December 2014, Novartis will evaluatejointly with us both clinical and pre-clinical stage projects presented by us via a Joint Steering Committee, which will determine whichprojects to advance further in development and on what terms. Projects at or reaching the clinical stage will be eligible for selection byNovartis. Upon selection of a project, Novartis will pay us an option fee of $5 million, as well as fund 50% of the anticipated remainingdevelopment costs associated with establishing clinical proof-of-concept, in the form of an additional equity investment in BioLineRx. Alimited number of projects in pre-clinical stages are also eligible for flagging by Novartis, for initial development by BioLineRx. Suchprojects, once reaching the clinical stage, will be eligible for selection by Novartis under the terms set forth above. The companies intend todevelop up to three clinical-stage programs pursuant to this collaboration. Under the terms of the agreement, Novartis acquired 5,000,000of our ADSs in a private transaction at a price of $2.00 per ADS, for a total equity investment of $10 million, and agreed to certain standstillprovisions. 27 . Our Product Pipeline The table below summarizes our current pipeline of therapeutic candidates, including the target indications and status of each candidate and ourdevelopment partners: Main Therapeutic Candidates BL-8040 BL-8040 is a novel, short peptide that functions as a high-affinity antagonist for CXCR4, which we are developing for multiple cancer andhematological indications. CXCR4 is a chemokine receptor that is directly involved in tumor progression, angiogenesis, metastasis and cell survival. CXCR4is over-expressed in more than 70% of human cancers and its over-expression often correlates with disease severity. We in-licensed BL-8040 from Biokine inSeptember 2012. The following paragraphs are a high-level summary of the therapeutic areas we are currently investigating for BL-8040: Acute Myeloid Leukemia (AML). AML is a cancer of the blood and bone marrow and is the most common type of acute leukemia in adults.According to the American Cancer Society, approximately 19,000 new cases of AML were diagnosed in the United States in 2014, and the median age ofAML patients was 67 years old. The first treatment line for patients with AML includes a combination of chemotherapy drugs and is called inductiontreatment. The median survival for AML patients receiving induction chemotherapy is less than two years, with shorter survival for patients over the age of60 or for those with certain gene or chromosome aberrations. Due to relapsed or refractory disease (where the disease is not responsive to standard treatments),the overall five-year survival rate for AML is between 10 and 40 percent. Stem Cell Mobilization. High-dose chemotherapy followed by stem cell transplantation has become an established treatment modality for a varietyof hematologic malignancies, including multiple myeloma, as well as various forms of lymphoma and leukemia. Stem cells are mobilized from the bonemarrow of the patient (i.e., autologous transplant) or donor (i.e., allogeneic transplant) using granulocyte colony-stimulating factor, or G-CSF, harvested fromthe peripheral blood by apheresis, and infused to the patient after chemotherapy. G-CSF is approved only for autologous use, although it is also used tomobilize and collect stem cells in the allogeneic setting on an off-label basis. This type of treatment often replaces the use of traditional surgical bone marrowharvesting, because the stem cells are easier to collect and the treatment allows for a quicker recovery time and fewer complications. 28 Hypoplastic myelodysplastic syndrome (hMDS) and aplastic anemia (AA). hMDS and AA are hematological conditions caused by progressive bonemarrow failure, and characterized by ineffective production of all blood cells, leading to severe anemia and cytopenias (low blood counts). These conditionsresult from disorders of the hematopoietic stem cells in the bone marrow, where hematopoiesis is disrupted and the number and quality of blood-forming cellsdecline irreversibly, further impairing blood production. hMDS is a subtype of myelodysplastic syndrome, a collection of myeloid malignanciescharacterized by one or more peripheral blood cytopenias (deficiency in the number of blood cells). AA is a disease in which the bone marrow and the bloodstem cells that reside in the marrow are depleted, resulting in a deficiency of all three blood cell types: red blood cells, white blood cells, and platelets.Treatment may include immunosuppressive therapy, chemotherapy or hematopoietic stem cell transplant. Pancreatic cancer. There are a number of types of pancreatic cancer. Based on available worldwide numbers, in 2014, pancreatic cancers of all typeswere the seventh most common cause of cancer-related deaths. According to the American Cancer Society, in 2015, nearly 50,000 were diagnosed withpancreatic cancer and an estimated 40,000 will die from the disease. The most common type of pancreatic cancer is pancreatic adenocarcinoma, whichaccounts for about 85 percent of cases. These adenocarcinomas start within the part of the pancreas that makes digestive enzymes. There are usually nosymptoms in the early stages of the disease and symptoms that are specific enough to suggest the onset of pancreatic cancer typically do not develop untilthe disease has reached an advanced stage. The five-year survival rate of pancreatic adenocarcinoma is around 7 percent. Regulatory Approvals. In September 2013, the FDA granted an Orphan Drug Designation to BL-8040 as a therapeutic for the treatment of AML. InJanuary 2014, the FDA granted an Orphan Drug Designation to BL-8040 for use, in combination with G-CSF, in mobilizing human stem cells from the bonemarrow to the peripheral blood for collection for autologous or allogeneic (donor-based) transplantation. In January 2015, the FDA modified this OrphanDrug Designation for BL-8040 for use either as a single agent or in combination with G-CSF. Orphan Drug Designation is granted to therapeutics intended totreat rare diseases that affect not more than 200,000 people in the United States. Orphan Drug Designation entitles the sponsor to a seven-year marketingexclusivity period and clinical protocol assistance with the FDA, as well as federal grants and tax credits. Preclinical Results. In vitro and in vivo data show that BL-8040 binds CXCR4 at the low nanomolar range (1-2.5nM) and occupies it for prolonged periods of time(>24h). These studies have shown that BL-8040 mobilizes cancer cells from the bone marrow and may therefore sensitize these cells to chemo- and bio-basedanti-cancer therapies. In addition, BL-8040 directly induces apoptosis of cancer cells. BL-8040 was efficient, both alone and in combination withchemotherapy, in reducing malignant bone marrow cells and stimulating their cell death. In August 2013, we announced that BL-8040 has been shown in pre-clinical trials to be effective for the treatment of thrombocytopenia, or reducedplatelet production. In December 2013, we presented pre-clinical data at the annual meeting of the American Society of Hematology, or ASH Conference, showing thatBL-8040 directly inhibits AML cell growth and induces cell death, both in cell cultures and in mice engrafted with human AML cells. In addition, BL-8040showed the ability to induce mobilization of AML cells from the bone marrow into the blood circulation, thereby enhancing the chemotherapeutic effect ofARA-C (one of the standard-of-care chemotherapies for AML). The data also showed that BL-8040’s effects were even more robust in cells harboring theFLT3 mutation, and a synergistic effect was observed when BL-8040 was combined with the FLT3 inhibitor AC220 (Quizartinib). This data was alsopresented at the 2014 Annual Meeting of the Society of Hematologic Oncology, or SOHO Conference. Clinical Trials. In a Phase 1/2, open-label, dose escalation, safety and efficacy clinical trial in 18 multiple myeloma patients, BL-8040 demonstrated an excellentsafety profile at all doses tested and was highly effective in combination with G-CSF, in the mobilization of hematopoietic stem cells and white blood cellsfrom the bone marrow to the peripheral blood. All patients receiving transplants (n=17) exhibited rapid engraftment, with median time to neutrophil andplatelet recovery of 12 and 14 days, respectively, at the highest dose given (0.9 mg/kg). 29 In June 2013, we commenced a Phase 2 trial for BL-8040 for the treatment of patients with relapsed or refractory AML, or r/r AML. The study isbeing conducted at five sites in the United States, including MD Anderson Cancer Center in Houston, Memorial Sloan-Kettering Cancer Center in New York,Mayo Clinic in Jacksonville, Johns Hopkins University in Baltimore and Washington University in St. Louis, as well as at five well-known sites in Israel. Thestudy is a multicenter, open-label study under an IND, designed to evaluate the safety and efficacy profile of repeated escalating doses of BL-8040 in adultsubjects with r/r AML. The primary endpoints of the study are the safety and tolerability of the drug. Secondary endpoints include the pharmacokineticprofile of the drug and an efficacy evaluation, indicated by the extent of mobilization of cancer cells from the bone marrow to the peripheral blood, the levelof cancer cell death (apoptosis) and clinical responses. The study is comprised of two parts – the dose escalation phase and the current expansion phase at the highest tolerated dose found during theescalation phase. During the dose escalation phase, trial participants were recruited in cohorts of three patients at a time, and the dose was increased for eachsubsequent cohort depending on the safety and tolerability results of the previous cohort, which was determined by an independent data monitoringcommittee, or DMC. Twenty-two patients with r/r AML were enrolled in the dose escalation stage of the study (16 of whom received a dose of 1 mg/kg andhigher). Each patient received a once daily dose of BL-8040 monotherapy (from 0.5 to 2.0 mg/kg) on days 1-2 followed by the same dose of BL-8040 plusAra-C on days 3-7. Extensive pharmacodynamic parameters, such as mobilization of leukemic cells and induction of apoptosis, were assessed aftermonotherapy with BL-8040 using peripheral blood sampling and bone marrow aspirates at baseline and on day 3 prior to Ara-C administration. Clinicalresponse to treatment was evaluated by bone marrow biopsy on day 30. At the annual ASH conference in December 2015, we presented data from the dose escalation part of the trial. Results showed that BL-8040, as asingle agent and in combination with Cytarabine (Ara-C), was safe and well tolerated at all doses tested up to and including the highest dose level of 1.5mg/kg, with no major adverse events. The composite complete remission rate, including both complete remission (CR) and complete remission withincomplete blood count recovery (CRi), was 38% in subjects receiving only one cycle of BL-8040 treatment at doses of 1 mg/kg and higher (n=16). Patientsincluded in this part of the study were patients that had undergone a significant number of prior treatment cycles or that were refractory to inductiontreatment. Treatment with BL-8040 had a triple effect on the leukemic cells. First, following only two days of monotherapy, BL-8040 triggered an average40-fold mobilization of immature AML progenitor cells from the bone marrow to the peripheral blood, thereby sensitizing these cells to the Ara-Cchemotherapy and improving its efficacy. Second, BL-8040 showed a direct and significant apoptotic effect on the immature leukemia progenitor cells in thebone marrow following the two days of monotherapy. Last, BL-8040 induced leukemia progenitor cells towards differentiation, as evidenced by a 58%median decrease in the number of bone marrow leukemia progenitor cells, along with a three-fold increase in differentiated granulocytes, in the bone marrowbiopsy conducted on day 3 of the treatment cycle prior to the Ara-C treatment, as compared to the biopsy performed at baseline. Topline results of the full study are expected in the first quarter of 2016. In order to test a second AML treatment line, we commenced a Phase 2b trial in Germany as a consolidation treatment for AML patients who haveresponded to standard induction treatment. It will examine BL-8040 as part of a second stage treatment, termed consolidation therapy, to improve outcomesfor the approximately 70% of AML patients who have achieved remission after the standard initial treatment regimen, known as induction therapy. Theconsolidation therapy is aimed at eliminating the minimal residual disease left in the bone marrow after induction therapy that can lead to relapse in 40-60%of the patients within 12-18 months after entering remission. The Phase 2b trial, which is being conducted in collaboration with the University of Halle as sponsor and with the participation of two largeleukemia study groups in Germany, is a double-blind, placebo-controlled, randomized, multi-center study aimed at assessing the efficacy of BL-8040 inaddition to standard consolidation therapy in AML patients. The primary endpoint of the study is to compare the relapse free survival (RFS) time in AMLsubjects in their first remission during a minimum follow-up time of 18 months after randomization. In addition, pharmacodynamic measurements will beconducted in order to assess the minimal residual disease, and biomarker analyses will be performed to identify predictors of BL-8040 response. The studywill enroll up to 194 patients at up to 25 sites in Germany. AML patients between 18 and 75 years of age with documented first remission will be randomizedin a 1:1 ratio to receive high dose Cytarabine, either with BL-8040 or with a matching placebo, as consolidation therapy. Top-line results of this study areexpected in 2018. 30 We plan to commence a Phase 2a trial for BL-8040 for the treatment of a third population of AML patients, those with the FLT3-ITD mutation, in thesecond half of 2016. AML patients with the FLT3-ITD mutation exhibit poor response and high relapse rates when treated with chemotherapy, and exhibitonly transient response rates to FLT3 inhibitors. Preclinical data (presented at several conferences during 2014) show that by inhibiting the CXCR4 receptor,BL-8040 enhances the effect of FLT3 inhibition in killing FLT3-mutated leukemic cells. The Phase 1/2 trial, which will be conducted in collaboration withthe MD Anderson Cancer Center, is aimed at improving the response of FLT3-ITD mutated AML patients to treatment with a FLT3 inhibitor. We plan toenroll approximately 30-40 patients at two or three sites. Patients testing positive for the FLT3-ITD mutation will receive several treatment cycles of BL-8040in combination with a FLT3 inhibitor. The safety of the combination treatment, as well as the response rates to the treatment and the duration of the responseswill be evaluated. In March 2015, we announced successful top-line results from a Phase 1 trial for a fourth indication of BL-8040 as a novel treatment for themobilization of stem cells from the bone marrow to the peripheral blood circulation, where they can be harvested for transplant supporting the treatment ofhematological indications. The study was conducted at the Hadassah Medical Center in Jerusalem. It was performed on healthy volunteers and consisted oftwo parts. The first part of the study was a randomized, double-blind, placebo-controlled, dose-escalation study in three cohorts of eight participants each,with each participant receiving two consecutive injections of BL-8040. Results show that BL-8040 is safe and well tolerated up to a dose of 1 mg/kg, andthat dramatic mobilization of hematopoietic stem and progenitor cells, or HSPCs, was observed across all doses tested. The robust mobilization supports thefurther use of a single injection of BL-8040 for HSPC collection. In the second part of the Phase 1 study, eight healthy participants received a single injection of BL-8040 at the highest dose of 1 mg/kg, and fourhours later underwent a single, standard leukapheresis procedure. Robust and rapid stem-cell mobilization was evident in all treated participants, supportinga novel approach to stem-cell collection. The median level of collected stem cells was higher than 11 x 106 cells per kg, which is more than two-fold higherthan the target concentration, and five-fold higher than the minimum concentration, necessary for transplantation. In addition, the level of HPSCs in theperipheral blood circulation 24 hours after injection of BL-8040 enabled an additional apheresis on day 2, if needed. These data support the use of BL-8040as a single-agent, single-injection, one-day regimen for the collection of stem cells. In December 2015, we announced the filing of regulatory submissions required to commence a Phase 2 trial for use of BL-8040 in stem cellmobilization. The submission was made following a meeting with the FDA in October 2015 to discuss the BL-8040 stem cell mobilization developmentprogram. The open-label trial will be conducted as an investigator-initiated study in collaboration with the Division of Oncology and Hematology ofWashington University School of Medicine, and will enroll up to 24 donor/recipient pairs. On the donor side, the primary endpoint of the study is the abilityof a single injection of BL-8040 to mobilize sufficient amounts of cells for transplantation following up to two leukapheresis collections. On the recipientside, the study aims to evaluate the functionality and engraftment following transplantation of the BL-8040 collected graft. The trial is expected tocommence shortly after receipt of regulatory approval, anticipated in the first quarter of 2016. A fifth clinical development program for BL-8040 is the assessment of the drug for the treatment of hypoplastic myelodysplastic syndrome, orhMDS, and aplastic anemia, or AA. One type of treatment for these bone-marrow failure conditions consists of immunosuppressive therapy with hATG andcyclosporine; however, a sizable fraction of patients do not respond to this therapy. Preclinical data suggest that BL-8040 promotes stem cell proliferationand differentiation thereby allowing recovery of hematopoiesis (formation and development of blood cells). The data show that treatment of mice with BL-8040 contributes to bone marrow regeneration, and increases the number of progenitor cells and the mature components of the blood and immune systems. In November 2015, we announced the commencement of a Phase 1/2 trial, in collaboration with the MD Anderson Cancer Center, for BL-8040, incombination with standard of care immunosuppressive therapy, as a treatment for hMDS and AA. The open-label trial will examine BL-8040’s ability toimprove bone marrow cellularity and peripheral blood counts in up to 25 patients suffering from these bone marrow failure conditions. The study’s primaryendpoint is to evaluate the safety and tolerability of treatment with BL-8040 on top of the standard immunosuppressive regimen of Anti-ThymocyteGlobulin (hATG), Cyclosporine and Methylprednisolone (steroids) in hMDS and AA patients. Secondary endpoints include assessment of the clinicalefficacy (response rate), time and duration of response to the treatment, and overall survival following treatment. Safety and efficacy will be assessed atdefined time points throughout the study. Duration of response and overall survival will also be assessed as part of the study’s long term follow up protocol. 31 In January 2016, we announced a collaboration with MSD, known as Merck in the U.S. and Canada, in the field of cancer immunotherapy. We planto sponsor and conduct a Phase 2 study investigating BL-8040 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy, in patientswith metastatic pancreatic adenocarcinoma. Findings in the field of immuno-oncology suggest that CXCR4 antagonists such as BL-8040 may be effective ininducing the migration of anti-tumor T cells into the tumor micro-environment. KEYTRUDA® is a humanized monoclonal antibody that works by increasingthe ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA® blocks the interaction between PD-1 and its ligands, PD-L1 andPD-L2, thereby activating T- lymphocytes, which may affect both tumor cells and healthy cells. The study is an open-label, multicenter, single-arm trialdesigned to evaluate the clinical response, safety and tolerability of the combination of BL-8040 and KEYTRUDA® as well as multiple pharmacodynamicparameters, including the ability to improve infiltration of T cells into the tumor and their reactivity. The study is planned to commence by mid-2016. Uponcompletion of the study, or at any earlier point, both parties will have the option to expand the collaboration to include a pivotal registration study. BL-7010 BL-7010 is a novel, non-absorbable, orally available, high-molecular-weight co-polymer intended for the treatment of celiac disease and gluten sensitivity. Ithas a high affinity for gliadins, the immunogenic proteins present in gluten that cause an immune response in patients with celiac disease. BL-7010effectively masks gliadins from enzymatic degradation and prevents the formation of immunogenic peptides that trigger the immune system. BL-7010 isexcreted with gliadin from the digestive tract, preventing the formation and absorption of gliadin peptides. This significantly reduces the immune responsetriggered by gluten. We in-licensed the exclusive, worldwide rights to develop, market and sell BL-7010 from Valorisation-Recherche, Limited Partnership,or Univalor in February 2011. Celiac Disease. Celiac disease is a chronic, autoimmune, inflammatory disease of the small intestine characterized by damage to the lining of the smallintestine and typically leads to dyspepsia, malabsorption and a variety of other symptoms. It occurs in genetically predisposed individuals and is caused byan immunological reaction to gluten, found in wheat, barley and rye. Estimates suggest that 1% of the world’s population is affected by celiac disease, andprevalence is expected to increase dramatically with improved diagnosis and awareness of the disease. There are currently no treatments approved for celiacdisease and the only treatment option is a life-long, strict, gluten-free diet, which is difficult to maintain both due to food contamination with gluten, as wellas eating habits in a social setting. Estimates suggest that approximately 30% of patients on a gluten-free diet are still symptomatic to some extent. Non-Celiac Gluten Sensitivity (NCGS). NCGS is defined as a clinical condition induced by ingestion of gluten and leading to intestinal and/orextra-intestinal symptoms in subjects in which celiac disease and wheat allergy have been ruled out. The overall prevalence of NCGS in the generalpopulation is considered to be higher than celiac disease. However the exact number is still unknown and the estimates vary widely, mainly due to theabsence of biomarkers and the fact that many patients are self-diagnosed. As is the case with celiac disease, a gluten-free diet is currently the only therapyavailable for persons with NCGS. The total market for gluten-free products has grown to about 40 million consumers, of whom only up to four million sufferfrom celiac disease. This reinforces the large potentially available market size for products addressing NCGS. Preclinical Results. BL-7010 was evaluated in preclinical safety and efficacy studies. As we received conditional approval for device designation in Europe,the safety data available included a 6-week rat toxicity study and a biocompatibility package of studies. BL-7010 was found to be well tolerated in the rattoxicity study conducted at a dose range of 500 mg/kg to 3,000 mg/kg body weight/day by oral gavage. In addition, BL-7010 was found to have nomutagenic activity, to have no local irritation effect in the gastrointestinal tract and is not considered to be a sensitizer. 32 BL-7010 was evaluated in well-validated murine models of celiac disease (transgenic mice carrying the human DQ8 gene, sensitized to gluten). Itwas found that BL-7010 significantly reduced the damage to the small intestine and the immune response triggered by gluten or gliadin. In preclinical pharmacokinetics studies, it was found that BL-7010 is not absorbed systemically and is excreted in the feces, hence presenting a verygood safety profile. It was also found that BL-7010 interacts specifically with gliadin, and does not interact with tested vitamins, selected drugs or additionalselected proteins. Clinical Trial. In December 2013, we commenced a Phase 1/2 trial for BL-7010 at Tampere Hospital in Finland, a leading site for celiac research. The study was atwo-part (single and repeated), double-blind, placebo-controlled, dose escalation study of BL-7010 in up to 40 patients. The primary objective of the studywas to assess the safety of single and repeated ascending doses of BL-7010 in well-controlled celiac patients. Secondary objectives included an assessment ofthe systemic exposure, if any, of BL-7010 in the study patients. The study was conducted based on a device pre-clinical submission package under anapproval from the Finnish National Supervisory Authority for Welfare and Health (Valvira). During the single-administration part of the study, six dose levels of BL-7010 were evaluated compared to placebo in a 6+2 standard design, withsix patients on BL-7010 and two patients on placebo. This escalation stage reached the highest planned dose with no serious or dose-limiting adverse events.All planned doses were safe and well-tolerated with all patients completing this part of the study. During the second, repeated-administration part of thestudy, each patient received either 3 grams of BL-7010 or placebo for 14 days, three times per day, in the same 6+2 standard design. BL-7010 was well-tolerated over 14 days of treatment, with only one patient not completing the 14-day treatment period. Gastrointestinal-related adverse events (primarilydiarrhea) were reported in six out of eight patients, though none were considered serious or dose-limiting and were also observed in one of the two patients onplacebo. In light of these findings, and based on pre-clinical studies where the efficacious dose is predicted to be lower than the dose tested in the repeatedadministration stage of the study, we filed an amendment to further investigate lower repeated doses of BL-7010 in this study in order to select the optimaldose for the upcoming efficacy study. In November 2014, we reported the final results of the study, including the results of the additional cohort tested. The final results of the study fullyconfirmed the positive unblinded results previously reported in July, and showed a substantially reduced level of gastrointestinal-related adverse events.Based on these results, we selected the dosing regimen of one gram, three times per day, of BL-7010 as the as the optimal repeated dose in the next efficacystudy for celiac patients. In addition, pharmacokinetic analyses revealed no systemic exposure of BL-7010 in plasma and urine samples from all patients at all doses and timepoints tested, both in the single- and repeated-dose regimens. In January 2016, we received confirmation regarding the classification of BL-7010 as a ClassIIb medical device in the European Union. We believe this classification could significantly accelerate the development of BL-7010 in Europe. Over the last year, we have invested considerable efforts in examining alternative development and commercialization pathways for BL-7010, inaddition to the celiac disease pathway, including as a food supplement, in order to potentially address the multi-billion dollar market for gluten sensitivity.We believe the gluten sensitivity market has a significantly shorter time to market than drug or device pathways, especially in the U.S. market, where thedevice pathway is not available for BL-7010. We are currently conducting a number of activities towards the development of BL-7010 as a food supplement,including the development of a suitable product formulation, preparation of the documents necessary for a GRAS designation submission, and preparationsfor a relatively small clinical trial to support the marketing efforts we may conduct regarding gluten and/or gluten sensitivity. We expect to complete theseactivities by mid-2017 in order to support partnering discussions for the food supplement market in the U.S. and other relevant territories at that time. We willalso continue to evaluate the pathway for celiac disease in Europe and will make a decision about the timing and scope of the next efficacy study forEuropean registration over the next few months. 33 BL-5010 BL-5010 is a novel medical device containing a novel, acidic, aqueous solution and applicator for the non-surgical removal of benign skin lesions.It offers an alternative to painful, invasive and expensive removal treatments including cryotherapy, laser treatment and surgery. Since the treatment is non-invasive, it poses minimal infection risk and eliminates the need for anesthesia, antiseptic precautions and bandaging. The pre-filled device controls andstandardizes the volume of solution applied to a lesion, ensuring accurate administration directly on the lesion and preventing both accidental exposure ofthe healthy surrounding tissue and unintentional dripping. It has an ergonomic design, making it easy to handle, and has been designed with a childproofcap. BL-5010 is applied topically on a skin lesion in a treatment lasting a few minutes with the pen-like applicator and causes the lesion to gradually dry outand fall off within one to four weeks. We have received European confirmation from BSI of the regulatory pathway classification of BL-5010 as a Class IIamedical device. We in-licensed the exclusive, worldwide rights to develop, market and sell BL-5010 from IPC in November 2007. Development and Clinical History. We originally developed BL-5010 for the treatment of skin lesions such as seborrheic keratosis, or SK, andactinic keratosis. Clinically diagnosed skin lesions, or a growth or patch of skin that does not resemble the area surrounding it, are very common and oftenconstitute a cosmetic and functional annoyance. Moles and warts are other examples of skin lesions. In 2009 and 2010 we conducted a successful Phase 1/2clinical trial in 60 patients with SK in Germany and the Netherlands to assess the safety and efficacy of BL-5010 in completely removing the lesion and toassess the cosmetic outcome of the novel treatment. A pivotal, CE Mark registration trial for BL-5010 had been planned for 2014. However, duringdiscussions in recent years with potential partners for the development and commercialization of BL-5010, we learned that they had more interest in thepossibilities of BL-5010 for OTC indications than in its use by physicians for SK and other lesions. In December 2014, we entered into the out-licensingarrangement with Omega Pharma described below and the development activities for BL-5010 will be restricted for the time being to OTC indications. Development and Commercialization Arrangement. In December 2014, we entered into an exclusive out-licensing arrangement with Omega Pharmafor the rights to BL-5010 for over-the-counter, or OTC, indications in the territory of Europe, Australia and additional selected countries. We will retain theOTC rights to BL-5010 in the United States and the rest of the world, as well as the non-OTC rights on a global basis. Under our out-licensing arrangementwith Omega Pharma, Omega Pharma is obligated to use commercially reasonable best efforts to obtain regulatory approval in the licensed territory for at leasttwo OTC indications and to commercialize BL-5010 for those two OTC indications. In addition, Omega Pharma will sponsor and manufacture BL-5010 inthe relevant regions. Omega Pharma will pay us an agreed amount for each unit sold, and we will be entitled to certain commercial milestone payments. Inaddition, we will have full access to all clinical and research and development data generated during the performance of the development plan and may usethese data in order to develop or license the product in other territories and fields of use where we retain the rights. During 2015, Omega Pharma conducted a30-patient, open-label clinical study in Turkey to evaluate the advantages of BL-5010 in one of the intended OTC indications. Study results indicate thatBL-5010 is safe and efficacious. Omega Pharma submitted an application for CE Mark designation for BL-5010 during the third quarter of 2015, and hascompleted the initial manufacturing process automation to support the product launch. The commercial launch of the first OTC indication for this product isexpected during 2016. As a result of this out-licensing arrangement, as well as the previous discussions with other potential partners for this product, thedevelopment activities for BL-5010 are currently focused on OTC indications. However, we may decide to continue development of BL-5010 for non-OTCindications, including, but not limited to, SK, or for OTC indications in territories not out-licensed to Omega Pharma, primarily the U.S. Other Therapeutic Candidates BL-8020 BL-8020 is an orally available treatment for the hepatitis C virus, or HCV, and other viral indications, with a unique mechanism of action involvingthe inhibition of virus-induced autophagy in host cells. In April 2013, we commenced a Phase 1/2 clinical trial to evaluate the safety, tolerability andeffectiveness of BL-8020 at two sites in France. In January 2014, we entered into a collaboration agreement with the licensors of the compound whereby, inconsideration for the payment of future royalties to us, we terminated the license agreement, the licensors agreed to take over development of the compoundand we agreed to supply, at the licensors’ request and for full payment, the drug product needed for a clinical trial to be administered by the licensors. InAugust 2014, the licensors decided to terminate the ongoing Phase 1/2 trial in HCV due to a very slow recruitment rate, and are now determining the nextsteps in the clinical development plan of the compound, including an assessment regarding potential additional viral indications for development. 34 BL-1040 BL-1040 (now called “Bioabsorbable Cardiac Matrix,” or BCM), is a novel, resorbable polymer solution for use in the prevention of ventricularremodeling that may occur in patients who have suffered an acute myocardial infarction, or AMI. BL-1040 is being developed as a medical device. In 2009, we entered into an out-licensing arrangement with Bellerophon with regard to BL-1040, which we amended in January 2015. Under thisarrangement, Bellerophon is obligated to use commercially reasonable efforts to complete clinical development of, and to commercialize, BL-1040 or aproduct related thereto. To date, we have received $17.0 million from Bellerophon, and we are entitled to receive up to an additional $265.5 million fromBellerophon upon achievement of certain development, regulatory, and commercial milestones. In addition, we are entitled to receive from Bellerophonroyalties at the rate of 11-15% from net sales of any product developed under the arrangement. Pursuant to the January 2015 amendment, a certain milestoneand related payments have been adjusted, but the total potential milestone payments to be paid to us under the license agreement remain the same. In December 2011, Bellerophon commenced PRESERVATION I, a CE mark registration clinical trial of BL-1040. Enrollment for this trial wascompleted in December 2014, with 303 AMI patients having been recruited and treated. In July 2015, Bellerophon reported top-line results fromPRESERVATION I, showing no statistically significant difference between patients treated with BCM versus placebo for both the primary and the secondaryendpoints of the study. We have not yet received any notification from Bellerophon about their plans regarding the future of this program. We are obligated to pay 28% of all net consideration received under this arrangement to B.G. Negev Technologies, the party from which we in-licensed BL-1040 in 2005. We have agreed to pay Ramot at Tel Aviv University Ltd., or Ramot, a portion of the payments we make to B.G. NegevTechnologies in connection with the in-license arrangement to satisfy contractual obligations between B.G. Negev Technologies and Ramot with respect tocertain intellectual property rights to the licensed technology. We have also agreed to indemnify Ramot and certain of its related parties in connection withour use of the technology we in-licensed from B.G. Negev Technologies. Therapeutic Candidates in Preclinical Development As of the date of this annual report, we have one preclinical stage therapeutic candidate. BL-9020 is a novel monoclonal antibody treatmentdesigned to prevent immune-mediated destruction of insulin-producing beta cells in the pancreas. It was developed to treat Type 1 diabetes in early stagepatients, during what is known as the “honeymoon period,” where the pancreatic beta cells have not been completely destroyed and continue to secreteinsulin. BL-9020 targets NKp46, a unique target that is involved in the innate response against the pancreas. Pre-clinical studies in mouse models of Type 1diabetes suggest that BL-9020 can inhibit beta cell death, thus preventing full maturation of the disease. This effect could significantly delay, andpotentially prevent, the need for chronic insulin use by Type 1 diabetes patients, as well as provide a potential benefit in minimizing diabetes-relatedcomplications. Based on its mechanism of action, additional therapeutic indications may be relevant to BL-9020 as well, and we are currently evaluatingthese additional indications. We in-licensed BL-9020 from the Yissum Research Development Company of the Hebrew University of Jerusalem Ltd., B.G.Negev Technologies and Hadasit Medical Research Services and Development Ltd., or Hadasit (the technology transfer company of Hadassah MedicalOrganization). Termination of Therapeutic Candidates As part of our business strategy, we continue to actively source, rigorously evaluate and in-license selected therapeutic candidates. In line with thisstrategy, during 2015 and the period subsequent thereto through the date of this report, we terminated one clinical and three pre-clinical stage therapeuticcandidates. BL-7040 was an orally available synthetic oligonucleotide which was in clinical development for the treatment of inflammatory bowel disease, orIBD. Over the last two years, we invested significant efforts in attempting to locate a potential co-development, collaboration or licensing partner for thisasset, and conducted numerous discussions with both mid-sized and large pharma companies in this direction. Ultimately, due to a combination of factors, wewere unsuccessful in our efforts and have notified the licensors of our decision to terminate the project. 35 BL-8030 was a small molecule which we were developing for the treatment of hepatitis C. The compound was in pre-clinical development incollaboration with Jiangsu Chia-tai Tianqing Pharmaceutical Co., Ltd., or CTTQ, for China and Hong Kong. For addition details regarding CTTQ, see “—Other Out-licensing/Collaboration Agreements.” BL-1110 was a small molecule which we were developing for the treatment of neuropathic pain. BL-9010was a bi-specific antibody intended to treat severe allergies and asthma. These three pre-clinical projects were terminated due to lack of efficacy and otherscientific considerations as well as market considerations. Product Development Approach We seek to develop a pipeline of promising therapeutic candidates that exhibit distinct advantages over currently available therapies or addressunmet medical needs. Our resources are focused on advancing our therapeutic candidates through development and toward commercialization. Our currentdrug development pipeline consists of six therapeutic candidates. Our focus is principally on the therapeutic areas of oncology and immunology. However, we may also in-license therapeutic compounds outside ofthese areas in connection with our strategic collaboration with Novartis, as well as to a limited extent for our independent pipeline as the opportunities arise. We have established relationships with various universities, academic and research institutions and biotechnology companies that permit us toidentify and select compounds at various stages of clinical and pre-clinical development. Initially, we focused on Israeli institutions as the primary source ofour therapeutic candidates. In Israel, we established close relationships with the Technion – Israel Institute of Technology, or Technion, Ben GurionUniversity of the Negev, Hebrew University of Jerusalem, Tel Aviv University, Bar Ilan University and the Weizmann Institute. More recently, we have begunto source therapeutic candidate opportunities worldwide. Although our focus since inception has been on identifying early development stage therapeuticcandidates, over the last few years we have begun evaluating clinical and later-stage pre-clinical candidates in order to introduce therapeutic candidates witha greater potential for clinical success to our pipeline. Once we identify a candidate, it enters our internal evaluation system and undergoes our rigorous selection process. We employ internal researchefforts to evaluate candidates. We evaluate each compound’s potential for success by looking at the candidate’s efficacy, safety, total estimated developmentcosts, technological novelty, patent status, market potential and approvability. Following evaluation and diligence, as necessary, a therapeutic candidatemay also be evaluated by our Scientific Advisory Board and by disease-specific advisors for external scientific review. At each step of the process, atherapeutic candidate is subjected to critical evaluation and potential termination. Our approach is consistent with our objective of proceeding only withtherapeutic candidates that we believe exhibit a relatively high probability of therapeutic and commercial success. To date, we have screened over 2,300compounds, presented more than 70 candidates for final internal evaluation, initiated development of 45 therapeutic candidates and terminated 39 feasibilityprograms. Once we approve a compound, we in-license the candidate and any related technology and our drug development team and project managersidentify, define and oversee the necessary steps to development and commercialization. The design of an appropriate development plan is critical to ourapproach. We design experiments and studies that challenge the identified weaknesses of a compound, and often verify initial data by testing the compoundin additional animal models, as well as in early-stage clinical studies. Our development approach focuses on identifying and following what we believe will be successful pathways to commercialization. Our team hasthe expertise to move our candidates through all phases of preclinical and clinical development. Our staff includes professionals with extensive experience indrug development, chemistry, manufacturing and controls, or CMC, preclinical experimentation, clinical development, regulatory affairs, intellectualproperty protection and business development. We perform all of our development activities in our certified good laboratory practices, or GLP, gradechemistry laboratory or outsource these activities to contract research organizations, or CROs, that meet applicable regulatory standards. Following thegeneration of sufficient preclinical data, applications to regulatory authorities for the initiation of clinical trials are submitted. Phase 1 and 2 clinical trials arethen conducted to demonstrate clinical proof of safety and efficacy. Following this stage of development we seek either to sublicense the therapeuticcandidate to a pharmaceutical partner or, in certain circumstances, we may elect to complete development by ourselves. To the extent we in-license laterstage compounds, we may eliminate certain of these development efforts. 36 Collaboration and Out-Licensing Agreements Investment and Collaboration Agreement with Novartis In December 2014, we entered into a multi-year strategic collaboration agreement with Novartis designed to facilitate development andcommercialization of Israeli-sourced drug candidates. Novartis will evaluate projects identified and presented by us for co-development and potential futurelicensing under the collaboration. The companies intend to co-develop a number of pre-clinical and early clinical therapeutic projects through clinical proof-of-concept. As part of the agreement, Novartis made an initial equity investment in BioLineRx of $10 million, representing 12.8% of our then current sharesoutstanding. See “Item 10. Additional Information — Material Contracts — Investment and Collaboration Agreement with Novartis.” Collaboration Agreement with MSD (Merck) In January 2016, we announced a collaboration with MSD, known as Merck in the U.S. and Canada, to support a Phase 2 study investigating BL-8040 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy, in patients with metastatic pancreatic cancer. The Phase 2 study willevaluate the clinical response, safety and tolerability of the combination of these therapies as well as multiple pharmacodynamic parameters, including theability to improve infiltration of T cells into the tumor and their reactivity. Per the terms of the agreement, we will sponsor and perform the study, which isplanned to commence by mid-2016, and a portion of the study costs will be funded by Merck. Upon completion of the study, or at any earlier point, bothparties will have the option to expand the collaboration to include a pivotal registration study. Out-Licensing Agreement with Omega Pharma In December 2014, we entered into an exclusive out-licensing arrangement with Omega Pharma for the rights to BL-5010 for over-the-counter, orOTC, indications in the territory of Europe, Australia and additional selected countries (collectively, the “Territory”). We will retain all OTC rights to BL-5010 in the United States and the rest of the world, as well as all non-OTC rights on a global basis. Omega Pharma is obligated to make all necessary efforts tolaunch a licensed product commercially in the Territory in 2016, including having secured sufficient licensed product supply to support such commerciallaunch. In addition, Omega Pharma is obligated to use commercially reasonable best efforts to obtain regulatory approval in the Territory for at least two OTCindications and to commercialize BL-5010 for those two OTC indications. Omega has the right to sublicense BL-5010 in arm’s-length transactions consistent with the terms and conditions of its license agreement with us. Incertain agreed-on countries in the Territory, Omega Pharma is obligated to commercialize licensed products itself, through its affiliates or throughsublicensees approved by us; in other countries in the Territory, Omega Pharma does not need our prior written approval for sublicensing but must provide uswith a copy of the executed sublicense agreement. Omega Pharma is obligated to pay us an agreed amount for each unit sold, and we will be entitled to certain commercial milestone payments. Wemust pay a portion of all net consideration we receive from Omega Pharma, within our standard range of sublicense receipt consideration, to IPC, thecompany from which we initially in-licensed the development rights to BL-5010. See “— In-Licensing Agreements — BL-5010.” We have the right to prosecute and maintain the patents for BL-5010 in the Territory, and Omega Pharma will bear the cost of all renewal fees fee forpatents and the other costs of prosecution and maintenance up to an agreed limit. We will have full access to all clinical and research and development data generated during the performance of the development plan and may usethese data in order to develop or license the product in other territories and fields of use where we retain the rights. Our agreement with Omega will continue in effect until the cessation of all commercialization in the Territory. After the fifth anniversary of the firstcommercial sale of a licensed product, either party may terminate the agreement by giving at least 18 months’ prior written notice to the other party. Eitherparty may terminate the agreement (a) by providing 60 days’ written notice of a material breach of the agreement by the other party if the breaching partydoes not cure the breach during that time or (b) with immediate effect on written notice to the other party if there is a change of control of the other party. Theparties have agreed that the announced acquisition of Omega Pharma by Perrigo Company Plc is a change of control event that will not give rise to a right onour part to terminate the license agreement. In addition, we have the right to terminate the agreement if Omega Pharma does not fulfill any of its obligationsof diligence with respect to launching a licensed product or obtaining regulatory approval for, and commercializing, licensed products as described above. 37 Other Out-licensing/Collaboration Agreements Bellerophon In 2009, we entered into a licensing arrangement with Bellerophon, pursuant to which we granted Bellerophon an exclusive, worldwide license todevelop, manufacture and commercialize BL-1040 for use in the prevention, mitigation and treatment of injury to the myocardial tissue of the heart.Bellerophon is obligated to use commercially reasonable efforts to complete clinical development of, and to commercialize, BL-1040 or a product relatedthereto. We were responsible for the costs of the completed Phase 1/2 studies. Bellerophon is responsible for the costs associated with conducting all otherdevelopment and regulatory activities of BL-1040, including those costs relating to the completion of its clinical development, the conduct and funding ofits commercialization and the prosecution and maintenance of patents. Pursuant to the agreement, Bellerophon paid us an initial up-front payment equal to $7.0 million on the effective date of the agreement and in April2010 paid us a milestone payment of $10.0 million. We are entitled to receive up to an additional $265.5 million from Bellerophon upon achievement ofcertain development, regulatory, and commercial milestones. In addition, we are entitled to receive from Bellerophon royalties from net sales of any productdeveloped under the agreement ranging from 11% to 15%, depending on net sales levels achieved by Bellerophon or its sublicensees, as applicable. Bellerophon has the right to sublicense BL-1040 in arm’s-length transactions consistent with the terms and conditions of the license andcommercialization agreement. If Bellerophon receives an upfront payment under a sublicense, Bellerophon is required to pay us 10% of such payment. Wehave the option to manufacture at least 20% of BL-1040 products pursuant to the terms of a supply agreement to be negotiated in good faith, provided thisoption is exercised six months prior to the date Bellerophon intends to file for regulatory approval for BL-1040 in the United States. Bellerophon bears the costs of the worldwide prosecution and maintenance of the patents for BL-1040. We have the right to intervene and maintainour patents in any country where Bellerophon declines to file or prosecute those patents, or if it does not take actions necessary to avoid abandonment ofthose patents. Our agreement with Bellerophon expires on a product-by-product basis and a country-by-country basis on the date royalties are no longer payable inconnection with the product in a given country. Either party may terminate the agreement by providing 90 days’ written notice of a material breach of theagreement by the other party if the breaching party does not cure the breach during that time. In addition, Bellerophon may terminate the agreement upon 60days’ prior written notice if Bellerophon determines, in its sole judgment, that the results of the development program under the agreement do not warrantfurther development of products under the agreement. In January 2015, we reached an agreement with Bellerophon to amend the BL-1040 license agreement. The amendment changed a certain milestoneand related payments, but the total potential milestone payments to be paid to us under the license agreement remain the same. We must pay 28% of all net consideration we receive from Bellerophon to B.G. Negev Technologies, the institution from which we initially in-licensed the development rights to BL-1040. See “— In-Licensing Agreements — BL-1040.” We have agreed to pay Ramot a portion of the payments wemake to B.G. Negev Technologies in connection with the in-license arrangement to satisfy contractual obligations between B.G. Negev Technologies andRamot with respect to certain intellectual property rights to the licensed technology. CTTQ In June 2013, we signed an out-licensing agreement with CTTQ the leading Chinese pharmaceutical company in the liver disease therapeutic area,granting CTTQ exclusive rights to develop, manufacture and commercialize BL-8030, an orally available treatment for HCV, in China and Hong Kong. In January 2016, we received notice from CTTQ that it was exercising its right to terminate the agreement with us, effective in April 2016. We havealso provided notice to the licensors of BL-8030 of the termination of our in-licensing agreement with them, which took effect in early March 2016. 38 JHL In January 2014, we signed a collaboration agreement with JHL Biotech, or JHL, a biopharmaceutical company that develops, manufactures, andcommercializes biologic medicines, pursuant to which we will collaborate with JHL in the development and commercialization of BL-9020, a novelmonoclonal antibody for the treatment of Type 1 diabetes. JHL will be responsible for all process development and manufacturing of BL-9020 during its pre-clinical and clinical development stages, and we will be responsible for all pre-clinical development of BL-9020. Responsibility for clinical development ofBL-9020 will be shared by the parties on a regional basis. Under the terms of the agreement, JHL will have global manufacturing rights to BL-9020, alongwith development and commercialization rights in China and Southeast Asia, or the JHL Territory, and we will have development and commercializationrights in the rest of the world. In all development and manufacturing of BL-9020, JHL will adhere to FDA guidelines and regulations. Each party will haverights to all development and regulatory data generated under the agreement in order to commercialize BL-9020 in its respective territory. Each party will be entitled to single-digit royalties on the sale of BL-9020 in the other party’s respective territory. We must pay 16% of all netconsideration we receive from JHL to Yissum, B.G. Negev Technologies and Hadasit Medical Research Services and Development Ltd., the companies fromwhich we initially in-licensed the development rights to BL-9020. In addition, we are required to pay 12% of all net consideration we receive as a result ofthe out-licensing of BL-9020, including without limitation the net consideration we receive from JHL, to a party that is assisting us in the initialdevelopment of BL-9020. JHL has the right to sublicense BL-9020 in the JHL Territory in arm’s-length transactions consistent with the terms and conditions of the licenseagreement. Our agreement with JHL expires upon the later of the date on which JHL reasonably expects no additional sales of product in the JHL Territory orthe date on which on which we reasonably expect that we will no longer receive additional sublicensing consideration or net sales. Either party mayterminate the agreement by providing either 30 or 60 days’ written notice (depending on which provision of the agreement has been breached) of a materialbreach of the agreement by the other party if the breaching party does not cure the breach during that time. In-Licensing Agreements We have in-licensed and intend to continue to in-license development, production and marketing rights from selected research and academicinstitutions in order to capitalize on the capabilities and technology developed by these entities. We also seek to obtain technologies that complement andexpand our existing technology base by entering into license agreements with pharmaceutical and biotechnology companies. When entering into in-licenseagreements, we generally seek to obtain unrestricted sublicense rights consistent with our primarily partner-driven strategy. We are generally obligated underthese agreements to diligently pursue product development, make development milestone payments, pay royalties on any product sales and make paymentsupon the grant of sublicense rights. We generally insist on the right to terminate any in-license for convenience upon prior written notice to the licensor. The scope of payments we are required to make under our in-licensing agreements is comprised of various components that are paid commensuratewith the progressive development and commercialization of our drug products. Our in-licensing agreements generally provide for the following types of payments: •Revenue sharing payments. These are payments to be made to licensors with respect to revenue we receive from sub-licensing to thirdparties for further development and commercialization of our drug products. These payments are generally fixed at a percentage of the totalrevenues we earn from these sublicenses. 39 •Milestone payments. These payments are generally linked to the successful achievement of milestones in the development and approval ofdrugs, such Phases 1, 2 and 3 of clinical trials and approvals of new drug applications, or NDAs. •Royalty payments. To the extent we elect to complete the development, licensing and marketing of a therapeutic candidate, we aregenerally required to pay our licensors royalties on the sales of the end drug product. These royalty payments are generally based on the netrevenue from these sales. In certain instances, the rate of the royalty payments decrease upon the expiration of the drug’s underlying patentand its transition into a generic drug. Certain of our agreements provide that if a licensed drug product is developed and sold through adifferent corporate entity, the licensors may elect to receive shares in such company instead of a portion of the royalties. •Additional payments. In addition to the above payments, certain of our in-license agreements provide for a one-time or periodic paymentthat is not linked to milestones. Periodic payments may be paid until the commercialization of the product, either by direct sales orsublicenses to third parties. Other agreements provide for the continuation of these payments even following the commercialization of thelicensed drug product. The royalty and revenue sharing rates we agree to pay in our in-licensing agreements vary from case to case but in most cases range from 20% to29.5% of the consideration we receive from sublicensing the applicable therapeutic candidate. We are required to pay a substantially lower percentage,generally less than 5%, if we elect to commercialize the subject therapeutic candidate independently. In addition, milestone payments are not generallypayable if revenue-sharing from an out-licensing transaction is greater than any relevant payments due under our in-licensing agreements. The following are descriptions of our in-licensing agreements associated with our therapeutic candidates under clinical development. In addition tothe in-licensing agreements discussed herein, we have entered into other in-licensing arrangements in connection with our therapeutic candidates in theadvanced preclinical and feasibility stages. BL-8040 In September 2012, we in-licensed the rights to BL-8040 under a license agreement with Biokine. Pursuant to the agreement, Biokine granted us anexclusive, worldwide, sublicensable license to develop, manufacture, market and sell certain technology relating to a short peptide that functions as a highaffinity antagonist for CXCR4 and the uses thereof. There were no upfront payments due under the agreement. We are obligated to pay a monthly development fee for certain development services thatBiokine has committed to provide to us under the agreement, as follows: • during the initial 12-month period following execution of the agreement; $100,000 per month; •after the initial 12-month period and continuing until the earlier of (i) completion of the clinical trials contemplated under the agreement or(ii) grant of a sublicense, as follows: $65,000 per month for the following 12 months, $60,000 per month for the next six months and$50,000 per month thereafter until the earlier of the completion of the two clinical trials contemplated by the parties or the grant of asublicense pursuant to the agreement. We are currently paying a development fee of $50,000 per month, which is expected to end followingcompletion of the r/r AML study in the first quarter of 2016. We are responsible for paying all development costs incurred by the parties in carrying out the development plan. The agreement contemplates two non-comparative clinical trials studying the effects of BL-8040 in two indications. If both clinical trialscontemplated under the agreement are completed within a given period, we are obligated to pay Biokine a bonus of $250,000. This is the sole milestonepayment due under the agreement. Should we independently develop manufacture and sell products (excluding sublicensing) containing the licensed technology, we are obligated tomake royalty payments of 10% of net sales, subject to certain limitations. 40 The agreement also grants us the right to grant sublicenses for the licensed technology. In such event, we are required to pay Biokine a royaltypayment of 40% of the amounts we receive as consideration in connection with any sublicensing, development, manufacture, marketing, distribution or saleof the licensed technology. Before we in-licensed BL-8040, Biokine had received funding for the project from the OCS, and as a condition to OCS giving its consent to our in-licensing of BL-8040, we were required to agree to abide by any obligations resulting from such funding. However, if we become legally required to makepayments to the OCS in respect of grants made to Biokine, we have the right to offset the full amount of such grants from any payments otherwise due toBiokine as sublicensing royalties as described above. We are obligated under the agreement with Biokine to make commercially reasonable good faith efforts to sublicense or commercialize BL-8040 forfair consideration. If we do not fulfill this obligation within 24 months after completion of the development plan, all of the rights and responsibilities withrespect to commercialization of the licensed technology will revert to Biokine, and our obligation to pay royalties for sales of any licensed products orsublicensing as described above will revert to Biokine. We have the first right to prepare, file, prosecute and maintain any patent applications and patents, in respect of the licensed technology and anypart thereof, at our expense, provided that we are required to consult with Biokine regarding patent prosecution and patent maintenance. In addition, we havethe right to take action in the prosecution, prevention, or termination of any patent infringement of the Licensed Technology. We are responsible for all theexpenses of any patent infringement suit that we bring, including any expenses incurred by Biokine in connection with such suits, with such expensesreimbursable from any sums recovered in such suit or in the settlement thereof for. After such reimbursement, if any funds remain, both we and Biokine areeach entitled to a certain percentage of any remaining sums. The agreement will remain in full effect until the expiration of all of our royalty and sublicense revenue obligations to Biokine, determined on aproduct-by-product and country-by-country basis. We may terminate the agreement for any reason on 90 days’ prior written notice to Biokine. Either partymay terminate the agreement for a material breach by the other party if the breaching party is unable to cure the breach within 30 days after receiving writtennotice of the breach from the non-breaching party. With respect to any termination for a material breach, if the breach is not susceptible to cure within thestated period and the breaching party uses diligent, good faith efforts to cure such breach, the stated period will be extended by an additional 30 days. Inaddition, either party may terminate the agreement upon the occurrence of certain bankruptcy events. Termination of the agreement will result in a loss of all of our rights to the drug and the licensed technology, which will revert to Biokine. Inaddition, any sublicense of ours will terminate provided that, upon such termination and at the request of the sublicensee, Biokine will be required to enterinto a separate license agreement with the sublicensee on substantially the same terms as those contained in the applicable sublicense agreement. BL-7010 In February 2011, we in-licensed the rights to BL-7010 under a license agreement with Univalor, the technology transfer office for the University ofMontreal. Under the agreement, Univalor granted us an exclusive, worldwide, sublicensable license to research, have researched, develop, have developed,manufacture, have manufactured, use, market, distribute, offer for sale, sell, have sold, export and import products that comprise, contain or incorporate acertain invention relating to polymeric binders for celiac disease and/or provide services relating thereto. Notwithstanding the exclusive license, theUniversity of Montreal retained the right to use the licensed invention and patents for academic (i.e., non-commercial) research and teaching purposes. Underthe agreement, we are required to use commercially reasonable efforts to carry out the development work necessary to develop products under the agreementin accordance with a specified development plan. According to the terms of the agreement, we reimbursed Univalor for a portion of all past documented patents costs relating to the registration andmaintenance of the licensed patents. On execution of the agreement, we paid Univalor a non-refundable license issue fee. On each anniversary of theexecution of the agreement, we have paid an annual, non-refundable license maintenance fee and will continue to pay such annual maintenance fee untilsuch time as we become obligated to pay minimum annual royalties after the first commercial sale made by us, our affiliates or our sublicensees. If wemanufacture and/or sell in any way products under the license, we are obligated to pay Univalor low, single-digit royalties which vary in amount dependingon whether sales are made in a country where there is a licensed patent. The minimum annual royalties are fully creditable against actual royalties due. Theagreement obligates us to pay milestone payments on the occurrence of each of the following: enrollment of the first patient in the first Phase I clinical trialrelating to the licensed products; enrollment of the first patient in the first Phase II clinical trial relating to the products; enrollment of the first patient in thefirst Phase III clinical trial relating to the products; the first filing of a new drug application (NDA) or equivalent for the products; and receipt of a firstregulatory approval from any relevant registration authority (e.g. FDA, TPD or EMEA) for the products. If we grant sublicenses of our rights under the license,we are required to pay Univalor a portion of the consideration we receive in connection with the grant of a sublicense or option to obtain a sublicense,subject to certain criteria. Royalties are payable under the agreement beginning with the first commercial sale of a product under the agreement and expiringon the expiration of the last valid patent claim in or covered by any patent application related to any of the licensed invention, the licensed patents, theimprovements made therein, or any other patent pertaining to such invention or improvements, whichever expires last. 41 Either we or Univalor may terminate the agreement immediately upon written notice to the other relating to bankruptcy and insolvency matters, andupon 60 days’ written notice of a material breach if such breach is not cured. Notwithstanding the foregoing, a party is entitled to an extra 30 days to cure abreach if the breach is not capable of cure during the stated period if the breaching party uses diligent good faith efforts to cure the breach. Termination of theagreement will result in the termination of the license and, accordingly, the licensed invention and all rights included therein will revert to Univalor. Allsublicenses under the agreement are required to provide that, upon termination of the license the sublicense shall terminate; provided that as long as thesublicensee is not in breach of the sublicense agreement at such time to the extent that we would have the right to terminate the sublicense, Univalor will berequired to act in one of the two following ways: either (a) take over the sublicense; or (b) enter into a new agreement with the sublicensee on substantiallythe same terms as those contained in the existing sublicense agreement. We have the first right to prepare, file, prosecute and maintain any patent applications and patents in respect of the licensed invention and any partthereof, at our expense, subject to certain conditions. We are required to make all the reasonable efforts necessary to obtain and maintain patent protection ofthe licensed technology in at least the following countries: Canada, the United States, France, Italy and Belgium. We have the right, but not the obligation, totake action in the prosecution, prevention or termination of any infringement of patents licensed under the agreement. We are responsible for the expenses ofany patent infringement suit that we bring, including the expenses incurred by Univalor in connection with such suits. We are entitled to reimbursement fromany awards or settlements recovered in such suit or in the settlement thereof for all costs and expenses involved in the prosecution of any such suit. If we electnot to pursue any action in connection with infringement, Univalor may elect to do so. In such event, Univalor will be responsible for the expenses of anypatent infringement suit that it brings, including the expenses incurred by Univalor in connection with such suits and be entitled to reimbursement from anyawards or settlements recovered in such suit or in the settlement thereof for all costs and expenses involved in the prosecution of any such suit. BL-5010 In November 2007, we in-licensed the rights to develop and commercialize BL-5010 under a license agreement with IPC. Under the agreement, IPCgranted us an exclusive, worldwide, sublicensable license to develop, manufacture, market and sell certain technology relating to an acid-based formulationfor the non-surgical removal of skin lesions and the uses thereof. We are obligated to use commercially reasonable efforts to develop the licensed technologyin accordance with a specified development plan, including meeting certain specified diligence goals. We were required to pay to IPC a license feeamounting to $400,000, which we have paid in full. We are also required to make low, single digit royalty payments on the net sales of the licensedtechnology if we manufacture and sell it on our own, subject to certain limitations. Our royalty payment obligations are payable on a product-by-product andcountry-by-country basis, until the last to expire of any patent included within the licensed technology in such country. We also have the right to grantsublicenses for the licensed technology and are required to pay IPC a payment, within our standard range of sublicense receipt consideration, based on therevenues we receive as consideration in connection with any sublicensing, development, manufacture, marketing, distribution or sale of the licensedtechnology. The license agreement remains in effect until the expiration of all of our license, royalty and sublicense revenue obligations to IPC, determined on aproduct-by-product and country-by-country basis, unless we terminate the license agreement earlier. We may terminate the license agreement for any reasonon 30 days’ prior written notice. We may also terminate the license agreement upon 60 days’ prior written notice to IPC for scientific, regulatory or medicalreasons that would prevent us from continuing the development of the licensed technology pursuant to the development plan. Either party may terminate theagreement for material breach if the breach is not cured within 30 days after written notice from the non-breaching party. If the breach is not susceptible tocure within the stated period and the breaching party uses diligent, good faith efforts to cure such breach, the stated period will be extended by an additional30 days. In addition, either party may terminate the agreement upon the occurrence of certain bankruptcy events. 42 Termination of the agreement will result in a loss of all of our rights to the licensed technology, which will revert to IPC. In addition, any sublicenseof the licensed technology will terminate provided that, upon termination, at the request of the sublicensee, IPC is required to enter into a license agreementwith the sublicensee on substantially the same terms as those contained in the sublicense agreement. We have the first right to prepare, file, prosecute and maintain any patent applications and patents, in respect of the licensed technology and anypart thereof, at our expense, provided that such patent applications and patents are registered in the name of IPC. We are required to make all future paymentsnecessary to prosecute and maintain all patent applications and/or patents in respect of the licensed technology. We are required to consult with IPCregarding the preparation, filing and prosecution of all patent applications, and the maintenance of all patents included within the licensed patents. Inaddition, we have the right to take action in the prosecution, prevention, or termination of any patent infringement of the licensed patents. We are responsiblefor the expenses of any patent infringement suit that we bring, including the expenses incurred by IPC in connection with such suits. We are entitled toreimbursement from any sums recovered in such suit for all costs and expenses involved in the prosecution of any such suit. After such reimbursement, weand IPC are each entitled to a certain percentage of any remaining sums. BL-1040 In January 2005, we in-licensed the rights to BL-1040 under a license agreement with B.G. Negev Technologies. Under the agreement, B.G. NegevTechnologies granted us an exclusive, worldwide, sublicensable license to develop, manufacture, market and sell certain technology relating to injectablealginate biomaterials and the uses thereof. Upon execution of the agreement, we were obligated to make an initial payment and to make annual paymentsequal to $30,000, subject to certain conditions. We are obligated to make a low, single digit royalty payment on net sales, subject to certain limitations if wemanufacture and sell products developed under the agreement on our own. We also have the right to grant sublicenses for the licensed technology and arerequired to pay B.G. Negev Technologies a payment of 28% of the net revenues (after giving effect to withholding taxes and other deductions) we receive asconsideration in connection with any sublicensing, co-marketing or co-promotion, or a permitted assignment, of BL-1040, which includes those under ourlicensing agreement with Bellerophon. We have agreed to pay Ramot a portion of the payments we make to B.G. Negev Technologies in connection with thein-license arrangement to satisfy contractual obligations between B.G. Negev Technologies and Ramot with respect to certain intellectual property rights tothe licensed technology. We have also agreed to indemnify Ramot and certain of its related parties in connection with our use of the technology we in-licensed from B.G. Negev Technologies. Under the license agreement, we are obligated to use commercially reasonable efforts to develop the licensed technology in accordance with aspecified development plan. We have paid to B.G. Negev Technologies initial payments and are required to pay an annual license fee, subject to certainexceptions. In addition, we are required to make a one-time milestone payment upon the achievement of specified milestones. We are required to makecertain royalty payments on the net sales of the licensed technology, subject to certain limitations. Our royalty payment obligations are payable on aproduct-by-product and country-by-country basis, for the period that a valid patent on the licensed technology remains in force in such country, subject tocertain exceptions for abandonment. The license agreement remains in effect until the expiration of all of our royalty and sublicense revenue obligations to B.G. Negev Technologies,determined on a product-by-product and country-by-country basis. We may terminate the license agreement for any reason on 60 days’ prior written notice toB.G. Negev Technologies. Either party may terminate the agreement for material breach by the other party if the breaching party is unable to cure the breachwithin 60 days after receiving written notice of the breach from the non-breaching party. With respect to any termination for material breach, if the breach isnot susceptible to cure within the stated period and the breaching party uses diligent, good faith efforts to cure such breach, the stated period will beextended by an additional 30 days. In addition, either party may terminate the agreement upon the occurrence of certain bankruptcy events. 43 We have the first right to prepare, file, prosecute and maintain any patent applications and patents, in respect of the licensed technology and anypart thereof, at our expense. We are required to consult with B.G. Negev Technologies regarding patent prosecution and patent maintenance. In addition, wehave the right to take action in the prosecution, prevention, or termination of any patent infringement of the licensed technology. We are responsible for theexpenses of any patent infringement suit that we bring, including the expenses incurred by B.G. Negev Technologies in connection with such suits. We areentitled to reimbursement from any sums recovered in such suit or in the settlement thereof for all costs and expenses involved in the prosecution of any suchsuit. After such reimbursement, if any funds remain, we and B.G. Negev Technologies are each entitled to a certain percentage of any remaining sums. Intellectual Property Our success depends in part on our ability to obtain and maintain proprietary protection for our therapeutic candidates, technology and know-how,to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect ourproprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions andimprovements that are important to the development of our business. We also rely on trade secrets, know-how and continuing technological innovation, aswell as on regulatory exclusivity, such as orphan drug designation or new chemical entity (NCE) protection, to develop and maintain our proprietaryposition. Patents As of March 1, 2016, we owned or exclusively licensed for uses within our field of business 18 patent families that collectively contain over 35issued patents, three allowed patent applications and over 56 pending patent applications relating to the three clinical candidates listed below. We are alsopursuing patent protection for other drug candidates in our pipeline. Patents related to our therapeutic candidates may provide future competitive advantagesby providing exclusivity related to the composition of matter, formulation, and method of administration of the applicable compounds and could materiallyimprove the value of our therapeutic candidates. The patent positions for our three main therapeutic candidates are described below and include both issuedpatents and pending patent applications we exclusively license. We vigorously defend our intellectual property to preserve our rights and gain the benefit ofour investment. •With respect to BL-8040, we have an exclusive license to two patent families that cover the molecule that is the active ingredient of ourproprietary drug. Patents and patent applications of these families have been granted or are pending in the United States, Europe, Japan andCanada. The patents and any patents to issue in the future based on pending patent applications in these families will expire in 2023 (in theUnited States) and 2021 (in other countries), plus any applicable patent term extension, which may add an additional term of up to 5 yearson the patent. In addition, we have an exclusive license to seven other patent families pending worldwide directed to the use of BL-8040for the treatment of certain types of cancer and other indications. Furthermore, we have Orphan Drug status for both AML and stem cellmobilization, as well as data exclusivity protection afforded to BL-8040 as a new chemical entity, or NCE. •With respect to BL-7010, we have an exclusive license to a patent family directed to the BL-7010 composition and its use for the treatmentof celiac disease, as well as its use as a food. Patents and patent applications of this family have been granted or are pending in the UnitedStates, Israel, Europe, Japan, Canada, Brazil, China, India, Mexico, Russia and Australia. The issued patents and any patents to issue in thefuture based on pending patent applications in this family will expire in October 2026, with a possibility of up to five years of patent-termextension. •With respect to BL-5010, we have an exclusive license to a patent family directed to a novel applicator uniquely configured for applyingthe BL-5010 composition to targeted skin tissue safely and effectively. Patents applications of this family are pending in the United States,Israel, Europe, Japan, Canada, China, Russia and Australia. Patents to issue will expire in 2034. 44 The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. Our ability to maintain andsolidify our proprietary position for our technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We donot know whether any of our patent applications or those patent applications that we license will result in the issuance of any patents. Our issued patents andthose that may issue in the future, or those licensed to us, may be challenged, narrowed, circumvented or found to be invalid or unenforceable, which couldlimit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for our products. Neither wenor our licensors can be certain that we were the first to invent the inventions claimed in our owned or licensed patents or patent applications. In addition, ourcompetitors may independently develop similar technologies or duplicate any technology developed by us, and the rights granted under any issued patentsmay not provide us with any meaningful competitive advantages against these competitors. Furthermore, because of the extensive time required fordevelopment, testing and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patentmay expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent. Trade Secrets We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to protectour proprietary technology and processes, in part, by confidentiality agreements and assignment of invention agreements with our employees, consultants,scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security ofour premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations andsystems, such agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets mayotherwise become known or be independently discovered by competitors. Scientific Advisory Board Until 2015, our Scientific Advisory Board consisted of a number of leading scientists and physicians who played an active role in the evaluation ofmany of our in-licensing opportunities and the development of our pipeline. In addition, we sought advice from our Scientific Advisory Board on scientificand medical matters generally. As a result of our strategic decision over the last few years to focus on the therapeutic fields of oncology and immunology, in2015 we decided to disband the previous Scientific Advisory Board and establish two separate new Boards to focus on providing insight and guidance forour activities in the fields of oncology and immunology. In December 2015, we announced the establishment of our oncology Scientific Advisory Board. Weare currently in the process of setting up our immunology Scientific Advisory Board and hope to finalize this process by mid-2016. With respect to each of the two therapeutic fields, the new Scientific Advisory Boards will, as deemed necessary: •screen certain potential relevant in-licensing and current therapeutic candidates; •oversee our research and development programs; •address specific scientific and technical issues relevant to the field; and •review certain strategic decisions we may consider related to the field. 45 The following table sets forth information for our oncology Scientific Advisory Board members. Name Position/Institutional Affiliation J. Aaron Ciechanover, M.D., Ph.D. Professor Ciechanover is a Distinguished University Professor at the Rappaport Faculty of Medicine of the Technionand the co-director of the Technion Integrated Cancer Center. He shared the 2004 Nobel Prize in Chemistry withProfessors Avram Hershko and Irwin Rose for the discovery of ubiquitin-mediated protein degradation. Among hismany other prizes are the Israel Prize in Biological Research (2003) and the Albert Lasker Award for Basic Medicalresearch (2000). He is a member of numerous learned societies, among them the Israeli Academy of Sciences andHumanities and the National Academies of Sciences and of Medicine of the USA (Foreign Associate). ProfessorCiechanover was also a member of our original Scientific Advisory Board. Jorge Eduardo Cortes, M.D. Dr. Cortes is Professor of Medicine, Deputy Chair, and Chief of the CML and AML Sections of the Department ofLeukemia at The University of Texas, MD Anderson Cancer Center (MDACC). Dr. Cortes has authored hundreds ofpeer-reviewed manuscripts, abstracts, book chapters, and other medical publications. He is an associate editor for themedical journal, Blood and serves on the editorial board of other journals such as the Journal of Clinical Oncology,the American Journal of Hematology and Clinical Cancer Research. In addition, Dr. Cortes serves on the Board ofthe International CML Foundation. Dr. Cortes has received numerous awards including The Service to MankindAward from the Leukemia and Lymphoma Society and the Faculty Scholar Award from the MDACC for clinicalresearch and for education. Debasish Roychowdhury, M.D. Dr. Roychowdhury is a leader in the pharmaceutical industry with a strong background in oncology research anddevelopment, and regulatory and commercial operations, having previously served in key senior leadership roles atSanofi, GlaxoSmithKline and Eli Lilly. Dr. Roychowdhury has a distinguished track record in the field of oncologyhaving been involved in the approval of nine oncology drugs, including Almita, Tykerb and Jevtana. Currently, heis President of Nirvan Consultants, LLC and in this capacity he serves in senior advisory roles for biotechnologycompanies to help advance their pipeline of therapeutic medicines. Dr. Roychowdhury also serves as a member ofthe Board of Directors for Lytix Biopharma AS and Radius Health, Inc. In his academic career, Dr. Roychowdhuryserved as a faculty member at the University of Cincinnati. Yosef Yarden, Ph.D. Professor Yarden is The Harold and Zeda Goldenberg Chair of Molecular Cell Biology of the Weizmann Institute ofScience. He is a member of the Israel Academy of Sciences and Humanities and Past President of the Federation ofthe Israel Societies of Experimental Biology. Among his many awards, he has received the Susan G. Komen for theCure® Brinker Award for Scientific Distinction in Basic Research, and the Ernst W. Bertner Memorial Award of theMD Anderson Cancer Center. Professor Yarden is also a member of the European Molecular Biology Organization,the European Cancer Academy and the Asia-Pacific International Molecular Biology Network. Professor Yarden wasalso a member of our original Scientific Advisory Board. Manufacturing Our laboratories, which are located in our headquarters in Modi’in, Israel, are compliant with both current good manufacturing practices, or cGMP,and certified Good Laboratory Practices, or GLP, and allow us to manufacture drug products for our current clinical trials. The suppliers of the drugsubstances used for our current clinical trials have the necessary approvals as well. See “— Property, Plant and Equipment.” If we decide to perform any Phase3 clinical trial with respect to, or commercialize, any therapeutic candidate on our own, we anticipate that we will rely on third parties to produce thetherapeutic supplies. We have limited personnel with experience in drug or medical device manufacturing and we lack the resources and capabilities tomanufacture any of our therapeutic candidates on a commercial scale. Under our out-licensing agreement with Bellerophon with regard to BL-1040, we have the option to manufacture at least 20% of BL-1040 productspursuant to the terms of a supply agreement to be negotiated in good faith with Bellerophon. See “— Other Out-Licensing Agreements — Bellerophon.”Under our collaboration agreement with Panmed and Genoscience with regard to BL-8020, we have agreed to supply, at the licensors’ request, the drugneeded for a clinical trial to be administered by the licensors, subject to the parties agreeing to commercially reasonable supply terms. There can be noassurance that our therapeutic candidates, if approved, can be manufactured in sufficient commercial quantities, in compliance with regulatory requirementsand at an acceptable cost. We and our contract manufacturers are, and will be, subject to extensive governmental regulation in connection with themanufacture of any pharmaceutical products or medical devices. We and our contract manufacturers must ensure that all of the processes, methods andequipment are compliant with cGMP, for drugs or QSR for devices on an ongoing basis, mandated by the FDA and other regulatory authorities, and conductextensive audits of vendors, contract laboratories and suppliers. 46 Contract Research Organizations We outsource certain preclinical and clinical development activities to contract research organizations, or CROs, which meet FDA or EuropeanMedicines Agency regulatory standards. We create and implement the drug development plans and, during the preclinical and clinical phases ofdevelopment, manage the CROs according to the specific requirements of the therapeutic candidate under development. Competition The pharmaceutical, medical device and biotechnology industries are intensely competitive. Several of our therapeutic candidates, ifcommercialized, would compete with existing drugs and therapies. In addition, there are many pharmaceutical companies, biotechnology companies,medical device companies public and private universities, government agencies and research organizations actively engaged in research and development ofproducts targeting the same markets as our therapeutic candidates. Many of these organizations have substantially greater financial, technical, manufacturingand marketing resources than we have. Our competitors may also be able to use alternative technologies that do not infringe upon our patents to formulatethe active materials in our therapeutic candidates. They may, therefore, bring to market products that are able to compete with our candidates, or otherproducts that we may develop in the future. BL-8040 If approved, BL-8040 will compete with currently approved treatments for AML that include chemotherapy (Doxorubicin, Cytarabine, Vincristine),radiation therapy, stem cell transplantation and the hypomethylating agents Dacogen (decitabine), which has been developed by Eisai and Johnson &Johnson, and Vidaza (azacitidine), which has been developed by Celgene. There are a number of potentially competitive compounds under development that act as CXCR4 inhibitors, including, among others, Mozobil(plerixafor), which is being marketed by Genzyme and Sanofi as a stem cell mobilizer for autologous stem cell transplantation; LY-2510924, which is beingdeveloped by Eli Lilly & Co; BMS-936564 (MDX-1338; ulocuplumab) developed by Bristol-Myers Squibb; F-50067 developed by Pierre Fabre; TG-0054(burixafor) developed by TaiGen Biotechnology Co; POL-6326 developed by Polyphor Ltd; PTX-9908 developed by MicroConstants China and PertinaxTherapeutics Inc.; and X4P-001 developed by X4 Pharmaceuticals Inc. Immuno-oncology is an area of great interest in the pharmaceutical market, specifically, immuno-oncology combination therapies. Recently, therehas been growing attention to the combination of immuno-oncology agents with chemokines such as CXCR4 antagonist. One such combination therapy thatis currently under development is BMS-936564 and Opdivo (ulocuplumab and nivolumab respectively, both of which are being developed by Bristol-MyersSquibb).These combination therapies, among others, could potentially compete with the combination of BL-8040 and Keytruda® (pembrolizumab,developed by Merck & Co.). In addition there are a number of potentially competitive compounds under development to treat AML including, among others, Qinprezo(vosaroxin), which is being developed by Sunesis Pharmaceuticals (pre-registration in Europe); BI-6727 (volasertib), BIBF-1120 (nintedanib) and BI-836858, which are under development by Boehringer Ingelheim; Sprycel (dasatinib) developed under BMS; RG-6016 under development by Roche; OCV-501, under development by Otsuka Pharmaceutical; ibrutinib developed by Pharmacyclics, under license from Celera, and in collaboration with JanssenBiotech; CPI-613 developed by Cornerstone Pharmaceuticals; F-14512 developed by Pierre Fabre; SL-401 developed by Stemline Therapeutics; pacritinibdeveloped by CTI BioPharma Corp; Odomzo (sonidegib) developed by Novartis; venetoclax developed by AbbVie Inc.; lirilumab developed by InnatePharma in collaboration with BMS; selinexor developed by Karyopharm Therapeutics; ganetespib developed by Synta Pharmaceuticals; crenolanib, whichis being developed by Arog Pharmaceuticals, under license from Pfizer; BVD-ERK developed by BioMed Valley Discoveries; tosedostat developed by CTIBioPharma; pidilizumab developed by Medivation, under license from CureTech; Velcade (bortezomib) developed by Janssen and Takeda; uprosertibdeveloped by Novartis; Revlimid (lenalidomide) developed by Celgene; Tarceva (erlotinib) developed by Roche Astellas and Chugai; Mekinist (trametinib)developed by Novartis; Zolinza (vorinostat) developed by Merck and Co.; SGI-110 developed by Astex Pharmaceuticals; alvocidib developed by ToleroPharmaceuticals Inc.; pracinostat developed by MEI Pharma; Estybon (rigosertib) developed by Onconova Therapeutics, Baxter International and Symbio;Sapacitabine developed by Cyclacel Pharmaceuticals; RP-323 under development by Rich Pharmaceuticals; AG-221 (enasidenib) developed by AgiosPharmaceuticals Inc. and Celgene Corp; guadecitabine, developed by Astex Pharmaceuticals Inc.; CPX-351 (liposomal Cytarabine + Daunorubicin),developed by Celator Pharmaceuticals Inc.; Some of these treatments are being developed for specific AML patient populations and lines of treatment (e.g.,quizartinib developed by Ambit Biosciences as treatment for FLT3-ITD mutated AML patients; Nexavar (sorafenib), developed by Bayer; midostaurin,developed by Novartis; and ASP-2215 (gilteritinib), developed by Astellas Pharma Inc.) and not for the entire AML population. Some of these treatments canbe developed for administration to AML patients in combination with BL-8040. 47 BL-7010 If approved, BL-7010 will compete with other products for treatment of celiac disease and gluten sensitivity that are currently undergoingdevelopment. There are several potentially competitive compounds under development for celiac disease such as larazotide acetate (AT-1001, InnovateBiopharmaceuticals Inc.), which inhibits the activity of zonulin; latiglutenase (ALV-003, AbbVie Inc. and Alvine Pharmaceuticals Inc.), which is acombination of gluten targeting proteases; nexvax2 (BTG plc and ImmusanT Inc.), which is a gluten epitope-based injectable vaccine, for the potentialtreatment of HLA DQ2-associated celiac disease. Currently, celiac patients are prescribed a gluten-free diet to relieve their disease symptoms. Neverthelessthe symptoms persist in most cases despite the patient’s following a gluten-free diet. BL-7010, as well as the treatments specified above (except nexvax2), isenvisioned to be prescribed to patients who are on a gluten-free diet but still suffer from disease symptoms. In addition, there are a few marketed OTCproducts, based on various mixtures of enzymes, that are taken in addition to a gluten-free diet and aim to enhance digestion of residual gluten, e.g.,Tolerase®, G GlutenEase™, Enzymedica; Gluten Defense™, Enzymatic Therapy; BioCore DPP-IV® and NEC. BL-5010 If approved, BL-5010 will compete with a variety of approved destructive and non-destructive treatments for skin lesions. Surgery is currently the mostcommon approved non-destructive treatment for skin lesions but is invasive and painful, and generally results in cosmetically undesirable outcomes.Destructive treatments are associated with pain. Destructive treatments include cryotherapy, laser therapy, electrodessication, curettage and several cream-based treatments. Picato (Leo Pharma) and Metvixia® (Galderma Pharma) are cream-based treatments for skin lesions which have been approved in manycountries. Insurance We maintain insurance for our offices and laboratory in Israel. This insurance covers approximately $5.3 million of equipment, consumables andlease improvements against risk of fire, lightning, natural perils and burglary (the latter coverage limited to $250,000), and $1.5 million of consequentialdamages (covering fixed damages and extra expenses). For our clinical activities, we carry life science liability insurance covering general liability with anannual coverage amount of $20.0 million per occurrence and product liability and clinical trials coverage with an annual coverage amount of $20.0 millioneach claim and in the aggregate. The maximum indemnity for a single occurrence, claim or circumstances under this insurance is $20.0 million. In addition,we maintain the following insurance: employer’s liability with coverage of approximately $10.0 million for each occurrence and in the aggregate; third partyliability with coverage of approximately $5.0 million for each occurrence and in the aggregate; all risk coverage of approximately $2.0 million for electronicand mechanical equipment; and directors’ and officers’ liability with coverage of $20.0 million for each occurrence and in the aggregate. We procure cargo marine coverage when we ship substances for our clinical studies. Such insurance is customized to the special requirements of theapplicable shipment, such as temperature and/or climate sensitivity. If required, we insure the substances to the extent they are stored in central depots and atclinical sites. We believe that the amounts of our insurance policies are adequate and customary for a business of our kind. However, because of the nature of ourbusiness, we cannot assure you that we will be able to maintain insurance on a commercially reasonable basis or at all, or that any future claims will notexceed our insurance coverage. 48 Environmental Matters We are subject to various environmental, health and safety laws and regulations, including those governing air emissions, water and wastewaterdischarges, noise emissions, the use, management and disposal of hazardous, radioactive and biological materials and wastes and the cleanup ofcontaminated sites. We believe that our business, operations and facilities are being operated in compliance in all material respects with applicableenvironmental and health and safety laws and regulations. Based on information currently available to us, we do not expect environmental costs andcontingencies to have a material adverse effect on us. The operation of our facilities, however, entails risks in these areas. Significant expenditures could berequired in the future if we are required to comply with new or more stringent environmental or health and safety laws, regulations or requirements. See“Business — Government Regulation and Funding — Israel Ministry of Environment — Toxin Permit.”Government Regulation and Funding We operate in a highly controlled regulatory environment. Stringent regulations establish requirements relating to analytical, toxicological andclinical standards and protocols in respect of the testing of pharmaceuticals and medical devices. Regulations also cover research, development,manufacturing and reporting procedures, both pre- and post-approval. In many markets, especially in Europe, marketing and pricing strategies are subject tonational legislation or administrative practices that include requirements to demonstrate not only the quality, safety and efficacy of a new product, but alsoits cost-effectiveness relating to other treatment options. Failure to comply with regulations can result in stringent sanctions, including product recalls,withdrawal of approvals, seizure of products and criminal prosecution. Before obtaining regulatory approvals for the commercial sale of our therapeutic candidates, we or our licensees must demonstrate throughpreclinical studies and clinical trials that our therapeutic candidates are safe and effective. Historically, the results from preclinical studies and early clinicaltrials often have not accurately predicted results of later clinical trials. In addition, a number of pharmaceutical products have shown promising results inearly clinical trials but subsequently failed to establish sufficient safety and efficacy results to obtain necessary regulatory approvals. We have incurred andwill continue to incur substantial expense for, and devote a significant amount of time to, preclinical studies and clinical trials. Many factors can delay thecommencement and rate of completion of clinical trials, including the inability to recruit patients at the expected rate, the inability to follow patientsadequately after treatment, the failure to manufacture sufficient quantities of materials used for clinical trials, and the emergence of unforeseen safety issuesand governmental and regulatory delays. If a therapeutic candidate fails to demonstrate safety and efficacy in clinical trials, this failure may delaydevelopment of other therapeutic candidates and hinder our ability to conduct related preclinical studies and clinical trials. Additionally, as a result of thesefailures, we may also be unable to find additional licensees or obtain additional financing. Governmental authorities in all major markets require that a new pharmaceutical product or medical device be approved or exempted from approvalbefore it is marketed, and have established high standards for technical appraisal, which can result in an expensive and lengthy approval process. The time toobtain approval varies by country. In the past, it generally took from six months to four years from the application date, depending upon the quality of theresults produced, the degree of control exercised by the regulatory authority, the efficiency of the review procedure and the nature of the product. Someproducts are never approved. In recent years, there has been a trend towards shorter regulatory review times in the United States as well as certain Europeancountries, despite increased regulation and higher quality, safety and efficacy standards. Historically, different requirements by different countries’ regulatory authorities have influenced the submission of applications. However, a trendtoward harmonization of drug and medical device approval standards, starting in individual territories in Europe and then in the EU as a whole, in Japan, andin the United States under the aegis of what is now known as the International Council on Harmonisation, or ICH (created as the International Conference onHarmonisation in 1990), is gradually narrowing these differences. In many cases, compliance with ICH standards can help avoid duplication of non-clinicaland clinical trials and enable companies to use the same basis for submissions to each of the respective regulatory authorities. The adoption of the CommonTechnical Document format by the ICH has greatly facilitated use of a single regulatory submission for seeking approval in the ICH regions and certain othercountries such as Canada and Australia. Summaries of the United States, EU and Israeli regulatory processes follow below. 49 United States In the United States, drugs are subject to rigorous regulation by the FDA. The U.S. Federal Food, Drug and Cosmetic Act, or FDCA, and other federaland state statutes and regulations govern, among other things, the research, development, testing, manufacture, storage, record-keeping, packaging, labeling,adverse event reporting, advertising, promotion, marketing, distribution and import and export of pharmaceutical products. Failure to comply with applicableregulatory requirements may subject us to a variety of administrative or judicially imposed sanctions and/or prevent us from obtaining or maintainingrequired approvals or to market drugs. Failure to comply with the applicable U.S. requirements may subject us to stringent administrative or judicialsanctions, such as agency refusal to approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of productionor distribution, injunctions or criminal prosecution. Unless a drug is exempt from the NDA process, the steps required before a drug may be marketed in the United States include: •preclinical laboratory tests, animal studies and formulation development; •submission to the FDA of a request for an investigational new drug, or IND, to conduct human clinical testing; •adequate and well controlled clinical trials to determine the safety and efficacy of the drug for each indication as well as to establish theexposure levels; •submission to the FDA of an NDA; •a potential public hearing of an outside advisory committee to discuss the application; •satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is manufactured; and •FDA review and approval of the NDA. Preclinical studies include laboratory evaluation of product chemistry, toxicity, formulation and stability, as well as animal studies. For studiesconducted in the United States, and certain studies carried out outside the United States, we submit the results of the preclinical studies, together withmanufacturing information and analytical results, to the FDA as part of an IND, which must become effective before we may commence human clinical trials.An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues suchas the conduct of the trials as outlined in the IND. In such a case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questionsbefore clinical trials can proceed. Submission of an IND does not always result in the FDA allowing clinical trials to commence and the FDA may halt aclinical trial if unexpected safety issues surface or the study is not being conducted in compliance with applicable requirements. The FDA may refuse to accept an IND for review if applicable regulatory requirements are not met. Moreover, the FDA may delay or prevent the startof clinical trials if the manufacturing of the test drugs fails to meet cGMP requirements or the clinical trials are not adequately designed. Such governmentregulation may delay or prevent the study and marketing of potential products for a considerable time period and may impose costly procedures upon amanufacturer’s activities. In addition, the FDA may, at any time, impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical hold, clinicaltrials cannot continue without FDA authorization and then only under terms authorized by the FDA. Success in early-stage clinical trials does not assure success in later-stage clinical trials. Results obtained from clinical activities are not alwaysconclusive and may be susceptible to varying interpretations that could delay, limit or prevent regulatory approval. Even if a therapeutic candidate receivesregulatory approval, later discovery of previously unknown problems with a product may result in restrictions on the product or even withdrawal ofmarketing approval for the product. 50 Clinical Trials Clinical trials involve the administration of the investigational drug to people under the supervision of qualified investigators in accordance withthe principles of good clinical practice, or GCP. We conduct clinical trials under protocols detailing the trial objectives, the parameters to be used inmonitoring safety, and the effectiveness criteria to be evaluated. We must submit each U.S. study protocol to the FDA as part of the IND. Foreign clinicaltrials may or may not be conducted under an IND. However, their safety assessments are included in the IND annual reports. We conduct clinical trials typically in three sequential phases, but the phases may overlap or be combined. An institutional review board, or IRB,must review and approve each trial before it can begin. Phase 1 includes the initial administration of a tested drug to a small number of humans. These trialsare closely monitored and may be conducted in patients, but are usually conducted in healthy volunteer subjects. These trials are designed to determine themetabolic and pharmacologic actions of the drug in humans and the side effects associated with increasing doses as well as, if possible, to gain early evidenceon effectiveness. Phase 2 usually involves trials in a limited patient population to evaluate dosage tolerance and appropriate dosage, identify possibleadverse effects and safety risks and preliminarily evaluate the efficacy of the drug for specific indications. Phase 3 trials are large trials used to furtherevaluate clinical efficacy and test further for safety by using the drug in its final form in an expanded patient population. There can be no assurance that we orour licensees will successfully complete Phase 1, Phase 2 or Phase 3 testing with respect to any therapeutic candidate within any specified period of time, if atall. Furthermore, clinical trials may be suspended at any time on various grounds, including a finding that the subjects or patients are being exposed to anunacceptable health risk. We and our licensees perform preclinical and clinical testing outside of the United States. The acceptability of the results of ourpreclinical and clinical testing by the FDA will be dependent upon adherence to applicable U.S. and foreign standards and requirements, including goodlaboratory practices, or GLP, GCP and the Declaration of Helsinki for protection of human subjects. Additionally, the FDA may require at least one pivotalclinical study to be conducted in the United States, in order to take into account medical practice and ethnic diversity in the United States. NDAs and BLAs After successful completion of the required clinical testing, an NDA, or in the case of certain biological products a Biological Product Application,or BLA, is prepared and submitted to the FDA. FDA approval of the NDA or BLA is required before product marketing may begin in the United States. TheNDA/BLA must include the preclinical and clinical testing results and a compilation of detailed information relating to the product’s pharmacology,toxicology, chemistry, manufacture and manufacturing controls. In certain cases, an application for marketing approval may include information regardingthe safety and efficacy of a proposed drug that comes from trials not conducted by, or for, the applicant and for which trials the applicant has not obtained aspecific right to reference. Such an application, known as a 505(b)(2) NDA, is permitted for new drug products that incorporate previously approved activeingredients, even if the proposed new drug incorporates an approved active ingredient in a novel formulation or for a new indication. Although 505(b)(2) is atype of NDA, it has been used in the US to obtain approval of follow-on biologics (also termed biosimilars) where limited clinical data is necessary to showthat the follow-on is the same as the reference product. However, 505(b)(2) can be used to seek approval for a biologic only until March 23, 2020, and onlyfor follow-on biologics of a class for which a product has already been approved under 505(b)(2). In this way, several natural source products andrecombinant proteins have been approved as generic drugs under Section 505(b)(2) of the FDCA. An additional pathway for approval of follow-on biologicsis discussed in the section “Generic Competition” below. As interpreted by the FDA, Section 505(b)(2) also permits the FDA to rely for such approvals onliterature or on a finding by the FDA of safety and/or efficacy for a previously approved drug product. Under this interpretation, a 505(b)(2) NDA for changesto a previously approved drug product may rely on the FDA’s finding of safety and efficacy of the previously approved product coupled with new clinicaldata and information needed by the FDA to support the change. NDAs submitted under 505(b)(2) are potentially subject to patent and non-patent exclusivityprovisions which can block effective approval of the 505(b)(2) application until the applicable exclusivities have expired, which in the case of patents maybe several years. The cost of preparing and submitting an NDA may be substantial. Under U.S. federal law, the submission of NDAs, including 505(b)(2)NDAs, is generally subject to substantial application user fees, and the manufacturer and/or sponsor under an NDA approved by the FDA is also subject toannual product and establishment user fees. These fees are typically increased annually. Separate fees are payable for an Abbreviated New Drug Application,or ANDA, and for Biosimilar Biological Product Development, or BPD. 51 The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the FDA thresholddetermination that the NDA is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depthreview of the NDA. Under U.S. federal law, the FDA has agreed to certain performance goals in the review of NDAs. Most such applications for non-prioritydrug products are to be reviewed within 10 months. The review process may be significantly extended by FDA requests for additional information orclarification. The FDA may also refer applications to an advisory committee, typically a panel that includes clinicians and other experts, for review,evaluation and a recommendation as to whether the application should be approved. This often, but not exclusively, occurs for novel drug products or drugproducts that present difficult questions of safety or efficacy. The FDA is not bound by the recommendation of an advisory committee. Before approving an application, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will notapprove the application unless the FDA determines that the product is manufactured in substantial compliance with GMPs. If the FDA determines that theNDA or BLA is supported by adequate data and information, the FDA may issue an approval letter, or, in some cases, when the FDA desires some additionaldata or information an approvable letter. An approvable letter generally contains a statement of specific conditions that must be met to secure final approvalof the application. Upon compliance with the conditions stated in the approvable letter, the FDA will typically issue an approval letter. An approval letterauthorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of approval, the FDA may requireadditional trials or post-approval testing and surveillance to monitor the drug’s safety or efficacy, the adoption of risk evaluation and mitigation strategies,and may impose other conditions, including labeling and marketing restrictions on the use of the drug, which can materially affect its potential market andprofitability. Once granted, product approvals may be withdrawn if compliance with regulatory standards for manufacturing and quality control are notmaintained or if additional safety problems are identified following initial marketing. If the FDA’s evaluation of the NDA or BLA submission or manufacturing processes and facilities is not favorable, the FDA may refuse to approve theNDA or BLA and may issue a complete response letter. The complete response letter indicates that the review cycle for an application is complete and thatthe application is not ready for approval. The complete response letter will describe specific deficiencies and, when possible, will outline recommendedactions the applicant might take in order to place the application in condition for approval. Following receipt of a complete response letter, the company maysubmit additional information and start a new review cycle, withdraw the application or request a hearing. Failure to take any of the above actions may resultin the FDA considering the application withdrawn following 1 year from issuance of the complete response letter. In such cases, the FDA will notify thecompany and the company will have 30 days to respond and request an extension of time in which to resubmit the application. The FDA may grantreasonable requests for extension. If the company does not respond within 30 days of the FDA’s notification, the application will be considered withdrawn.Even with submission of additional information for a new review cycle, the FDA ultimately may decide that the application does not satisfy the regulatorycriteria for approval. The Pediatric Research Equity Act, or PREA, requires NDAs (or NDA supplements) for a new active ingredient, new indication, new dosage form,new dosing regimen or new route of administration to contain results assessing the safety and efficacy for the claimed indication in all relevant pediatricsubpopulations. Data to support dosing and administration also must be provided for each pediatric subpopulation for which the drug is safe and effective.The FDA may grant deferrals for the submission of results or full or partial waivers from the PREA requirements (for example, if the product is ready forapproval in adults before pediatric studies are complete, if additional safety data is needed, among others). In addition, under the Best Pharmaceuticals forChildren Act, or BPCA, the FDA may issue a written request to the company to conduct clinical trials in the pediatric population that are related to themoiety and expand on the claimed indication. The studies are voluntary, but may award the company with 6 months of marketing exclusivity if conductedaccording to good scientific principles and address the written request. Finally, a sponsor can request that a product that must be studied under PREA to bestudied also under the BPCA to allow the sponsor to be eligible for six-months of pediatric exclusivity. 52 Post-Marketing Requirements Once an NDA or BLA is approved, the drug sponsor will be subject to certain post-approval requirements, including requirements for adverse eventreporting, submission of periodic reports, manufacturing, labeling, packaging, advertising, promotion, distribution, record-keeping and other requirements.For example, the approval may be subject to limitations on the uses for which the product may be marketed or conditions of approval, or containrequirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product or require the adoption of risk evaluation andmitigation strategies. In addition, the FDA requires the reporting of any adverse effects observed after the approval or marketing of a therapeutic candidateand such events could result in limitations on the use of such approved product or its withdrawal from the marketplace. Also, some types of changes to theapproved product, such as manufacturing changes and labeling claims, are subject to further FDA review and approval. Additionally, the FDA strictlyregulates the promotional claims that may be made about prescription drug products. In particular, the FDA requires substantiation of any claims ofsuperiority of one product over another including, in many cases, requirements that such claims be proven by adequate and well controlled head-to-headclinical trials. To the extent that market acceptance of our therapeutic candidates may depend on their superiority over existing products, any restriction onour ability to advertise or otherwise promote claims of superiority, or any requirements to conduct additional expensive clinical trials to provide proof ofsuch claims, could negatively affect the sales of our therapeutic candidates and our costs. Generic Competition Once an NDA, including a 505(b)(2) NDA, is approved, the product covered thereby becomes a “listed drug” which can, in turn, be cited bypotential competitors in support of approval of an ANDA, which relies on bioequivalence studies that compare the generic drug to a reference listed drug tosupport approval. Specifically, a generic drug that is the subject of an ANDA must be bioequivalent and have the same active ingredient(s), route ofadministration, dosage form, and strength, as well as the same labeling, with certain exceptions, as the listed drug. If the FDA deems that any of theserequirements are not met, additional results may be necessary to seek approval. Section 7002 of the Patient Protection and Affordable Care Act, which is referred to as the Biologics Price Competition and Innovation Act of 2009,or BPCIA, amends Section 351 of the Public Health Service Act to create an abbreviated Biologic License Application (BLA) for ‘highly similar’ biologicalproducts; the abbreviated BLA permits a follow-on biological product to be evaluated against only a single reference biological product. To be consideredfor an abbreviated BLA, the biosimilar must have the same presumed mechanism of action, route of administration, dosage form and potency as the innovatorproduct. It may only be reviewed and approved for indications for which the FDA already has approved the innovator product. The BPCIA provides the manufacturer of the innovator product with economic protection by granting a period of “exclusivity” during whichfollow-on products may not be approved. A BLA for approval of a follow-on biological product may not be submitted for 4 years after the reference productwas initially approved. The FDA may not approve a BLA for a follow-on biological product until 12 years after the reference product was first licensed. Noadditional period of exclusivity will be granted to a previously licensed biologic product when subsequent applications are made for a new indication, routeof administration, dosage form, or dosing strength. However, each of the periods of exclusivity may be extended by 6 months if studies of the innovatorbiological product in the pediatric population are requested by the U.S. Secretary of Health and Human Services and carried out. To encourage the development of biosimilars, the BPCIA grants 1 year of exclusive marketing rights to the first follow-on biological that isapproved as being “interchangeable” with a reference product. If patent litigation between the manufacturers of the follow-on and innovator products isongoing, this period of exclusivity may be extended for up to 42 months. ANDA applicants do not have to conduct extensive clinical trials to prove the safety or efficacy of the drug product. Rather, they are required toshow that their drug is pharmaceutically equivalent to the innovator’s drug and also conduct “bioequivalence” testing to show that the rate and extent bywhich the ANDA applicant’s drug is absorbed does not differ significantly from the innovator product. Bioequivalence tests are typically in vivo studies inhumans but they are smaller and less costly than the types of Phase 3 trials required to obtain initial approval of a new drug. Drugs approved in this way arecommonly referred to as “generic equivalents” to the listed drug, are listed as such by the FDA, and can often be substituted by pharmacists underprescriptions written for the original listed drug. 53 With respect to NDAs, U.S. federal law provides for a period of three years of non-patent market exclusivity following the approval of a listed drugthat contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or combination, or for a new use,the approval of which was required to be supported by new clinical trials, other than bioavailability studies, conducted by or for the sponsor. During thisthree-year period the FDA cannot grant effective approval of an ANDA or a 505(b)(2) NDA for the same conditions of approval under which the NDA wasapproved. U.S. federal law also provides a period of five years following approval of a new chemical entity that is a drug containing no previously approvedactive ingredients, during which ANDAs for generic versions of such drugs, as well as 505(b)(2) NDAs, cannot be submitted unless the submission contains acertification that the listed patent is invalid or will not be infringed, in which case the submission may be made four years following the original productapproval. If an ANDA or 505(b)(2) NDA applicant certifies that it believes one or more listed patents is invalid or not infringed, it is required to providenotice of its filing to the NDA sponsor and the patent holder. If the patent holder or exclusive patent licensee then initiates a suit for patent infringementagainst the ANDA or 505(b)(2) NDA sponsor within 45 days of receipt of the notice, the FDA cannot grant effective approval of the ANDA or 505(b)(2) NDAuntil either 30 months have passed or there has been a court decision holding that the patents in question are invalid or not infringed. If an infringementaction is not brought within 45 days, the ANDA or 505(b)(2) NDA applicant may bring a declaratory judgment action to determine patent issues prior tomarketing. If the ANDA or 505(b)(2) NDA applicant certifies as to the date on which the listed patents will expire, then the FDA cannot grant effectiveapproval of the ANDA or 505(b)(2) NDA until those patents expire. The first ANDA(s) submitting substantially complete application(s) certifying that listedpatents for a particular product are invalid or not infringed may qualify for a period of 180 days of marketing exclusivity, starting from the date of the firstcommercial marketing of the drug by the applicant, during which subsequently submitted ANDAs cannot be granted effective approval. The first ANDAapplicant can forfeit its exclusivity under certain circumstances; for example, if it fails to market its product or meet other regulatory requirements withinspecified time periods. From time to time, including presently, legislation is drafted and introduced in the U.S. Congress that could significantly change the statutoryprovisions governing the approval, manufacturing and marketing of drug products. In addition, FDA regulations and guidance are often revised orreinterpreted by the agency in ways that may significantly affect our business and our therapeutic candidates. It is impossible to predict whether legislativechanges will be enacted, or FDA regulations, guidance or interpretations changed, or what the impact of such changes, if any, may be. FDA Approval or Clearance of Medical Devices In the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending on thecontrols the FDA determines necessary to reasonably ensure their safety and efficacy: •Class I: general controls, such as labeling and adherence to Quality System Regulations, or QSRs. Some Class I medical devices require510(k) pre-market notification although most are exempt; •Class II: general controls, 510(k) pre-market notification, and specific controls such as performance standards, patient registries, andpostmarket surveillance; and •Class III: general controls and approval of a pre-market approval, or PMA. All new devices are class III by operation of law unless the FDA (1) determines the new device to be substantially equivalent (SE) to a devicepreviously classified in class I or class II, (2) grants a risk-based (“de novo”) classification request, or (3) reclassifies the device into class I or II. A PMA application must provide a demonstration of safety and effectiveness, which generally requires extensive preclinical and clinical trial data.Information about the device and its components, device design, manufacturing and labeling, among other information, must also be included in the PMA.As part of the PMA review, the FDA will typically inspect the manufacturer’s facilities for compliance with QSR requirements, which govern testing, control,documentation and other aspects of quality assurance with respect to manufacturing. During the review period, an FDA advisory committee, typically a panelof clinicians, is likely to be convened to review the application and recommend to the FDA whether, or upon what conditions, the device should beapproved. The FDA is not bound by the advisory panel decision, but the FDA often follows the panel’s recommendation. If the FDA finds the informationsatisfactory, it will approve the PMA. The PMA can include post-approval conditions including, among other things, restrictions on labeling, promotion, saleand distribution, or requirements to do additional clinical studies post-approval. Even after approval of a PMA, a new PMA or PMA supplement is required toauthorize certain modifications to the device, its labeling or its manufacturing process. Supplements to a PMA often require the submission of the same typeof information required for an original PMA, except that the supplement is generally limited to that information needed to support the proposed change fromthe product covered by the original PMA. During the review of a PMA, the FDA may request more information or additional studies and may decide that theindications for which we seek approval or clearance should be limited. 54 If human clinical trials of a medical device are required and the device presents a significant risk, the sponsor of the trial must file an investigationaldevice exemption, or IDE, application prior to commencing human clinical trials. The IDE application must be supported by data, typically including theresults of animal and/or laboratory testing. If the IDE application is approved by the FDA, human clinical trials may begin at a specific number ofinvestigational sites with a specific number of patients, as approved by the FDA upon receipt of the respective IRB approvals. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more institutional review boards withoutseparate approval from the FDA. Submission of an IDE does not give assurance that the FDA will approve the IDE and, if it is approved, the FDA maydetermine that the data derived from the trials do not support the safety and effectiveness of the device or warrant the continuation of clinical trials. An IDEsupplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affectits scientific soundness, study indication or the rights, safety or welfare of human subjects. The trial also must comply with the FDA’s IDE regulations andinformed consent must be obtained from each subject. FDA Nutritional Segment In the United States, two regulatory pathways exist for dietary ingredients, one for ingredients marketed in food and the other for dietary ingredientsmarketed in nutritional supplements. Dietary ingredients that were marketed in nutritional supplements prior to October 1994 are not subject to premarketauthorization requirements. All other dietary ingredients must undergo a “premarket notification” process. This process requires the manufacturer to detailthe quality and safety of the ingredient and file such information with the FDA at least 85 days prior to placing the ingredient on the market as a dietarysupplement. Food ingredients must be determined to be safe prior to being added to foods. The following categories of food ingredients are considered to be safe bythe FDA: •a food additive that has received pre-market approval from the FDA; •an ingredient that is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of itsintended use (referred to as generally recognized as safe, or “GRAS”); or •an ingredient that was determined to be safe for use in food prior to September 6, 1958 (a list of these substances that are GRAS arepublished by the FDA in the Federal Register). For an ingredient to be considered GRAS, the manufacturer of the ingredient must provide information on the quality and safety of the ingredient forits intended use as well as the results of relevant clinical studies. Such information is reviewed by qualified experts who determine whether the ingredient hasbeen adequately shown to be GRAS. Additionally, such information may be voluntarily submitted to the FDA for review. If the FDA is satisfied with thedetermination of the new ingredient as GRAS, it will issue an Agency Response Letter advising that the agency has no questions regarding the safetyconclusions of the ingredient. Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated ormisbranded. That means that these firms are responsible for evaluating the safety and labeling of their products before marketing to ensure that they meet allthe requirements of DSHEA and FDA regulations. The FDA is responsible for taking action against any adulterated or misbranded dietary supplement productafter it reaches the market. 55 European Economic Area Clinical Trials The European Medicines Agency relies on the results of clinical trials carried out by pharmaceutical companies to reach its opinions on theauthorization of medicines. Although the authorization of clinical trials occurs at Member State level, the Agency plays a key role in ensuring that thestandards of good clinical practice (GCP) are applied across the European Economic Area (EEA) in cooperation with the Member States. It also manages adatabase of clinical trials carried out in the European Union. Clinical trials are currently regulated under Directive 2001/20/EC. However, in April 2014 anew Regulation on clinical trials on medicinal products for human use was adopted. The Regulation entered into force on in June 2014 but will apply noearlier than May 28, 2016. The Regulation will apply to interventional clinical trials on medicines once the Regulation is in operation, and to all trialsauthorized under the previous legislation (Directive (EC) No. 2001/20/EC) and still ongoing three years(the transition period) after the Regulation has comeinto operation. The regulation ensures that: ·the rules for conducting clinical trials are consistent throughout the EU; ·transparent information is made publicly available on the authorization, conduct, and results of each clinical trial carried out in the EU. Marketing Authorization Procedures A medicinal product may only be placed on the market in the European Economic Area, or EEA, composed of the 28 EU member states, plusNorway, Iceland and Lichtenstein, when a marketing authorization has been issued by the competent authority of a member state pursuant to Directive2001/83/EC, as amended, or an authorization has been granted under the centralized procedure in accordance with Regulation (EC) No. 726/2004, asamended, or its predecessor, Regulation 2309/93. There are essentially three EU procedures created under prevailing European pharmaceutical legislationthat, if successfully completed, allow an applicant to place a medicinal product on the market in the EEA. Centralized Procedure Regulation 726/2004/EC now governs the centralized procedure when a marketing authorization is granted by the European Commission, acting inits capacity as the European Licensing Authority on the advice of the European Medicines Agency, or EMA. That authorization is valid throughout theentire EEA and directly or (as to Norway, Iceland and Liechtenstein) indirectly allows the applicant to place the product on the market in all member states ofthe EEA. The EMA is the administrative body responsible for coordinating the existing scientific resources available in the member states for evaluation,supervision and pharmacovigilance of medicinal products. Certain medicinal products, as described in the Annex to Regulation 726/2004, must beauthorized centrally. These are products that are developed by means of a biotechnological process in accordance with Paragraph 1 to the Annex to theRegulation or veterinary products designed to promote animal growth or increase yield in accordance with Paragraph 2. The mandatory centralized procedureis applicable to: (a) medicinal products for human use containing an active substance authorized in the EU after May 20, 2004 for which the therapeuticindication is the treatment of acquired immune deficiency syndrome, or AIDS, cancer, neurodegenerative disorder or diabetes; (b) autoimmune diseases andother immune dysfunctions and viral diseases; (c) all medicinal products that are designated as orphan medicinal products pursuant to Regulation141/2000; and (d) medicines derived from biotechnology processes or advanced therapy medicinal products, such as gene therapy, tissue engineered andsomatic cell therapy products. An applicant may also opt for assessment through the centralized procedure if it can show that the medicinal productconstitutes a significant therapeutic, scientific or technical innovation or that the granting of authorization centrally is in the interests of patients at the EUlevel. For each application submitted to the EMA for scientific assessment, the EMA is required to ensure that the opinion of the Committee for MedicinalProducts for Human Use, or CHMP, is given within 210 days after receipt of a valid application or within 150 days by means of an accelerated procedure. Ifthe opinion is positive, the EMA is required to send the opinion to the European Commission, which is responsible for preparing the decision granting amarketing authorization, within 67 days. If the initial opinion of the CHMP is negative, the applicant is afforded an opportunity to seek a re-examination ofthe opinion. The CHMP is required to re-examine its opinion within 60 days following receipt of the request by the applicant. A refusal of a centralizedmarketing authorization constitutes a prohibition on placing the given medicinal product on the market in the EU. 56 Mutual Recognition and Decentralized Procedures. With the exception of products that are authorized centrally, the competent authorities of the member states are responsible for granting marketingauthorizations for medicinal products placed on their markets. If the applicant for a marketing authorization intends to market the same medicinal product inmore than one member state, the applicant may seek an authorization progressively in the EU under the mutual recognition or decentralized procedure.Mutual recognition is used if the medicinal product has already been authorized in a member state. In this case, the holder of this marketing authorizationrequests the member state where the authorization has been granted to act as reference member state by preparing an updated assessment report that is thenused to facilitate mutual recognition of the existing authorization in the other member states in which approval is sought (the so-called concerned memberstate(s)) in accordance with Article 28 of Directive 2001/83/EC. The reference member state must prepare an updated assessment report within 90 days ofreceipt of a valid application. This report together with the approved Summary of Product Characteristics, or SmPC (which sets out the conditions of use ofthe product), and a labeling and package leaflet are sent to the concerned member states for their consideration. The concerned member states are required toapprove the assessment report, the SmPC and the labeling and package leaflet within 90 days of receipt of these documents. The total procedural time is 180days. The decentralized procedure is used in cases where the medicinal product has not received a marketing authorization in the EU at the time ofapplication. The applicant requests a member state of its choice to act as reference member state to prepare an assessment report that is then used to facilitateagreement with the concerned member states and the grant of a national marketing authorization in all of these member states. In this procedure, the referencemember state must prepare, for consideration by the concerned member states, the draft assessment report, a draft SmPC and a draft of the labeling andpackage leaflet within 120 days after receipt of a valid application. As in the case of mutual recognition, the concerned member states are required to approvethese documents within 90 days of their receipt. In both procedures, national marketing authorizations shall be granted within 30 days afteracknowledgement of the agreement. For both mutual recognition and decentralized procedures, if a concerned member state objects to the grant of a marketing authorization on thegrounds of a potential serious risk to public health, it may raise a reasoned objection with the reference member state. The points of disagreement are in thefirst instance referred to the Co-ordination Group on Mutual Recognition and Decentralized Procedures, or CMD, to reach an agreement within 60 days of thecommunication of the points of disagreement. If member states fail to reach an agreement, then the matter is referred to the EMA’s scientific committee andCHMP for arbitration. The CHMP is required to deliver a reasoned opinion within 60 days of the date on which the matter is referred. The scientific opinionadopted by the CHMP forms the basis for a binding European Commission decision. Irrespective of whether the medicinal product is assessed centrally, de-centrally or through a process of mutual recognition, the medicinal productmust be manufactured in accordance with the principles of good manufacturing practice as set out in Directive 2003/94/EC for medicines and investigationalmedicines for human use or Directive 91/412/EEC for medicines for veterinary use and Volume 4 of the “Rules Governing Medicinal Products in theEuropean Community” and distributed in accordance with Directive 92/25/EEC and current guidance. Moreover, EU law requires the clinical results insupport of clinical safety and efficacy to be based upon clinical trials conducted in the EU in compliance with the requirements of Directives 2001/20/ECand 2005/28/EC, which implement good clinical practice in the conduct of clinical trials on medicinal products for human use. Clinical trials conductedoutside the EU and used to support applications for marketing within the EU must have been conducted in a way consistent with the principles set out inDirective 2001/20/EC. The conduct of a clinical trial in the EU requires, pursuant to Directive 2001/20/EC, authorization by the relevant national competentauthority where a trial takes place, and an ethics committee to have issued a favorable opinion in relation to the arrangements for the trial. It also requires thatthe sponsor of the trial, or a person authorized to act on his behalf in relation to the trial, be established in the EU. National Procedure In order to increase availability of medicinal products, in particular on smaller markets, Article 126a of Directive 2001/83/EC provides that, in theabsence of a marketing authorization or of a pending application for authorization for a medicinal product, which has already been authorized in anotherMember State, a Member State may for justified public health reasons authorize the placing on the market of that medicinal product. In such cases, thecompetent authority of the Member State has to inform the marketing authorization holder in the Member State in which the medicinal product concerned isauthorized, of the proposal to authorize the placing on the market under this Article. 57 When a Member State avails itself of this possibility, it must adopt the necessary measures in order to ensure that the requirements for the labellingand package leaflet, classification of the medicinal product, advertising, pharmacovigilance and supervision and sanctions are complied with. For thespecific mechanisms chosen by the Member States to implement this provision, the relevant national legislation is referred to. The register of the medicinalproducts authorized under Article 126a is available at the European Commission web-site. For medicinal products authorized in accordance with Article 126a of Directive 2001/83/EC, marketing authorization holders do not qualify for thepediatric development rewards as described in Regulation (EC) No. 1901/2006. Types of Marketing Authorization Applications: There are various types of applications for marketing authorizations. The legal basis for all types of application is set out in Directive 2001/83/ECand in Regulation (EC) No726/2004. A. Full Applications. A full application is one that is made under any of the EU procedures described above and “stands alone” in the sense that itcontains all of the particulars and information required by Article 8(3) of Directive 2001/83/EC, as amended, to allow the competent authority to assess thequality, safety and efficacy of the product and in particular the balance between benefit and risk. Article 8(3)(l) in particular refers to the need to present theresults of the applicant’s research on (1) pharmaceutical (physical-chemical, biological or microbiological) tests, (2) preclinical (toxicological andpharmacological) studies and (3) clinical trials in humans. The nature of these tests, studies and trials is explained in more detail in Annex I to Directive2001/83/EC, as amended. Full applications would be required for products containing new active substances not previously approved by the competentauthority, but may also be made for other products. B. Abridged Applications. Article 10 of Directive 2001/83/EC contains exemptions from the requirement that the applicant provide the results of itsown preclinical and clinical research. There are four regulatory routes for an applicant to seek an exemption from providing such results, namely (1) cross-referral to an innovator’s results without consent of the innovator (used for generic medicines or similar biological medicinal products), (2) well establisheduse according to published literature, (3) fixed combination products, and (4) informed consent to refer to an existing dossier of research results filed by aprevious applicant. (1) Cross-referral to Innovator’s Data Generic Applications. Articles 10(1) and 10(2)(b) of Directive 2001/83/EC provide the legal basis for an applicant to seek a marketing authorizationon the basis that its product is a generic medicinal product (a copy) of a reference medicinal product that has already been authorized, in accordance with EUprovisions. A reference product is, in principle, an original product granted an authorization on the basis of a full dossier of particulars and information. Thisis the main exemption used by generic manufacturers for obtaining a marketing authorization for a copy product. The generic applicant is not required toprovide the results of preclinical studies and of clinical trials if its product meets the definition of a generic medicinal product and the applicable regulatoryresults protection period for the results submitted by the innovator has expired. A generic medicinal product is defined as a medicinal product: •having the same qualitative and quantitative composition in active substance as the reference medicinal product; •having the same pharmaceutical form as the reference medicinal product; and •whose bioequivalence with the reference medicinal product has been demonstrated by appropriate bioavailability studies. Applications in respect of a generic medicinal product cannot be made before the expiry of the protection period. For applications made after eitherOctober 30 or November 20, 2005 (depending on the approval route used), Regulation 726/2004 and amendments to Directive 2001/83/EC provide for aharmonized protection period regardless of the approval route utilized. The harmonized protection period is in total 10 years, including eight years ofresearch data protection and two years of marketing protection. The effect is that the originator’s results can be the subject of a cross-referral application aftereight years, but any resulting authorization cannot be exploited for a further two years. The rationale of this procedure is not that the competent authoritydoes not have before it relevant tests and trials upon which to assess the efficacy and safety of the generic product, but that the relevant particulars can, if theresearch data protection period has expired, be found on the originator’s file and used for assessment of the generic medicinal product. The 10-year protectionperiod can be extended to 11 years where, in the first eight years post-authorization, the holder of the authorization obtains approval for a new indicationassessed as offering a significant clinical benefit in comparison with existing products. 58 Hybrid Applications (equivalent to the U.S. 505(b)(2) NDA). If the copy product does not meet the definition of a generic medicinal product or ifcertain types of changes occur in the active substance(s) or in the therapeutic indications, strength, pharmaceutical form or route of administration in relationto the reference medicinal product, Article 10(3) of Directive 2001/83/EC provides that the results of the appropriate preclinical studies or clinical trials mustbe provided by the applicant. Similar Biological Applications. Article 10(4) refers to a biological medicinal product which is similar to a reference biological product and doesnot meet the conditions in the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences inmanufacturing processes of the biological medicinal product and the reference biological medicinal product. For such products, the results of appropriate pre-clinical tests or clinical trials relating to these conditions must be provided in accordance with the criteria stated in the Annex and related guidelines. Theresults of other tests and trials from the reference medicinal product's dossier shall not be provided. (2) Well-established Medicinal Use Under Article 10a of Directive 2001/83/EC, an applicant may, in substitution for the results of its own preclinical and clinical research, presentdetailed references to published literature demonstrating that the active substance(s) of a product have a well-established medicinal use within the EU withrecognized efficacy and an acceptable level of safety. The applicant is entitled to refer to a variety of different types of literature, including reports of clinicaltrials with the same active substance(s) and epidemiological studies that indicate that the constituent or constituents of the product have an acceptablesafety/efficacy profile for a particular indication. However, use of the published literature exemption is restricted by stating that in no circumstances willconstituents be treated as having a well-established use if they have been used for less than 10 years from the first systematic and documented use of thesubstance as a medicinal product in the EU. Even after 10 years’ systematic use, the threshold for well-established medicinal use might not be met. Europeanpharmaceutical law requires the competent authorities to consider the period over which a substance has been used, the amount of patient use of thesubstance, the degree of scientific interest in the use of the substance (as reflected in the scientific literature) and the coherence (consistency) of all thescientific assessments made in the literature. For this reason, different substances may reach the threshold for well-established use after different periods, butthe minimum period is 10 years. If the applicant seeks approval of an entirely new therapeutic use compared with that to which the published literature refers,additional preclinical and/or clinical results would have to be provided. (3) Fixed Combination Application Under Article 10(b) of Directive 2001/83/EC, as amended, and Annex I, Part II(5), fixed-combination applications are possible formedicinal products containing active substances used in the composition of authorized medicinal products (but not to be used in combination for therapeuticpurposes). In that case, the results of new preclinical tests or new clinical trials relating to that combination shall be provided in accordance with Article 8(3)(i), but it is not necessary to provide scientific references relating to each individual active substance. Moreover, any fixed combination may be considered acomplete/full, independent application because it is a new and unique medicinal product requiring a separate summary of product characteristics, or SmPC. (4) Informed Consent Under Article 10c of Directive 2001/83/EC, following the grant of a marketing authorization the holder of such authorization may consent to acompetent authority utilizing the pharmaceutical, preclinical and clinical documentation that it submitted to obtain approval for a medicinal product toassess a subsequent application relating to a medicinal product possessing the same qualitative and quantitative composition with respect to the activesubstances and the same pharmaceutical form. 59 C. Mixed Marketing Authorization Applications Annex I, Part II(7) of Directive 2001/83/EC, as amended, specifies that mixed marketing authorization applications, or MAAs, must presentpublished scientific literature together with original results of tests and trials. Such applications must be submitted and processed following the complete, fulland independent MAA dossier requirements. These requirements apply to the use of bibliographic references in mixed dossiers both as supporting data forthe applicant’s own tests and trials or in order to replace any tests or trials in Module 4 and/or 5. All other module(s) are in accordance with the structuredescribed in Part I of the above-mentioned Annex 1. The Competent Authority will accept the applicant’s proposed format on a case-by-case basis. Law Relating to Pediatric Research Regulation (EC) 1901/2006 (as amended by Regulation (EC) 1902/2006) was adopted on December 12, 2006. This Regulation governs thedevelopment of medicinal products for human use in order to meet the specific therapeutic needs of the pediatric population. It requires any application formarketing authorization made after July 26, 2008 in respect of a product not authorized in the EU on January 26, 2007, the time the Regulation entered intoforce, to include studies in children conducted in accordance with a pediatric investigation plan agreed to by the relevant European authorities, unless theproduct is subject to an agreed waiver or deferral or unless the product is excluded from the scope of Regulation 1902/2006 (generics, hybrid medicinalproducts, biosimilars, homeopathic and traditional (herbal) medicinal products and medicinal products containing one or more active substances of well-established medicinal use. Waivers can be granted in certain circumstances where pediatric studies are not required or desirable. Deferrals can be granted incertain circumstances where the initiation or completion of pediatric studies should be deferred until appropriate studies in adults have been performed.Moreover, this regulation imposes the same obligation from January 26, 2009 on an applicant seeking approval of a new indication, pharmaceutical form orroute of administration for a product already authorized and still protected by a supplementary protection certificate granted under Regulation (EEC)1768/92 codified as Regulation (EC) no. 469/2009 or by a patent that qualifies for the granting of such a supplementary protection certificate. The pediatricRegulation 1901/2006 also provides, subject to certain conditions, a reward for performing such pediatric studies, regardless of whether the pediatric resultsprovided resulted in the grant of a pediatric indication. This reward comes in the form of an extension of six months to the supplementary protectioncertificate granted in respect of the product, unless the product is subject to orphan drug designation, in which case the 10-year market exclusivity period forsuch orphan products is extended to 12 years. If any of the non-centralized procedures for marketing authorization have been used, the six month extensionof the supplementary protection certificate is only granted if the medicinal product is authorized in all member states. Where the product is no longer coveredby a patent or supplementary protection certificate, the applicant may make a separate application for a Pediatric Use Marketing Authorization, or PUMA,which, on approval, will provide eight years’ protection for data and 10 years’ marketing protection for the pediatric results. In June 2013, the European Commission published a report on the first five years of implementation of the Regulation. The report concludes thatpediatric development has become a more integral part of the overall development of medicinal products in the EU, with the Regulation working as a majorcatalyst to improve the situation for young patients Post-authorization Obligations An authorization to market a medicinal product in the EU carries with it an obligation to comply with many post-authorization regulations relatingto the marketing and other activities of authorization holders. These include requirements relating to provision of a risk management plan and provision ofannual periodic safety update reports, carrying out of post-authorization efficacy studies and/or post-authorization safety studies, maintenance of apharmacovigilance system master file, adverse event reporting, signal detection and management and other pharmacovigilance activities conducted under anestablished quality system, advertising, packaging and labeling, patient package leaflets, distribution and wholesale dealing. The regulations frequentlyoperate within a criminal law framework, and failure to comply with the requirements may not only affect the authorization, but also can lead to financial andother sanctions levied on the company in question and responsible officers. Any authorization granted by member state authorities, which within three years of its granting is not followed by the actual placing on the marketof the authorized product in the authorizing member state ceases to be valid. When an authorized product previously placed on the market in the authorizingmember state is no longer actually present on the market for a period of three consecutive years, the authorization for that product shall cease to be valid. Thesame two three year periods apply to authorizations granted by the European Commission based on the centralized procedure. 60 Approval of Medical Devices In the EEA there is a consolidated system for the authorization of medical devices as provided for in three core directive: the Medical DeviceDirective 93/42/EEC as amended by Directive 93/68/EEC on CE marking, Directive 90/385/EEC, as amended by Directive 2007/47/EC, regarding activeimplantable medical devices and Directive 98/79/EC regarding in vitro diagnostic medical devices. The European Union requires that manufacturers ofmedical devices obtain the right to affix the CE mark to their products, which shows that the device has a Declaration of Conformity, before selling them inEuropean Union member countries. The CE mark is an international symbol of adherence to quality assurance standards and compliance with applicableEuropean medical device directives. In order to obtain the right to affix the CE mark to products, a manufacturer must obtain certification that its processesmeet certain European quality standards, which vary according to the nature of the device. Compliance with the Medical Device Directive, as certified by arecognized European Notified Body, permits the manufacturer to affix the CE mark on its products and commercially distribute those products throughoutthe European Union without further conformance tests being required in other member states. In September 2012, the European Commission adopted a Proposal for a Regulation of the European Parliament and of the Council on medicaldevices and a Proposal for a Regulation of the European Parliament and of the Council on in vitro diagnostic medical devices which will, once adopted bythe European Parliament and by the Council, replace the existing three medical devices directives. Revisions include extension of the scope for legislation,better supervision of independent assessment bodies, clear rights for manufacturers/distributors and stronger requirements for medical evidence. Israel Israel Ministry of the Environment — Toxin Permit In accordance with the Israeli Dangerous Substances Law - 1993, the Ministry of the Environment is required to grant a permit in order to use toxicmaterials. Because we utilize toxic materials in the course of operation of our laboratories, we were required to apply for a permit to use these materials. Ourcurrent toxin permit will remain in effect until December 2018. Clinical Testing in Israel In order to conduct clinical testing on humans in Israel, special authorization must first be obtained from the ethics committee and general managerof the institution in which the clinical studies are scheduled to be conducted, as required under the Guidelines for Clinical Trials in Human Subjectsimplemented pursuant to the Israeli Public Health Regulations (Clinical Trials in Human Subjects), as amended from time to time, and other applicablelegislation. These regulations require authorization by the institutional ethics committee and general manager as well as from the Israeli Ministry of Health,except in certain circumstances, and in the case of genetic trials, special fertility trials and complex clinical trials, an additional authorization of the Ministryof Health’s overseeing ethics committee. The institutional ethics committee must, among other things, evaluate the anticipated benefits that are likely to bederived from the project to determine if it justifies the risks and inconvenience to be inflicted on the human subjects, and the committee must ensure thatadequate protection exists for the rights and safety of the participants as well as the accuracy of the information gathered in the course of the clinical testing.Since we intend to perform a portion of the clinical studies on certain of our therapeutic candidates in Israel, we will be required to obtain authorization fromthe ethics committee and general manager of each institution in which we intend to conduct our clinical trials, and in most cases, from the Israeli Ministry ofHealth. Other Countries In addition to regulations in the United States, the EU and Israel, we are subject to a variety of other regulations governing clinical trials andcommercial sales and distribution of drugs in other countries. Whether or not our products receive approval from the FDA, approval of such products must beobtained by the comparable regulatory authorities of countries other than the United States before we can commence clinical trials or marketing of theproduct in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.The requirements governing the conduct of clinical trials and product licensing vary greatly from country to country. 61 Related Matters From time to time, legislation is drafted, introduced and passed in governmental bodies that could significantly change the statutory provisionsgoverning the approval, manufacturing and marketing of products regulated by the FDA or EMA and other applicable regulatory bodies to which we aresubject. In addition, regulations and guidance are often revised or reinterpreted by the national agency in ways that may significantly affect our business andour therapeutic candidates. It is impossible to predict whether such legislative changes will be enacted, whether FDA or EMA regulations, guidance orinterpretations will change, or what the impact of such changes, if any, may be. We may need to adapt our business and therapeutic candidates and productsto changes that occur in the future. Israeli Government Programs Office of the Chief Scientist Research and Development Grants. A number of our therapeutic products have been financed, in part, through funding from the OCS in accordancewith Research Law. Through December 31, 2015 we have received approximately $19.5 million in aggregate funding from the OCS. As of December 31,2015, we have a contingent obligation to the OCS (other than for BL-8040 – see below) in the total amount of $0.2 million under all of our approvedprograms. In connection with the in-licensing of BL-8040 from Biokine, and as a condition to OCS consent to the transaction, we agreed to abide by anyobligations resulting from funds previously received by Biokine from the OCS. The contingent liability to the OCS assumed by us relating to this transactionamounts to $2.7 million as of December 31, 2015. We have a full right of offset for amounts payable to the OCS from payments that we may owe to Biokinein the future. Therefore, the likelihood of any payment obligation to the OCS with regard to the Biokine transaction is remote. Under the Research Law as ineffect prior to the R&D Amendment and the terms of the grants, royalties on the revenues derived from sales of products developed with the support of theOCS were payable to the Israeli government, generally at the rate of 3% during the first three years of repayment, 4% during the subsequent three years and5% from the seventh year onwards, although these terms would be different if we were to receive OCS approval to manufacture or to transfer the rights tomanufacture our products developed with OCS grants outside of Israel. The obligation to make these payments terminates upon repayment of the amount ofthe received grants as adjusted for fluctuation in the dollar/shekel exchange rate, plus interest and any additional amounts as described below. However, wecould be required to pay an increased total amount of royalties (possibly up to 300% of the grant amounts plus interest) if we receive approval to manufactureor to transfer the rights to manufacture our products developed with OCS grants outside of Israel, depending on the portion of total manufacturing that wasperformed outside of Israel, as further described below, and we could be required to pay additional amounts in respect of the technology developed underthese projects that was otherwise transferred outside of Israel, as further described below. The amounts received bear interest equal to the 12-month LondonInterbank Offered Rate applicable to dollar deposits that was published on the first business day of each calendar year. Pursuant to the Research Law as in effect prior to the R&D Amendment, recipients of funding from the OCS were prohibited from manufacturingproducts developed using OCS grants or derived from technology developed with OCS grants outside of the State of Israel and from transferring rights tomanufacture such products outside of Israel. However, the OCS could, in special cases, approve the transfer of manufacture or of manufacturing rights of aproduct developed in an approved program or which resulted therefrom, outside of Israel. If we were to receive approval to manufacture or to transfer therights to manufacture our products developed with OCS grants outside of Israel, we would be required to pay an increased total amount of royalties (possiblyup to 300% of the grant amounts plus interest), depending on the portion of total manufacturing that was performed outside of Israel. In addition, the royaltyrate applicable to us could possibly increase. Such increased royalties constituted the total repayment amount required in connection with the transfer ofmanufacturing rights of OCS funded products outside Israel. The Research Law, as in effect prior to the R&D Amendment, did enable companies to seek priorapproval for conducting manufacturing activities outside of Israel without being subject to increased royalties (but resulting in a lower grant amount);however, the OCS rarely granted such prior approval. 62 Under the Research Law, as in effect prior to the R&D Amendment, we were prohibited from transferring our OCS-financed technologies,technologies derived therefrom and related intellectual property rights outside of Israel except under limited circumstances and only with the approval of theOCS and upon making a payment to the OCS. The required approvals may not have been received for any proposed transfer and, if received, we could berequired to pay the OCS an amount calculated in accordance with the applicable formula set out in the Research Law. The scope of the support received, theroyalties that we already paid to the OCS, the amount of time that elapsed between the date on which the technology was transferred and the date on whichthe OCS grants were received and the sale price and the form of transaction were to be taken into account in order to calculate the amount of the payment tothe OCS. The repayment amount was subject to a maximum limit calculated in accordance with a formula set forth in regulations enacted during 2012. Inaddition, any decrease in the percentage of manufacture performed in Israel of any product or technology, as originally declared in the application to the OCSwith respect to the product or technology, could require us to notify, or to obtain the approval of, the OCS, and could result in increased royalty payments tothe OCS of up to 300% of the total grant amounts received in connection with the product or technology, plus interest, depending on the portion of totalmanufacturing that was performed outside of Israel. Approval of the transfer of technology to residents of Israel was required prior to the R&D Amendment, and could be granted in specificcircumstances, only if the recipient agreed to abide by the provisions of applicable laws, including the restrictions on the transfer of know-how and theobligation to pay royalties. In July 2015, the Knesset enacted the R&D Amendment after reaching the conclusion that the pre-R&D Amendment regime was not flexible enoughto allow the OCS and the recipients of research and development funding to respond quickly to the challenges of a changing world. Pursuant to the R&DAmendment, the OCS was replaced with the Authority, which is comprised of the Council of the Authority, or Council, a Director General and the ResearchCommittees. The Chief Scientist will become the head of the Authority. According to the R&D Amendment, the Council will have broad discretion regardingmaterial matters, including, among others, with respect to the new funding programs, or Tracks, and requirements with respect to manufacture in Israel andtransfer of manufacture abroad (including payment for such transfer). While the pre-R&D Amendment regime provided base-line default terms and conditionswith respect to the core issues relevant for OCS grant recipients, as provided above, these default provisions have been largely rescinded by the R&DAmendment. Many of these matters will now be decided separately for each Track by the Council, based on certain guidelines stipulated in the R&DAmendment. Such guidelines provide, for example, that considerable preference should be given to having ownership of Authority-funded know-how andrights vest with the recipient of assistance and/or with an Israeli company, with transfer of know-how and related rights abroad to be permitted only inexceptional circumstances. In addition, the R&D Amendment stipulates that the transfer of manufacturing rights abroad, whether under a license or otherwise,shall only be allowed in special circumstances. Nonetheless, these matters are merely guidelines, and the essential matters will be determined by the Councilin its discretion. While the R&D Amendment is designed to provide flexibility in a rapidly-changing business environment, leaving the above essentialmatters to the Council’s discretion currently causes much ambiguity as to the implementation of the R&D Amendment. The State of Israel does not own intellectual property rights in technology developed with OCS or Authority funding and there is no restriction onthe export of products manufactured using technology developed with OCS or Authority funding. The technology is, however, subject to transfer oftechnology and manufacturing rights restrictions as described above. Israel Ministry of Health Israel’s Ministry of Health, which regulates medical testing, has adopted protocols that correspond, generally, to those of the FDA and the EuropeanMedicines Agency, making it comparatively straightforward for studies conducted in Israel to satisfy FDA and the European Medicines Agency requirements,thereby enabling medical technologies subjected to clinical trials in Israel to reach U.S. and EU commercial markets in an expedited fashion. Many membersof Israel’s medical community have earned international prestige in their chosen fields of expertise and routinely collaborate, teach and lecture at leadingmedical centers throughout the world. Israel also has free trade agreements with the United States and the EU. C. Organizational Structure Our corporate structure consists of BioLineRx Ltd. and one wholly-owned inactive subsidiary: BioLineRx USA Inc. Until the end of 2014,BioLineRx Ltd. had two other wholly-owned entities: BioLine Innovations Jerusalem Limited Partnership, or BIJ L.P. and BioLine Innovations JerusalemLtd., or BIJ Ltd. Both BIJ L.P. and BIJ Ltd. were engaged in the operation of our biotechnology incubator. Our incubator agreement with the OCS expired atthe end of 2013. As a result, we decided to transfer all the employees, activities and assets from the incubator to BioLineRx Ltd., and liquidated BIJ L.P. andBIJ Ltd. in December 2014 and 2015, respectively. 63 D. Property, Plant and Equipment We are headquartered in Modi’in, Israel. Until June 2015, our headquarters were located in Jerusalem. The facility consists of 1,663 square meters(approximately 17,900 square feet) of space and lease payments are approximately $27,000 per month, including maintenance fees and parking. This facilityhouses both our administrative and research operations and our central laboratory. The central laboratory consists of approximately 380 square meters andincludes an analytical chemistry laboratory, a formulation laboratory and a tissue culture laboratory. Our central laboratory is compliant with both cGMP andcertified GLP, which allows us to manufacture therapeutic supplies for our current clinical trials. All of our employees are based in this facility. ITEM4A. UNRESOLVED STAFF COMMENTS None. ITEM5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and thenotes thereto included elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates andbeliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to thesedifferences include those discussed below and elsewhere in this annual report, particularly those in “Item 3. Key Information — Risk Factors.” We are a clinical stage biopharmaceutical development company dedicated to identifying, in-licensing and developing therapeutic candidates thathave advantages over currently available therapies or address unmet medical needs. Our current development pipeline consists of three main clinicaltherapeutic candidates: BL-8040, BL-7010 and BL-5010. In addition, we have three other therapeutic candidates in clinical and pre-clinical development.We generate our pipeline by systematically identifying, rigorously validating and in-licensing therapeutic candidates that we believe exhibit a relativelyhigh probability of therapeutic and commercial success. Our strategy includes commercializing our therapeutic candidates through out-licensingarrangements with biotechnology and pharmaceutical companies and evaluating, on a case by case basis, the commercialization of our therapeuticcandidates independently. Our focus is principally on the therapeutic areas of oncology and immunology. However, we may also in-license therapeuticcompounds outside of these areas in connection with our strategic collaboration with Novartis, as well as to a limited extent for our independent pipeline asthe opportunities arise. Clinical Stage Pipeline The following is a description of our three main clinical therapeutic candidates: •BL-8040 is a novel, short peptide that functions as a high-affinity antagonist for CXCR4, which we intend to develop for multiple cancerand hematological indications. ØIn June 2013, we commenced a Phase 2 trial for the treatment of r/r AML, which is currently being conducted at five world-leadingcancer research centers in the U.S. and at five premier sites in Israel. In November 2015, we announced positive results from the doseescalation stage of this study, including clinical response data. Top-line results of the study are expected in the first quarter of 2016. ØIn March 2015 we reported successful top-line safety and efficacy results from a Phase 1 safety and efficacy trial for the use of BL-8040as a novel treatment for stem cell mobilization, which was conducted at the Hadassah Medical Center in Jerusalem. Morecomprehensive data from this study was reported at the European Hematology Association (EHA) Conference in June 2015. In October2015, we held a “Type B” meeting with the FDA to discuss the next steps in the clinical development plan for stem cell mobilization.In December 2015, we announced the filing of regulatory submissions required to commence a Phase 2 trial at Washington UniversitySchool of Medicine in St. Louis for use of BL-8040 in stem cell mobilization for allogeneic transplantation. The trial is expected tocommence shortly after receipt of regulatory approval, anticipated in the first quarter of 2016. 64 ØIn August 2015, we initiated a Phase 2b trial in Germany, in collaboration with the German Study Alliance Leukemia Group, as aconsolidation treatment for AML patients who have responded to standard induction treatment. The Phase 2b trial is a double-blind,placebo-controlled, randomized, multi-center study aimed at assessing the efficacy of BL-8040 in addition to standard consolidationtherapy in AML patients. Up to 194 patients will be enrolled in the trial. The primary endpoint of the study is to compare the relapsefree survival (RFS) time in AML subjects in their first remission during a minimum follow-up time of 18 months after randomization.Top-line results of this study are expected in 2018. ØIn November 2015, we commenced a Phase 1/2 trial, in collaboration with the MD Anderson Cancer Center, for BL-8040 as a treatmentfor hypoplastic myelodysplastic syndrome (hMDS) and aplastic anemia (AA). The study will be open label and designed to evaluatethe safety, tolerability and efficacy of the combination of BL-8040 with immunosuppressive therapies (hATG, cyclosporine andmethylprednisone). ØIn January 2016, we entered into a collaboration with MSD, known as Merck in the U.S. and Canada, in the field of cancerimmunotherapy. We plan to sponsor and conduct a Phase 2 study investigating BL-8040 in combination with KEYTRUDA®(pembrolizumab), MSD’s anti-PD-1 therapy, in patients with metastatic pancreatic adenocarcinoma. The study is an open-label,multicenter, single-arm trial designed to evaluate the clinical response, safety and tolerability of the combination of these therapies aswell as multiple pharmacodynamic parameters, including the ability to improve infiltration of T cells into the tumor and theirreactivity. The study is planned to commence by mid-2016. ØWe are also planning to commence a Phase 2a trial for BL-8040 in the second half of 2016, also in collaboration with the MDAnderson Cancer Center, for the treatment of AML patients with the FLT3-ITD mutation. ØIn September 2013, the FDA granted an Orphan Drug Designation to BL-8040 as a therapeutic for the treatment of AML; and inJanuary 2014, the FDA granted an Orphan Drug Designation to BL-8040 as a treatment for stem cell mobilization. In January 2015, theFDA modified this Orphan Drug Designation for BL-8040 for use either as a single agent or in combination with G-CSF. •BL-7010 is a novel, non-absorbable, orally available, high-molecular-weight co-polymer intended for the treatment of celiac disease andgluten sensitivity. In December 2013, we commenced a Phase 1/2 trial for BL-7010 at Tampere Hospital in Finland, a leading site for celiacresearch. This study was conducted based on an initial medical device submission, under a conditional approval received from theregulatory authorities. In November 2014, we reported the final results of the study. BL-7010 was found to be safe and well tolerated inboth single- and repeated-dose administrations. Based on these results, we selected the dosing regimen of one gram, three times per day, ofBL-7010 as the optimal repeated dose in the next efficacy study for celiac patients. In January 2016, we received confirmation regardingthe classification of BL-7010 as a Class IIb medical device in the European Union. Over the last year, we have invested considerable efforts in examining alternative development and commercialization pathways for BL-7010, in addition to the celiac disease pathway, including as a food supplement, in order to potentially address the multi-billion dollarmarket for gluten sensitivity. We believe the gluten sensitivity market has a significantly shorter time to market than drug or devicepathways, especially in the U.S. market, where the device pathway is not available for BL-7010. We are currently conducting a number ofactivities towards the development of BL-7010 as a food supplement, including the development of a suitable product formulation,preparation of the documents necessary for a GRAS designation submission, and preparations for a relatively small clinical trial to supportthe marketing efforts we may conduct regarding gluten and/or gluten sensitivity. We expect to complete these activities by mid-2017 inorder to support partnering discussions for the food supplement market in the U.S. and other relevant territories at that time. We will alsocontinue to evaluate the pathway in Europe for celiac disease and will make a decision about the timing and scope of the next efficacystudy for European registration over the next few months. 65 •BL-5010 is a customized, proprietary pen-like applicator containing a novel, acidic, aqueous solution for the non-surgical removal of skinlesions. In December 2010, we announced positive results from a Phase 1/2 clinical trial of BL-5010. We have received Europeanconfirmation from BSI of the regulatory pathway classification of BL-5010 as a Class IIa medical device. In December 2014, we enteredinto an exclusive out-licensing arrangement with Omega Pharma (now a subsidiary of Perrigo Company plc) for the rights to BL-5010 forover-the-counter, or OTC, indications in the territory of Europe, Australia and additional selected countries. In September 2015, we reportedthat Omega Pharma submitted an application for CE marking for BL-5010. During 2015, Omega Pharma conducted a 30-patient, open-labelclinical study in Turkey to evaluate the advantages of BL-5010 in one of the intended OTC indications. Study results indicate that BL-5010 is safe and efficacious. Omega Pharma submitted an application for CE Mark designation for BL-5010 during the third quarter of2015, and has completed the initial manufacturing process automation to support the product launch. The commercial launch of the firstOTC indication for this product is expected during 2016. Principal Partnering and Collaboration Agreements In December 2014, we entered into a strategic collaboration with Novartis for the co-development of selected Israeli-sourced novel drug candidates.Under the agreement, we intend, in collaboration with Novartis, to co-develop a number of pre-clinical and early clinical therapeutic projects through clinicalproof-of-concept for potential future licensing by Novartis. In December 2014, we entered into an exclusive out-licensing arrangement with Omega Pharma for the rights to BL-5010 for over-the-counter orOTC indications in the territory of Europe, Australia and additional selected countries. We will retain all OTC rights to BL-5010 in the United States and therest of the world, as well as all non-OTC rights on a global basis. Under our out-licensing arrangement with Omega Pharma, Omega Pharma is obligated to usecommercially reasonable best efforts to obtain regulatory approval in the licensed territory for at least two OTC indications and to commercialize BL-5010for those two OTC indications. In addition, Omega Pharma will sponsor and manufacture BL-5010 in the relevant regions. Omega Pharma will pay us anagreed amount for each unit sold, and we will be entitled to certain commercial milestone payments. In addition, we will have full access to all clinical andresearch and development data, as well as manufacturing data, generated during the performance of the development plan and may use these data in order todevelop or license the product in other territories and fields of use where we retain the rights. In January 2016, we entered into a collaboration with MSD, known as Merck in the U.S. and Canada, in the field of cancer immunotherapy. We planto sponsor and conduct a Phase 2 study investigating BL-8040 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy, in patientswith metastatic pancreatic adenocarcinoma. The study is an open-label, multicenter, single-arm trial designed to evaluate the clinical response, safety andtolerability of the combination of these therapies as well as multiple pharmacodynamic parameters, including the ability to improve infiltration of T cellsinto the tumor and their reactivity. The study is planned to commence by mid-2016. Upon completion of the study, or at any earlier point, both parties willhave the option to expand the collaboration to include a pivotal registration study. Other Partnering and Collaboration Agreements In 2009, we entered into an exclusive, worldwide, royalty-bearing licensing arrangement with Bellerophon. Under the agreement, we grantedBellerophon an exclusive, worldwide license to develop, manufacture and commercialize BL-1040 for use in the prevention, mitigation and treatment ofinjuries to the myocardial tissue of the heart. Under the arrangement, Bellerophon is obligated to use commercially reasonable efforts to complete clinicaldevelopment of, and to commercialize, BL-1040 or products related thereto. We received an upfront payment of $7.0 million upon the execution of thelicense agreement. Upon successful completion of the Phase 1/2 clinical trial, Bellerophon paid us a milestone payment of $10.0 million in March 2010, andwe are entitled to receive additional milestone and royalty payments upon the occurrence of certain events. In June 2013, we signed an out-licensing agreement with CTTQ, the leading Chinese pharmaceutical company in the liver disease therapeutic area,granting CTTQ exclusive rights to develop, manufacture and commercialize BL-8030, an orally available treatment for HCV, in China and Hong Kong. InJanuary 2016, we received notice from CTTQ that it was exercising its right to terminate the agreement with us, effective in April 2016. We have alsoprovided notice to the licensors of BL-8030 of the termination of our in-licensing agreement with them, which took effect in early March 2016. 66 In January 2014, we signed a collaboration agreement with JHL Biotech, or JHL, a biopharmaceutical company that develops, manufactures, andcommercializes biologic medicines, pursuant to which we will collaborate with JHL in the development and commercialization of BL-9020, a novelmonoclonal antibody in the preclinical development stage for the treatment of Type 1 diabetes. JHL Biotech will be responsible for all process developmentand manufacturing of BL-9020 during its pre-clinical and clinical development stages, and we will be responsible for all pre-clinical development of BL-9020. JHL will have global manufacturing rights to BL-9020, along with development and commercialization rights in China and Southeast Asia, and wewill have development and commercialization rights in the rest of the world. In all development and manufacturing of BL-9020, JHL will adhere to FDAguidelines and regulations. Each party will have rights to all development and regulatory data generated under the agreement in order to commercialize BL-9020 in its respective territory. Each party will also be entitled to single-digit royalties on the sale of BL-9020 in the other party’s respective territory. History of Losses Since inception in 2003, we have generated significant losses in connection with our research and development. As of December 31, 2015, we hadan accumulated deficit of $159.4 million. Although we have previously recognized revenues in connection with our out-licensing arrangement withBellerophon for BL-1040 and our former out-licensing arrangement with Cypress Bioscience for BL-1020, we may continue to generate losses in connectionwith the research and development activities relating to our pipeline of therapeutic candidates. Such research and development activities are budgeted toexpand over time and will require further resources if we are to be successful. As a result, we may continue to incur operating losses, which may be substantialover the next several years, and we may need to obtain additional funds to further pursue our research and development programs. We have funded our operations primarily through the sale of equity securities (both in public and private offerings), funding received from the OCS,payments received under the licensing arrangements with Bellerophon and Cypress Bioscience, and interest earned on investments. We expect to continue tofund our operations over the next several years through our existing cash resources, potential future upfront, milestone, royalty or other payments that wemay receive from Omega Pharma, Novartis and other out-licensing or collaboration transactions for our other therapeutic candidates, interest earned on ourinvestments and additional capital to be raised through public or private equity offerings or debt financings. As of December 31, 2015, we heldapproximately $47.7 million of cash, cash equivalents and short-term bank deposits. Revenues Our revenues to date have been generated primarily from milestone payments under current and previously existing out-licensing agreements. We expect our revenues for the next several years to be derived primarily from payments under our current out-licensing agreement with OmegaPharma, our collaboration agreement with Novartis, as well as other potential collaboration arrangements, including future royalties on product sales. Research and Development Our research and development expenses consist primarily of salaries and related personnel expenses, fees paid to external service providers, up-frontand milestone payments under our license agreements, patent-related legal fees, costs of preclinical studies and clinical trials, drug and laboratory suppliesand costs for facilities and equipment. We primarily use external service providers to manufacture our product candidates for clinical trials and for themajority of our preclinical and clinical development work. We charge all research and development expenses to operations as they are incurred. We expectour research and development expense to remain our primary expense in the near future as we continue to develop our therapeutic candidates. 67 The following table identifies our current major research and development projects: ProjectStatus Expected Near-Term Milestone BL-80401.Phase 2 study for AML; dose expansion stage ongoing1.Top-line results expected in Q1 2016 2.Phase 1 study in stem cell mobilization completed; Type B (end ofPhase 1 meeting) with FDA conducted; regulatory submissions forPhase 2 study completed2.Phase 2 trial expected to commence in Q1 2016. Partial resultsexpected by end of 2016 3.Phase 2b consolidation treatment for AML initiated3.Completion of enrollment by mid-2017. Top-line results expected in2018 4.Phase 1/2 study for hMDS and AA initiated4.Partial results expected by end of 2016 5.Phase 2a study in pancreatic cancer, in collaboration with Merck, infinal planning stages5.Commencement of study expected in mid-2016 6.Phase 2a study for AML patients with FLT3-ITD mutation in finalplanning stages6.Commencement of study expected in H2 2016BL-7010Completed Phase 1/2 study; classified as Class IIb medical device in theEUSubmission of package for GRAS designation as food supplement inthe U.S.; completion of formulation development as food supplement;initiation of clinical study for marketing purposes as food supplement;determination of appropriate timing for continued medical devicedevelopment in EuropeBL-5010Out-licensed to Omega Pharma; application for CE mark submitted in Q32015CE mark approval; commercial launch of first OTC indication in Europeduring 2016; pursuit of potential out-licensing partner(s) for OTC andnon-OTC rights still held by us In addition to the projects set forth above, we have three additional projects in clinical and pre-clinical stages of development (BL-8020, BL-1040and BL-9020) that are significantly less material to the Company’s ongoing research and development expenditures. See “Item 4. Information on theCompany — Business Overview — Therapeutic Candidates in Preclinical Development.” Prior to 2013, we recorded costs for each development project on a “direct cost” basis only. Direct costs, which include contract researchorganization expenses, consulting expenses, patent expenses, materials and other, similar expenses, were recorded to the project for which such expenses areincurred. However, salary and overhead costs, including, but not limited to, salary expenses (including salaries for research and development personnel),facilities, depreciation and stock-based compensation, were shared among all of our projects and were not recorded on a project-by-project basis. We did notallocate direct salaries to projects due to the fact that our project managers were generally involved in several projects at different stages of development, andthe related salary expense was not significant to the overall cost of the applicable projects. In addition, indirect labor costs relating to our departments thatsupport the research and development process, such as chemistry, manufacturing and controls (CMC), pre-clinical analysis, laboratory testing and initial drugsample production, as well as rent and other administrative overhead costs, were shared by many different projects and were never considered by managementto be of significance in its decision-making process with respect to any specific project. Accordingly, such costs were not specifically allocated to individualprojects. Beginning in 2013, as the result of a decision to reduce the total number of development projects in our pipeline, along with the fact that thenumber of more advanced clinical projects in our pipeline has increased on a proportionate basis, we decided to record costs for each development project ona “full cost” basis. Accordingly, beginning in 2013, costs for each development project included salary and overhead costs, as well as direct costs. 68 Set forth below is a summary of the costs allocated to our main projects on an individual basis, as well as the costs allocated to our less significantprojects on an aggregate basis, for the years ended December 31, 2013, 2014 and 2015, and on an aggregate basis since project inception. Certain of suchcosts are covered by OCS funding, although OCS funds received have not been deducted from the project costs in the table. Year Ended December 31, Total CostsSince Project 2013 2014 2015 Inception (U.S. $ in thousands) BL-8040 3,910 4,698 7,045 16,376 BL-7010 1,905 3,756 1,657 8,152 BL-5010 251 1,282 400 4,069 Other projects 5,097 1,537 1,916 103,332 Total project costs 11,163 11,273 11,018 131,929 The costs and expenses of our projects have been partially financed by funds we have received from the OCS. Such funds are deducted from therelated research and development expenses as the costs are incurred. For additional information regarding the OCS funding process, see “GovernmentRegulation and Funding — Israeli Government Programs.” We have not received significant funding from the OCS since 2012, and there can be no assurancethat we will receive significant funding from the OCS in the future, if at all. From our inception through December 31, 2015, we have incurred research and development expense of approximately $166.0 million. We expectthat a large percentage of our research and development expense in the future will be incurred in support of our current and future preclinical and clinicaldevelopment projects. Due to the inherently unpredictable nature of preclinical and clinical development processes and given the early stage of ourpreclinical product development projects, we are unable to estimate with any certainty the costs we will incur in the continued development of thetherapeutic candidates in our pipeline for potential commercialization. Clinical development timelines, the probability of success and development costs candiffer materially from expectations. We expect to continue to test our product candidates in preclinical studies for toxicology, safety and efficacy, and toconduct additional clinical trials for each product candidate. If we are not able to enter into an out-licensing arrangement with respect to any therapeuticcandidate prior to the commencement of later stage clinical trials, we may fund the trials for the therapeutic candidate ourselves. While we are currently focused on advancing each of our product development projects, our future research and development expenses will dependon the clinical success of each therapeutic candidate, as well as ongoing assessments of each therapeutic candidate’s commercial potential. In addition, wecannot forecast with any degree of certainty which therapeutic candidates may be subject to future out-licensing arrangements, when such out-licensingarrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. See “Item 3. KeyInformation — Risk Factors — If we or our licensees are unable to obtain U.S. and/or foreign regulatory approval for our therapeutic candidates, we will beunable to commercialize our therapeutic candidates.” 69 As we obtain results from clinical trials, we may elect to discontinue or delay clinical trials for certain therapeutic candidates or projects in order tofocus our resources on more promising therapeutic candidates or projects. Completion of clinical trials by us or our licensees may take several years or more,but the length of time generally varies according to the type, complexity, novelty and intended use of a therapeutic candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including,among others: •the number of sites included in the clinical trials; •the length of time required to enroll suitable patients; •the cost of drug substance/product manufacturing, storage and shipment; •the number of patients that participate in the clinical trials; •the duration of patient follow-up; •whether the patients require hospitalization or can be treated on an out-patient basis; •the development stage of the therapeutic candidate; and •the efficacy and safety profile of the therapeutic candidate. We expect our research and development expenses to remain our most significant cost as we continue the advancement of our clinical trials andpreclinical product development projects and place significant emphasis on in-licensing new product candidates. The lengthy process of completing clinicaltrials and seeking regulatory approval for our product candidates requires expenditure of substantial resources. Any failure or delay in completing clinicaltrials, or in obtaining regulatory approvals, could cause a delay in generating product revenue and cause our research and development expenses to increaseand, in turn, have a material adverse effect on our operations. Due to the factors set forth above, we are not able to estimate with any certainty when we wouldrecognize any net cash inflows from our projects. Sales and Marketing Expenses Sales and marketing expenses consist primarily of compensation for employees in business development and marketing functions. Other significantsales and marketing costs include costs for marketing and communication materials, professional fees for outside market research and consulting, legalservices related to partnering transactions and travel costs. General and Administrative Expenses General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including accounting,finance, legal, investor relations, information technology and human resources. Other significant general and administration costs include facilities costs,professional fees for outside accounting and legal services, travel costs, insurance premiums and depreciation. Non-Operating Expense and Income Non-operating expense and income includes fair-value adjustments of derivative liabilities on account of the warrants issued in the private anddirect placements which we conducted in 2012 and 2013. These fair-value adjustments are highly influenced by our share price at each period end(revaluation date). Non-operating expense and income also includes the pro-rata share of issuance expenses from the private and direct placements related tothe warrants. In addition, non-operating expense and income includes the initial commitment and finder’s fees, as well as other one-time expenses, associatedwith the initial set-up of the share purchase agreements with LPC. Financial Expense and Income Financial expense and income consist of interest earned on our cash, cash equivalents and short-term bank deposits; bank fees and othertransactional costs; and expense or income resulting from fluctuations of the dollar and other currencies, in which a portion of our assets and liabilities aredenominated, against the NIS (our functional currency). 70 Critical Accounting Policies and Estimates We describe our significant accounting policies more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2015.We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations. The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepare in accordancewith IFRS. The preparation of these financial statements requires us to make estimates using assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses duringthe reporting periods. On an ongoing basis, we evaluate such estimates, including those described in greater detail below. We base our estimates on historicalexperience and on various assumptions that we believe are reasonable under the circumstances, the results of which impact the carrying value of our assetsand liabilities that are not readily apparent from other sources. Actual results will differ from these estimates and such differences may be significant. Functional and Presentational Currency From the Company’s inception through December 31, 2014, the Company’s functional and presentation currency was the NIS. As a result of anumber of factors, including the strategic collaboration agreement with Novartis that will be managed solely in dollars, as well as expectations regarding asignificant increase in expenses denominated in dollars relating to advanced clinical trials, effective January 1, 2015, the Company’s functional andpresentation currency was changed to the dollar. See Note 2c to our consolidated financial statements for the year ended December 31, 2015 includedelsewhere in this report. Revenue Recognition We recognize revenues in accordance with International Accounting Standard No. 18, or IAS 18. Under IAS 18, revenues incurred in connectionwith the out-licensing of our patents and other intellectual property are recognized when all of the following criteria have been met as of the applicablebalance sheet date: •we have transferred to the licensee the significant risks and rewards of the rights to the patents and intellectual property; •we do not retain either the continuing managerial involvement to the degree usually associated with ownership or the effective control overthe patents and intellectual property; •we can reliably measure the amount of revenue to be recognized; •it is probable that the economic benefits associated with the transaction will flow to us; and •we can reliably measure the costs incurred or to be incurred in respect of the out-licensing. We recognize revenues incurred in connection with the rendering of services by reference to the stage of completion of the transaction at the balancesheet date, if and when the outcome of the transaction can be estimated reliably. We recognize revenues from royalties on an accrual basis when they become probable in accordance with the substance of the relevant agreement.Accrued Expenses We are required to estimate accrued expenses as part of our process of preparing financial statements. This process involves estimating the level ofservice performed on our behalf and the associated cost incurred in instances where we have not been invoiced or otherwise notified of actual costs. Examplesof areas in which subjective judgments may be required include costs associated with services provided by contract organizations for preclinicaldevelopment, clinical trials and manufacturing of clinical materials. We account for expenses associated with these external services by determining the totalcost of a given study based on the terms of the related contract. We accrue for costs incurred as the services are being provided by monitoring the status of thetrials and the invoices received from our external service providers. In the case of clinical trials, the estimated cost normally relates to the projected costs oftreating the patients in our trials, which we recognize over the estimated term of the trial according to the number of patients enrolled in the trial on anongoing basis, beginning with patient enrollment. As actual costs become known to us, we adjust our accruals. 71 Investments in Financial Assets The primary objective of our investment activities is to preserve principal while maximizing the income that we receive from our investmentswithout significantly increasing risk and loss. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interestincome and the fair market value of our investments. We manage this exposure by performing ongoing evaluations of our investments. Due to the short-termmaturities of our investments to date, their carrying value has always approximated their fair value. A financial asset is classified in this category if our management has designated it as a financial asset upon initial recognition, because it is managedand its performance is evaluated on a fair-value basis in accordance with a documented risk management or investment strategy. Our investment policy withregard to excess cash, as adopted by our Board of Directors, is composed of the following objectives: (i) preserving investment principal; (ii) providingliquidity; and (iii) providing optimum yields pursuant to the policy guidelines and market conditions. The policy provides detailed guidelines as to thesecurities and other financial instruments in which we are allowed to invest. In addition, in order to maintain liquidity, investments are structured to provideflexibility to liquidate at least 50% of all investments within 15 business days. Information about these assets, including details of the portfolio and incomeearned, is provided internally on a quarterly basis to our key management personnel and on a semi-annual basis to the Investment Monitoring Committee ofour Board of Directors. Any divergence from this investment policy requires approval from our Board of Directors. Government Participation in Research and Development Expenses We have received research and development funding from the State of Israel through the OCS, and we may receive such funding in the future. Inaccordance with the OCS programs, we are entitled to specific funding with respect to a development project only after we incur development costs related tothe project. Such funding qualifies as “forgivable loans” in accordance with IAS 20, “Accounting for Government Grants and Disclosure of GovernmentAssistance,” since it is repayable only if we generate revenues related to the underlying project. In accordance with IAS 20, we account for each forgivable loan as a liability unless it is more likely than not that we will meet the terms offorgiveness of the loan, in which case the forgivable loan is accounted for as a government grant and carried to income as a reduction of the research anddevelopment expenses. Upon the initiation of any project for which we have received a loan, we consider it more likely than not that the project will notreach the revenue-generating stage during the entire development phase of the project when determining the accounting treatment of the related loan. Ourdetermination is based on the high risk nature of pharmaceutical development generally and specifically on our strategy of initializing projects in earlystages of development. Therefore, we record a liability in respect of forgivable loans on a project only when it becomes probable that we will repay the loan. Liabilities to the OCS in respect of out-licensing transactions are generally discussed and negotiated with the OCS, due to the fact that suchlicensing transactions do not fit into the standard development funding model contemplated by the Israeli Research and Development Law. Stock-based Compensation We account for stock-based compensation arrangements in accordance with the provisions of IFRS 2. IFRS 2 requires companies to recognize stockcompensation expense for awards of equity instruments based on the grant-date fair value of those awards (with limited exceptions). The cost is recognized ascompensation expense over the life of the instruments, based upon the grant-date fair value of the equity or liability instruments issued. The fair value of ouroption grants is computed as of the grant date based on the Black-Scholes model, using the standard parameters established in that model including estimatesrelating to volatility of our stock, risk-free interest rates, estimated life of the equity instruments issued and the market price of our stock. As our ordinaryshares are publicly traded on the TASE, we do not need to estimate their fair market value. Rather, we use the actual closing market price of our ordinaryshares on the date of grant, as reported by the TASE. 72 Warrants In connection with the private placement of approximately 5.25 million of our ADSs in February 2012, we issued warrants to purchaseapproximately 2.6 million of our ADSs at an exercise price of $3.57, subject to typical adjustments. The warrants are exercisable for a period of five yearsfrom the date of issuance. Since the exercise price was not deemed to be fixed, the warrants are not qualified for classification as an equity instrument andhave therefore been classified as a non-current financial liability. In connection with the direct placement to Orbimed of approximately 2.67 million of our ADSs in February 2013, we issued warrants to purchase 1.6million of our ADSs at an exercise price of $3.94, subject to typical adjustments. The warrants are exercisable for a period of five years from the date ofissuance. Since the exercise price was not deemed to be fixed, the warrants are not qualified for classification as an equity instrument and have therefore beenclassified as a non-current financial liability Recent Accounting Changes and Pronouncements The following standards have been adopted by the Company for the first time for the fiscal year beginning January 1, 2015: ·Annual Improvements to IFRSs – 2010-2012 Cycle; 2011-2013 Cycle ·Defined Benefit Plans: Employee Contributions – Amendments to IAS 19 The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods. Inaddition, the Company also elected to early adopt the following two amendments: ·Annual Improvements to IFRSs – 2012-2014 Cycle ·Disclosure Initiative: Amendments to IAS 1. As these amendments merely clarify the existing requirements, they do not affect the Company’s accounting policies or any of the disclosures. For information concerning new standards and interpretations not yet adopted, see Note 2t to our consolidated financial statements for the yearended December 31, 2015 included elsewhere in this report. Results of Operations -- Overview Revenues We did not record any revenues for the years ended December 31, 2013, 2014 and 2015. Cost of revenues We did not record any cost of revenues for the years ended December 31, 2013, 2014 and 2015. Research and development expenses At December 31, 2012, our drug development pipeline consisted of 14 therapeutic candidates. During 2013, we added two new compounds to ourpipeline and discontinued the development of six compounds from the pipeline, so that our drug development pipeline as of December 31, 2013 consisted of10 therapeutic candidates. During 2014, we added a new compound to our pipeline and discontinued the development of one compound from the pipeline,so that our drug development pipeline as of December 31, 2014 consisted of 10 therapeutic candidates. During 2015, we did not add any new compounds toour pipeline and we discontinued the development of one compound from the pipeline, so that our drug development pipeline as of December 31, 2015consisted of nine therapeutic candidates. Subsequent to December 31, 2015, we terminated three therapeutic candidates in our pipeline, so that our drugdevelopment pipeline of the date of this report consists of six therapeutic candidates. 73 Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014 Research and development expenses Research and development expenses for the year ended December 31, 2015 were $11.5 million, a decrease of $0.4 million, or 3.4%, compared to$11.9 million for the year ended December 31, 2014. The decrease results primarily from a decrease in spending on BL-7010 and various other projects,partially offset by increased spending on BL-8040. Sales and marketing expenses Sales and marketing expenses for the year ended December 31, 2015 were $1.0 million, a decrease of $0.6 million, or 37.5%, compared to $1.6million for the year ended December 31, 2014. The decrease resulted primarily from professional fees related to business development activities carried out in2014, including professional services related to the collaboration agreement with Novartis and the out-licensing agreement with Omega Pharma regardingBL-5010. General and administrative expenses General and administrative expenses for the year ended December 31, 2015 were $3.7 million, a decrease of $0.1 million, or 2.6%, compared to $3.8million for the year ended December 31, 2014. The decrease primarily results from a decrease in salary-related payments, partially offset by a small increase inprofessional fees. Non-operating income (expense), net We recognized net non-operating income of $1.4 million for the year ended December 31, 2015, compared to net non-operating income of $3.1million for the year ended December 31, 2014. Non-operating income for both periods primarily relates to fair-value adjustments of liabilities on account ofwarrants issued in the private and direct placements which we conducted in February 2012 and 2013. These fair-value adjustments were highly influenced byour share price at each period end (i.e., warrant revaluation date). Financial income (expense), net We recognized net financial income of $0.4 million for the year ended December 31, 2015, compared to net financial income of $3.1 million for theyear ended December 31, 2014. Net financial income for 2015 primarily relates to investment income earned on our bank deposits, partially offset bybanking fees. The 2014 period includes significant exchange rate differences primarily relating to changes in the USD/NIS exchange rate prior to theadoption of the dollar as our functional and reporting currency, effective as of January 1, 2015. Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013 Research and development expenses Research and development expenses for the year ended December 31, 2014 were $11.9 million, a decrease of $0.3 million, or 2.5%, compared to$12.2 million for the year ended December 31, 2013. The decrease resulted primarily from termination of the BL-1020 CLARITY clinical trial in March 2013and certain one-time costs associated with several clinical-stage projects in 2013, partially offset by increased spending on BL-8040, BL-7010 and BL-5010in 2014. Sales and marketing expenses Sales and marketing expenses for the year ended December 31, 2014 were $1.6 million, an increase of $0.5 million, or 45.4%, compared to $1.1million for the year ended December 31, 2013. The increase resulted primarily from professional fees related to increased business development activities,including professional services related to the collaboration agreement with Novartis and the out-licensing agreement with Omega Pharma regarding BL-5010. General and administrative expenses General and administrative expenses for the year ended December 31, 2014 were $3.8 million, an increase of $0.1 million, or 2.7%, compared to $3.7million for the year ended December 31, 2013. The small increase resulted primarily from an increase in salary-related payments. 74 Non-operating income (expense), net We recognized net non-operating income of $3.1 million for the year ended December, 2014, compared to net non-operating income of $1.2 millionfor the year ended December 31, 2013. Non-operating income for both periods primarily relates to fair-value adjustments of liabilities on account of warrantsissued in the private and direct placements which we conducted in February 2012 and 2013. These fair-value adjustments were highly influenced by ourshare price at each period end (i.e., warrant revaluation date). Financial income (expense), net We recognized net financial income of $3.1 million for the year ended December 31, 2014, compared to net financial expenses of $1.2 million forthe year ended December 31, 2013. Net financial income and expenses in 2013 and 2014 resulted primarily from changes in the average exchange rate of thedollar in relation to the NIS during the respective periods, prior to the adoption of the dollar as our functional and reporting currency as of January 1, 2015,which had a direct effect on our net assets denominated in dollars during those two years. 75 Quarterly Results of Operations The following tables show our unaudited quarterly statements of operations for the periods indicated. We have prepared this quarterly informationon a basis consistent with our audited consolidated financial statements and we believe it includes all adjustments, consisting of normal recurringadjustments necessary for a fair presentation of the information shown. Operating results for any quarter are not necessarily indicative of results for a fullfiscal year. Three Months Ended March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 2014 2015 (in thousands of U.S. dollars) Consolidated Statements ofOperations Revenues – – – – – – – – Cost of revenues – – – – – – – – Research and developmentexpenses, net (2,719) (2,792) (2,975) (3,380) (3,211) (2,891) (2,576) (2,811)Sales and marketing expenses (367) (285) (305) (632) (260) (299) (265) (179)General and administrativeexpenses (990) (834) (791) (1,185) (856) (976) (762) (1,110)Operating loss (4,076) (3,911) (4,071) (5,197) (4,327) (4,166) (3,603) (4,100)Non-operating incomeexpenses), net 1,687 279 1,380 (285) (40) (847) 1,983 349 Financial income, net 355 – 1,991 1,288 73 205 85 98 Financial expenses, net (81) (435) – – (17) (2) (91) – Net loss (2,115) (4,067) (700) (4,194) (4,311) (4,810) (1,626) (3,653)Other comprehensive loss –currency translationdifferences (136) (424) (2,027) (1,095) – – – – Comprehensive loss (2,251) (3,643) (2,727) (5,289) (4,311) (4,810) (1,626) (3,653) Our quarterly revenues and operating results of operations have varied in the past and can be expected to vary in the future due to numerous factors.We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of futureperformance. Liquidity and Capital Resources Since inception, we have funded our operations primarily through public and private offerings of our equity securities, funding from the OCS, andpayments received under our strategic licensing and collaboration arrangements. At December 31, 2015, we held approximately $47.7 million in cash, cashequivalents and short-term bank deposits. We have invested substantially all of our available cash funds in short-term bank deposits. Pursuant to the share purchase agreement with LPC signed in May 2014, we may sell, from time to time, and at our discretion, up to $20 million ofour ADSs to LPC during the 36-month term of the purchase agreement. From the effective date of the purchase agreement through the date of this annualreport, we have sold an aggregate of approximately $2.6 million of our ADSs to LPC, leaving an available balance under the facility of approximately $17.4million. Net cash used in operating activities for the year ended December 31, 2015 was $14.2 million, compared to $15.8 million for the year endedDecember 31, 2014 and $19.5 million for the year ended December 31, 2013. The decrease in net cash used in operating activities in 2015 was primarily theresult of a decrease in our operating loss in 2015. The decrease in net cash used in operating activities during 2014 resulted primarily from a large decrease innet trade payables and accruals during the 2013 period. Net cash used in investing activities for the year ended December 31, 2015 was $15.6 million, compared to $19.7 million for the year endedDecember 31, 2014 and $5.3 million for the year ended December 31, 2013. The changes in cash flows from investing activities relate primarily toinvestments in, and maturities of, short-term bank deposits and other investments during the respective periods. Net cash provided by financing activities for the year ended December 31, 2015 was $29.5 million, compared to $32.6 million for the year endedDecember 31, 2014, and $15.1 million for the year ended December 31, 2013. The cash flows in 2015 primarily reflect the underwritten public offering of ourADSs in March 2015. The cash flows in 2014 primarily reflect the underwritten public offering of our ADSs in March 2014, as well as the investment made byNovartis pursuant to our strategic collaboration agreement with them signed in December 2014. The cash flows in 2013 primarily reflect the direct placementto OrbiMed completed in February 2013, as well as funding under the previous share purchase agreement with LPC. 76 Developing drugs, conducting clinical trials and commercializing products is expensive and we will need to raise substantial additional funds toachieve our strategic objectives. Although we believe our existing cash and other resources will be sufficient to fund our projected cash requirements into2018, we will require significant additional financing in the future to fund our operations. Additional financing may not be available on acceptable terms, ifat all. Our future capital requirements will depend on many factors, including: •the progress and costs of our preclinical studies, clinical trials and other research and development activities; •the scope, prioritization and number of our clinical trials and other research and development programs; •the amount of revenues we receive under our collaboration or licensing arrangements; •the costs of the development and expansion of our operational infrastructure; •the costs and timing of obtaining regulatory approval of our therapeutic candidates; •the ability of our collaborators to achieve development milestones, marketing approval and other events or developments under ourcollaboration agreements; •the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; •the costs and timing of securing manufacturing arrangements for clinical or commercial production; •the costs of establishing sales and marketing capabilities or contracting with third parties to provide these capabilities for us; •the costs of acquiring or undertaking development and commercialization efforts for any future product candidates; •the magnitude of our general and administrative expenses; •any cost that we may incur under current and future licensing arrangements relating to our therapeutic candidates; and •payments to the OCS. Until we can generate significant continuing revenues, we expect to satisfy our future cash needs through payments received under ourcollaborations, debt or equity financings, or by out-licensing other product candidates. We cannot be certain that additional funding will be available to uson acceptable terms, or at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or ourcommercialization efforts. Off-Balance Sheet Arrangements Since inception, we have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinatedretained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any otherobligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support. 77 Contractual Obligations The following table summarizes our significant contractual obligations at December 31, 2015: Total Less than1 year 1-3 years 4-5 years More than5 years (in thousands of U.S. dollars) Car leasing obligations 337 199 138 – – Premises leasing obligations 1,024 225 449 351 – Purchase commitments 2,427 1,400 1,022 4 – Total 3,788 1,824 1,609 355 – The premises leasing obligations in the foregoing table include our commitments under the lease agreement for our facility in Modi’in. See “Item 4.Information on the Company — Property, Plant and Equipment.” The term of the lease began on June 15, 2015 and will end June 30, 2020. During the leaseterm, we are obligated to pay initial monthly rental payments of approximately $18,500 and initial monthly parking charges of approximately $1,800. Weare furthermore obligated to pay building maintenance charges during the lease term not exceeding approximately $6,700 per month. The foregoing table does not include our in-licensing agreements. Under our in-licensing agreements, we are obligated to make certain payments toour licensors upon the achievement of agreed upon milestones. We are unable at this time to estimate the actual amount or timing of the costs we will incur inthe future under these agreements; however, we do not expect any material milestones to be achieved within the next 12 months. If all of the milestones areachieved over the life of each in-licensing agreement, we will be required to pay approximately $5.5 million, in the aggregate, to the applicable licensors.Some of the in-licensing agreements are accompanied by consulting, support and cooperation agreements, pursuant to which we are required to pay thelicensors a fixed monthly amount, over a period stipulated in the applicable agreement, for their assistance in the continued research and development underthe applicable license. All of our in-licensing agreements are terminable at-will by us upon prior written notice of 30 to 90 days. We are unable at this time toestimate the actual amount or timing of the costs we will incur in the future under these agreements. See “Item 4. Information on the Company — BusinessOverview — In-Licensing Agreements.” 78 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information for our executive officers and directors as of March 1, 2016. Unless otherwise stated, the address for ourdirectors and officers is c/o BioLineRx Ltd., 2 HaMa’ayan Street, Modi’in 7177871, Israel. Name Age Position(s) Kinneret Savitsky, Ph.D. 49 Chief Executive Officer Philip Serlin, CPA, MBA 55 Chief Financial and Operating Officer Arnon Aharon, M.D. 47 Chief Medical Officer David Malek, MBA 38 Chief Business Officer Merril Gersten, M.D., Ph.D 64 Chief Scientific Officer Aharon Schwartz, Ph.D. 73 Chairman of the Board Michael J. Anghel, Ph.D. 76 Director Nurit Benjamini, MBA 49 External Director B.J. Bormann, Ph.D. 57 Director Raphael Hofstein, Ph.D. 66 Director Avraham Molcho, M.D. 58 External Director Sandra Panem, Ph.D. 69 Director Kinneret Savitsky, Ph.D., has served as our Chief Executive Officer since January 2010. Prior to becoming our Chief Executive Officer, from 2004through 2005, she served as our Vice President Drug Development and from 2005 through 2010 she served as the General Manager of BIJ, our wholly-ownedsubsidiary. Prior to joining BIJ, Dr. Savitsky served as the Vice President of Biology of Compugen Ltd. (Nasdaq: CGEN), from 2000 to 2004, and held othersenior positions at Compugen from 1997 through 2000. During 2010 and 2011, Dr. Savitsky served as a director on our Board of Directors; she currentlyserves as an external director at Evogene Ltd. (Nasdaq:EVGN, TASE:EVGN). Dr. Savitsky received her Ph.D. in human genetics from Tel Aviv University, aMaster’s degree in human genetics from Tel Aviv University and a B.Sc. in biology from The Hebrew University of Jerusalem. Philip Serlin, CPA, MBA, has served as our Chief Financial and Operating Officer since May 2009. From January 2008 to August 2008, Mr. Serlinserved as the Chief Financial Officer and Chief Operating Officer of Kayote Networks Inc. From January 2006 to December 2007, he served as the ChiefFinancial Officer of Tescom Software Systems Testing Ltd. (TASE:TSCM), an IT services company publicly traded in both Tel Aviv and London. Hisbackground also includes senior positions at Chiaro Networks Ltd. and at Deloitte, where he was head of the SEC and U.S. Accounting Department at theNational Office in Tel Aviv, as well as seven years at the SEC at its Washington, D.C., headquarters. Mr. Serlin currently serves as an external director atVascular Biogenics Ltd. (Nasdaq:VBLT). Mr. Serlin is a CPA and holds a B.Sc. in accounting from Yeshiva University and a Master’s degree in economicsand public policy from The George Washington University. Arnon Aharon, M.D., has served as our Chief Medical Officer since January 2016. From January 2014 through December 2015, Dr. Aharon served asour Vice President of Medical Affairs. Prior to joining the Company, Dr. Aharon served as Clinical Director, Medical Director or VP of Development atseveral biotechnology companies, the most recent being Thrombotech Ltd. (from 2009 to 2012) and LycoRed Ltd. (from 2009 to 2013). In addition, Dr.Aharon was a partner in R&D Integrative Solutions, a firm that provides consulting services to the biotechnology industry and academic centers. Dr. Aharonholds a B.Sc. in medical sciences and an M.D. from Tel Aviv University. 79 David Malek, MBA, has served as our Chief Business Officer since January 2016. From October 2011 through December 2015, Mr. Malek served asof Vice President of Business Development. Prior to joining the Company, from 2006 to 2011 Mr. Malek served at Sanofi-Aventis in a number ofmanagement positions, including Marketing, Finance and Business Development. Most recently, he served as Director of Oncology - New Products andBusiness Development. Mr. Malek received an MBA from the Tuck Business School at Dartmouth University and a B.A. in statistics and political sciencefrom the University of Haifa. Merril Gersten, M.D., Ph.D., has signed an agreement to serve as our Chief Scientific Officer beginning in May 2016. Prior to joining the Company,Dr. Gersten was a post-doctoral research fellow at the Department of Bioengineering of the University of California, San Diego, from 2012 to 2016. Dr.Gersten’s experience includes serving as Senior Director, Head of Experimental Medicine at Pfizer Global Research and Development in La Jolla, California,Medical Research Director at Agouron Pharmaceuticals, Medical Director at Lidak Pharmaceuticals and as a consultant assisting Dr. Jonas Salk at the SalkInstitute for Biological Sciences in La Jolla. Dr. Gersten holds a Ph.D. in Bioinformatics and Systems Biology from the University of California, San Diego,an M.D. from Cornell University Medical College and a B.A. in chemistry from Barnard College, Columbia University. Aharon Schwartz, Ph.D., has served as the Chairman of our Board of Directors since 2004. He served in a number of positions in Teva from 1975through 2011, the most recent being Vice President, Head of Teva Innovative Ventures from 2008. Dr. Schwartz is currently chairman of the boards ofnumerous life science companies, including D-Pharm Ltd., BioCancell Ltd., CureTech Ltd. and Biomas Ltd. Dr. Schwartz also serves on the board of directorsof Protalix Ltd. and as a consultant to Clal Biotechnology Industries Ltd. Dr. Schwartz received his Ph.D. in organic chemistry from the Weizmann Institute,his M.Sc. in organic chemistry from the Technion and a B.Sc. in chemistry and physics from the Hebrew University of Jerusalem. Dr. Schwartz recentlyreceived a second Ph.D. from the Hebrew University of Jerusalem in the history and philosophy of science. Michael J. Anghel, Ph.D., has served on our Board of Directors since 2010 and on our Investment Monitoring Committee since 2010. From 1977 to1999, he led the Discount Investment Corporation Ltd. (of the IDB Group) activities in the fields of technology and communications. Dr. Anghel wasinstrumental in founding Tevel, one of the first Israeli cable television operators and later in founding Cellcom Israel Ltd. (NYSE:CEL), the second Israelicellular operator. In 1999, he founded CAP Ventures, an advanced technology investment company. From 2004 to 2005, Dr. Anghel served as CEO of DCM,the investment banking arm of the Israel Discount Bank (TASE:DSCT). He has been involved in various technology enterprises and has served on the Boardsof Directors of various major Israeli corporations and financial institutions including Elron Electronic Industries Ltd. (TASE:ELRN), Elbit Systems Ltd.(Nasdaq:ESLT, TASE:ESLT), Nice Systems (Nasdaq:NICE), Gilat Satellite Networks Ltd. (Nasdaq:GILT), American Israeli Paper Mills (now Hadera PaperLtd. (AMEX:AIP)), Maalot (the Israeli affiliate of Standard and Poor’s) and Hapoalim Capital Markets. He currently serves on the Boards of Directors ofPartner Communications Company, Ltd. (Nasdaq:PTNR, TASE:PTNR), Syneron Medical Ltd. (Nasdaq:ELOS), Evogene Ltd. (Nasdaq:EVGN, TASE:EVGN),Dan Hotels Ltd. (TASE:DANH), Orbotech Ltd. (Nasdaq:ORBK, GSM:ORBK) and the Strauss Group Ltd. (TASE:STRS). Until recently, he was also thechairman of the Center for Educational Technology. Prior to launching his business career, Dr. Anghel served as a full-time member of the Recanati GraduateSchool of Business Administration of the Tel Aviv University, where he taught finance and corporate strategy. He currently serves as Chairman of the TelAviv University’s Executive Program. Dr. Anghel holds a B.A. (Economics) from the Hebrew University in Jerusalem and an MBA. and Ph.D. (Finance) fromColumbia University, New York. Nurit Benjamini, MBA, has served as an external director on our Board of Directors and as the chairperson of our Audit Committee of our Board ofDirectors since 2010. In addition, Ms. Benjamini has served on our Investment Monitoring Committee since 2010 and on our Compensation Committeesince 2012. Since December 2013, Ms. Benjamini has served as the Chief Financial Officer of TabTale Ltd. a company that develops, designs andmanufactures interactive digital content to be displayed on electronic devices and websites. From 2011 to 2013, Ms. Benjamini served as the Chief FinancialOfficer of Wixpress Ltd.; from 2007 through 2011, she served as the Chief Financial Officer of CopperGate Communications Ltd.; and from 2000 through2007, she served as the Chief Financial Officer of Compugen Ltd. (Nasdaq: CGEN). Prior to that, from 1993 through 1998, Ms. Benjamini served as the ChiefFinancial Officer of Aladdin Knowledge Systems Ltd., and from 1998 through 2000, as the Chief Financial Officer of Phone-Or Ltd. Ms. Benjamini serves onthe board of directors, and as chairperson of the audit committee, of Allot Communications Ltd. (Nasdaq:ALLT, TASE:ALLT) and of RedHill Biopharma Ltd.(NASDAQ:RDHL, TASE:RDHL). Ms. Benjamini holds a B.A. in economics and business and an M.B.A. in finance, both from Bar Ilan University, Israel. 80 BJ Bormann, Ph.D., has served on our Board of Directors since August 2013. Dr. Bormann currently serves as the CEO of Supportive Therapeutics,LLC, a Boston based company that is developing two molecules for use in the supportive care of oncology patients. In the past several years Dr. Bormann hasheld executive positions in several biotechnology companies including NanoMedical Systems (Austen, Texas), Harbour Antibodies (Rotterdam, TheNetherlands) and Pivot Pharmaceuticals (PVTF: OTC listed). Prior to these engagements, Dr. Bormann was Senior Vice President responsible for world-widealliances, licensing and business development at Boehringer Ingelheim Pharmaceuticals, Inc. from 2007 to 2013. From 1996 to 2007, she served in a numberof positions at Pfizer, Inc., the last one being Vice President of Pfizer Global Research and Development and world-wide Head of Strategic Alliances. Dr.Bormann serves on the board of directors of various companies, including Supportive Therapeutics, LLC, and the Institute for Pediatric Innovation. Dr.Bormann received her Ph.D. in biomedical science from the University of Connecticut Health Center and her B.Sc. from Fairfield University in biology. Dr.Bormann completed postdoctoral training at Yale Medical School in the department of pathology. Raphael Hofstein, Ph.D., has served on our Board of Directors since 2003, our Audit Committee since 2007 and our Compensation Committee since2012. Dr. Hofstein has served as the President and Chief Executive Officer of MaRS Innovation (a commercialization company of the University of Torontoand 10 affiliated hospitals) since June 2009. From 2000 through June 2009, Dr. Hofstein was the President and Chief Executive Officer of Hadasit MedicalResearch Services and Development Ltd., or Hadasit, the technology transfer company of Hadassah University Hospitals. He has served as chairman of theboard of directors of Hadasit since 2006. Prior to joining Hadasit, Dr. Hofstein was the President of Mindsense Biosystems Ltd. and the Business Unit Directorof Ecogen Inc. and has held a variety of other positions, including manager of R&D and chief of immunochemistry at the International Genetic SciencePartnership. Dr. Hofstein serves on the board of directors of numerous companies, including Hadasit Bio-Holdings Ltd. (TASE:HDST). Dr. Hofstein receivedhis Ph.D. and M.Sc. from the Weizmann Institute of Science, and his B.Sc. in chemistry and physics from the Hebrew University in Jerusalem. Dr. Hofsteincompleted postdoctoral training at Harvard Medical School in both the departments of biological chemistry and neurobiology. Avraham Molcho, M.D., MBA, has served as an external director on our Board of Directors and on our Audit Committee since 2010. In addition, Dr.Molcho has served on our Compensation Committee since 2012. Dr. Molcho is the Founder and Chairman of Biologic Design, a technology platform thatencourages human antibody discoveries, and is a venture partner at Forbion Capital Partners, a Dutch life sciences venture capital firm. In 2012, he becamethe co-founder, CEO and director of Ayana Pharma Ltd. (formerly DoxoCure), a privately-held company engaged in the manufacturing of liposome-basedtherapeutics. He currently serves on the board of directors of Circulite Inc. and NovoGI. From 2006 through 2008, Dr. Molcho served as the Chief ExecutiveOfficer and Chairman of Neovasc Medical, a privately-held Israeli medical device company. From 2001 through 2006, Dr. Molcho was a managing directorand the head of life sciences of Giza Venture Capital and, in that capacity, was involved in the founding of our company. He was also the Deputy DirectorGeneral of Abarbanel Mental Health Center, the largest acute psychiatric hospital in Israel, from 1999 to 2001. Dr. Molcho holds an M.D. from Tel-AvivUniversity School of Medicine and an MBA from Tel-Aviv University Recanati Business School. Sandra Panem, Ph.D., has been a member of our Board since February 2014. She is currently a managing partner at Cross Atlantic Partners, whichshe joined in 2000. She is also co-founder and President of NeuroNetworks Fund, a not-for-profit venture capital fund focusing on epilepsy, schizophreniaand autism. From 1994 to 1999, Dr. Panem was President of Vector Fund Management, the then asset management affiliate of Vector Securities International.Prior thereto, Dr. Panem served as Vice President and Portfolio Manager for the Oppenheimer Global BioTech Fund, a mutual fund that invested in public andprivate biotechnology companies. Previously, she was Vice President at Salomon Brothers Venture Capital, a fund focused on early and later-stage lifesciences and technology investments. Dr. Panem was also a Science and Public Policy Fellow in economic studies at the Brookings Institution, and anAssistant Professor of Pathology at the University of Chicago. Dr. Panem currently serves on the boards of directors of Acorda Therapeutics, Inc.(NASDAQ:ACOR), Labcyte, Inc. and GQLife Sciences, Inc. Previously, Dr. Panem served on numerous boards of public and private companies, includingMartek Biosciences (Nasdaq:MATK), IBAH Pharmaceuticals (Nasdaq:IBAH), Confluent Surgical and Molecular Informatics. She received a B.S. inbiochemistry and a Ph.D. in microbiology from the University of Chicago. 81 B. Compensation Employment Agreements We have entered into written employment agreements with each of our executive officers, the terms of which are consistent with the provisions ofthe Executive Compensation Policy of the Company which was approved by our shareholders in December 2013 (the “Compensation Policy”). All of theseagreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, theenforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of themto the fullest extent permitted by law to the extent that these liabilities are not covered by directors’ and officers’ insurance. The terms of these agreementsand of our directors’ and officers’ insurance are consistent with the provisions of the Compensation Policy. Compensation of Directors and Senior Management The following table presents in the aggregate all compensation we paid to all of our directors and senior management as a group for the year ended December31, 2015. The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing us with services during thisperiod. Salaries, fees,commissionsand bonuses(USD) Pension,retirement,options andother similarbenefits (USD) All directors and senior management as a group, consisting of 12 persons 1,292,000 784,000 In accordance with the Companies Law, the following table presents information regarding compensation actually received by our five most highly paidexecutive officers during the year ended December 31, 2015. Name and Position Salary Socialbenefits(1) Bonuses Value ofOptionsGranted(2) All OtherCompensation(3) Total (in thousands of U.S. dollars) Kinneret Savitsky, Chief Executive Officer 232 41 94 183 19 569 Philip Serlin, Chief Financial and OperatingOfficer 170 47 75 71 22 385 David Malek, Vice President of BusinessDevelopment 143 37 14 70 19 283 Leah Klapper, Chief Scientific Officer [untilDecember 31, 2015] 156 22 - 72 93 343 Arnon Aharon, Vice President of MedicalAffairs 139 31 31 46 15 263 (1)“Social Benefits” include payments to the National Insurance Institute, advanced education funds, managers’ insurance and pension funds; vacationpay; and recuperation pay as mandated by Israeli law.(2)Consists of amounts recognized as share-based compensation expense on the Company’s statement of comprehensive loss for the year endedDecember 31, 2015.(3)“All Other Compensation” includes automobile-related expenses pursuant to the Company’s automobile leasing program, telephone, basic healthinsurance and holiday presents. In the case of Leah Klapper, it also includes a severance payment. For additional information concerning our equity compensation plan, see “— Beneficial Ownership of Executive Officers and Directors — EquityCompensation Plan.” 82 C. Board Practices Board of Directors According to the Companies Law, the management of our business is vested in our Board of Directors. Our Board of Directors may exercise allpowers and may take all actions that are not specifically granted to our shareholders. Our executive officers are responsible for our day-to-day managementand have individual responsibilities established by our Board of Directors. Executive officers are appointed by and serve at the discretion of our Board ofDirectors, subject to any applicable employment agreements we have entered into with the executive officers. Under the Companies Law, we are not required to have a majority of independent directors. We are required to appoint at least two external directors.See “— External Directors.” According to our Articles of Association, our Board of Directors must consist of at least five and not more than 10 directors, including externaldirectors. Currently, our Board of Directors consists of seven directors, including two external directors as required by the Companies Law. Pursuant to ourArticles of Association, other than the external directors, for whom special election requirements apply under the Companies Law as detailed below, ourdirectors are elected at a general or special meeting of our shareholders and serve on the Board of Directors until they are removed by the majority of ourshareholders at a general or special meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and ourArticles of Association. In addition, our Articles of Association allow our Board of Directors to appoint directors to fill vacancies on the Board of Directors toserve until the next general meeting or special meeting, or earlier if required by our Articles of Association or applicable law. We have held elections for eachof our non-external directors at each annual meeting of our shareholders since our initial public offering in Israel. External directors are elected for an initialterm of three years and may be elected, under certain conditions, to two additional terms, although the term of office for external directors for Israelicompanies traded on certain foreign stock exchanges, including the NASDAQ Capital Market, may be further extended under certain conditions. Externaldirectors may be removed from office only pursuant to the terms of the Companies Law. Our last annual meeting of shareholders was held in March 2015. Foradditional information concerning external directors, see “— External Directors.” The Companies Law provides that an Israeli company may, under certain circumstances, exculpate an office holder from liability with respect to abreach of his duty of care toward the company if appropriate provisions allowing such exculpation are included in its articles of association. See “—Exculpation, insurance and indemnification of office holders.” Our Articles of Association contain such provisions, and we have entered into agreementswith each of our office holders undertaking to indemnify them to the fullest extent permitted by law, including with respect to liabilities resulting from thisoffering to the extent that these liabilities are not covered by insurance. In accordance with the exemption available to foreign private issuers under applicable Nasdaq rules, we do not follow the requirements of theNasdaq rules with regard to the process of nominating directors, and instead follow Israeli law and practice, in accordance with which our Board of Directorsis authorized to recommend to our shareholders director nominees for election, and, in some circumstances, our shareholders may nominate candidates forelection as directors by the shareholders’ general meeting. In addition, under the Companies Law, our Board of Directors must determine the minimum number of directors who are required to have financialand accounting expertise. Under applicable regulations, a director with financial and accounting expertise is a director who, by reason of his or her education,professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements. He or shemust be able to thoroughly comprehend the financial statements of the listed company and initiate debate regarding the manner in which financialinformation is presented. In determining the number of directors required to have such expertise, a company’s board of directors must consider, among otherthings, the type and size of the company and the scope and complexity of its operations. Our Board of Directors has determined that we require at least onedirector with the requisite financial and accounting expertise. Ms. Nurit Benjamini and Dr. Michael J. Anghel have such financial and accounting expertise. 83 The term office holder is defined in the Companies Law as a general manager, chief business manager, deputy general manager, vice generalmanager, executive vice president, vice president, or any other person assuming the responsibilities of any of the foregoing positions, without regard to suchperson’s title, or a director or any other manager directly subordinate to the general manager. Each person listed above under “Executive Officers andDirectors” is an office holder under the Companies Law. Chairman of the Board. Under the Companies Law, a person cannot hold the role of both chairman of the board of directors and chief executiveofficer of a company, without shareholder approval by special majority and for periods of time not exceeding three years each. Furthermore, a person who isdirectly or indirectly subordinate to a chief executive officer of a company may not serve as the chairman of the board of directors of that company and thechairman of the board of directors may not otherwise serve in any other capacity in a company or in a subsidiary of that company other than as the chairmanof the board of directors of such a subsidiary. External Directors Under Israeli law, the boards of directors of companies whose shares are publicly traded are required to include at least two members who qualify asexternal directors. Each of our current external directors, Dr. Avraham Molcho and Ms. Nurit Benjamini, was elected as an external director by ourshareholders in July 2010. Their initial terms expired in July 2013, at which time they were each re-elected by the shareholders of the Company for a secondthree-year term as external directors. External directors must be elected by majority vote of the shares present and voting at a shareholders meeting, provided that either: •the majority of the shares that are voted at the meeting, including at least a majority of the shares held by non-controlling shareholders whodo not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with acontrolling shareholder) who voted at the meeting, excluding abstentions, vote in favor of the election of the external director; or •the total number of shares held by non-controlling, disinterested shareholders (as described in the preceding bullet point) that are votedagainst the election of the external director does not exceed 2% of the aggregate voting rights in the company. After an initial term of three years, external directors may be re-elected to serve in that capacity for up to two additional terms of three years providedthat either (a) the board of directors has recommended such re-election and such re-election is approved by a majority vote at a shareholders’ meeting, subjectto the conditions described above for election of external directors, (b) (1) the re-election has been recommended by one or more shareholders holding at least1% of the company’s voting rights and is approved by a majority of non-controlling, disinterested shareholders who hold among them at least 2% of thecompany’s voting rights; and (2) pursuant to Amendment 22 of the Companies Law, effective as of January 2014, the external director who has beennominated in such fashion by the shareholders is not a linked or competing shareholder, and does not have or has not had, on or within the two yearspreceding the date of such person’s appointment to serve as another term as external director, any affiliation with a linked or competing shareholder, or (c)pursuant to Amendment 26 to the Companies Law, effective as of November 2014, the external director has proposed himself for reappointment and thereappointment was approved by the majority described in (b)(1) above. The term “linked or competing shareholder” means the shareholder(s) who nominatedthe external director for reappointment or a material shareholder of the company holding more than 5% of the shares in the company, provided that at thetime of the reappointment, such shareholder(s) of the company, the controlling shareholder of such shareholder(s) of the company, or a company under suchshareholder(s) of the company’s control, has a business relationship with the company or are competitors of the company; the Israeli Minister of Justice, inconsultation with the Israeli Securities Authority, may determine that certain matters will not constitute a business relationship or competition with thecompany. The term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the Nasdaq Capital Market, maybe extended beyond the initial three terms permitted under the Companies Law indefinitely in increments of additional three-year terms, provided in eachcase that the following conditions are met: (a) the audit committee and the board of directors confirm that, in light of the external director’s expertise andspecial contribution to the work of the board of directors and its committees, the re-election for such additional period(s) is beneficial to the company; (b) there-election is approved by the shareholders by a special majority required for the re-election of external directors; and (c) the term of office of the externaldirector, and the considerations of the audit committee and the Board of Directors in deciding to recommend re-election of the external director for suchadditional term of office, are presented to the shareholders prior to the vote on re-election. External directors may be removed from office by the samepercentage of shareholders required for their election or by a court, in each case, only under limited circumstances, including ceasing to meet the statutoryqualification for appointment or violating the duty of loyalty to the company. If an external directorship becomes vacant and there are less than two externaldirectors on the board of directors at the time, then the board of directors is required under the Companies Law to call a shareholders’ meeting immediately toappoint a replacement external director. Each committee of the board of directors that exercises the powers of the board of directors must include at least oneexternal director. Under the Companies Law external directors of a company are prohibited from receiving, directly or indirectly, any compensation from thecompany other than for their services as external directors pursuant to the provisions and limitations set forth in regulations promulgated under theCompanies Law. 84 A person may not serve as an external director if (a) the person is a relative of a controlling shareholder of a company or (b) at the date of the person’sappointment or within the prior two years, the person, the person’s relatives, entities under the person’s control, the person’s partner, the person’s employer, oranyone to whom that person is subordinate, whether directly or indirectly, have or have had any affiliation with (1) a company, (2) a company’s controllingshareholder at the time of such person’s appointment or (3) any entity that is either controlled by the company or under common control with the company atthe time of such appointment or during the prior two years. If a company does not have a controlling shareholder or a shareholder who holds company sharesentitling him to vote at least 25% of the votes in a shareholders meeting, then a person may not serve as an external director if, such person or such person’srelative, partner, employer or any entity under the person’s control, has or had, on or within the two years preceding the date of the person’s appointment toserve as external director, any affiliation with the chairman of the company’s board, chief executive officer, a substantial shareholder who holds at least 5% ofthe issued and outstanding shares of the company or voting rights which entitle him to vote at least 5% of the votes in a shareholders meeting, or the chieffinancial officer of the company. The term “affiliation” includes: •an employment relationship; •a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships); •control; and •service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if suchdirector was appointed as a director of the private company in order to serve as an external director following the public offering. The term “relative” is defined as a spouse, sibling, parent, grandparent or descendant; a spouse’s sibling, parent or descendant; and the spouse ofeach of such persons. In addition, no person may serve as an external director if that person’s professional activities create, or may create, a conflict of interest with thatperson’s responsibilities as a director or otherwise interfere with that person’s ability to serve as an external director or if the person is an employee of theIsrael Securities Authority or of an Israeli stock exchange. Furthermore, a person may not continue to serve as an external director if he or she received director indirect compensation from us for his or her role as a director. This prohibition does not apply to compensation paid or given for service as an externaldirector in accordance with regulations promulgated under the Companies Law or amounts paid pursuant to indemnification and/or exculpation contracts orcommitments and insurance coverage. 85 Following the termination of an external director’s service on a board of directors, such former external director and his or her spouse and childrenmay not be provided a direct or indirect benefit by the company, its controlling shareholder or any entity under its controlling shareholder’s control. Thisincludes engagement to serve as an executive officer or director of the company or a company controlled by its controlling shareholder or employment by, orproviding services to, any such company for consideration, either directly or indirectly, including through a corporation controlled by the former externaldirector, for a period of two years (and for a period of one year with respect to relatives of the former external director). If at the time an external director is appointed all members of the board of directors are of the same gender, the external director must be of the othergender. A director of one company may not be appointed as an external director of another company if a director of the other company is acting as an externaldirector of the first company at such time. The Companies Law provides that an external director must meet certain professional qualifications or have financial and accounting expertise andthat at least one external director must have financial and accounting expertise. However, if at least one of our other directors (1) meets the independencerequirements of the Exchange Act, (2) meets the standards of the Nasdaq Marketplace Rules for membership on the audit committee and (3) has financial andaccounting expertise as defined in the Companies Law and applicable regulations, then neither of our external directors is required to possess financial andaccounting expertise as long as both possess other requisite professional qualifications. Our Board of Directors is required to determine whether a directorpossesses financial and accounting expertise by examining whether, due to the director’s education, experience and qualifications, the director is highlyproficient and knowledgeable with regard to business-accounting issues and financial statements, to the extent that the director is able to engage in adiscussion concerning the presentation of financial information in the company’s financial statements, among others. Furthermore, our Board of Directors isalso required to take into consideration a director’s education, experience and knowledge in any of the following: (1) accounting issues and accountingcontrol issues characteristic to the segment in which the company operates and to companies of the size and complexity of the company, (2) the functions ofthe external auditor and the obligations imposed on such auditor, and (3) preparation of financial reports and their approval in accordance with theCompanies Law and the Israeli Securities Law, 5728-1968 (the “Israeli Securities Law”).The regulations define a director with the requisite professionalqualifications as a director who satisfies one of the following requirements: (1) the director holds an academic degree in either economics, businessadministration, accounting, law or public administration; (2) the director either holds an academic degree in any other field or has completed another form ofhigher education in the company’s primary field of business or in an area which is relevant to the office of an external director; or (3) the director has at leastfive years of experience serving in any one of the following, or at least five years of cumulative experience serving in two or more of the following capacities:(1) a senior business management position in a corporation with a substantial scope of business; (2) a senior position in the company’s primary field ofbusiness; or (3) a senior position in public administration. Our Board of Directors has determined that Nurit Benjamini possesses “accounting and financial”expertise, and that both of our external directors possess the requisite professional qualifications. Audit Committee Under the Companies Law, the board of directors of a public company must appoint an audit committee. The audit committee must be comprised ofat least three directors, including all of the external directors, and one of the external directors must serve as chairperson of the committee. The auditcommittee of a company may not include: •the chairman of the company’s board of directors; •a controlling shareholder or a relative of a controlling shareholder of the company (as each such term is defined in the Companies Law); or •any director employed by the company, by a controlling shareholder of the company or by any other entity controlled by a controllingshareholder of the company, or any director who provides services to the company, to a controlling shareholder of the company or to anyother entity controlled by a controlling shareholder of the company on a regular basis (other than as a member of the board of directors), orany other director whose main source of income derives from a controlling shareholder of the company. 86 The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, otherthan by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rightsin a company or has the right to appoint the majority of the directors of the company or its general manager. A majority of the total number of then-serving members of an audit committee shall constitute a quorum for the transaction of business at the auditcommittee meetings, provided, that the majority of the members present at such meeting are unaffiliated directors and at least one of such members is anexternal director. The audit committee of a publicly-traded company must consist of a majority of unaffiliated directors. An “unaffiliated director” is defined as eitheran external director or as a director who meets the following criteria: •he or she meets the qualifications for being appointed as an external director, except for (i) the requirement that the director be an Israeliresident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel)and (ii) the requirement for accounting and financial expertise or professional qualifications; and •he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less thantwo years in the service shall not be deemed to interrupt the continuation of the service. Any person who is not eligible to serve on the audit committee is further restricted from participating in its meetings and votes, unless the chairmanof the audit committee determines that such person’s presence is necessary in order to present a certain matter, provided however, that company employeeswho are not controlling shareholders or relatives of such shareholders may be present in the meetings but not for the actual votes, and likewise, companycounsel or company secretary who are not controlling shareholders or relatives of such shareholders may be present in the meetings and for the decisions ifsuch presence is requested by the audit committee. The members of our Audit Committee are Nurit Benjamini (Chairman), Dr. Avraham Molcho and Dr. Raphael Hofstein. Pursuant to the MarketplaceRules of the Nasdaq Stock Market, our Board of Directors may appoint one director to our Audit Committee who (1) is not an Independent Director as definedin Nasdaq Marketplace Rule 5605(a)(2), (2) meets the criteria set forth in Section 10A(m)(3) under the Exchange Act, and (3) is not one of our current officersor employees or “family member,” as defined in Nasdaq Marketplace Rule 5605(a)(2), of an officer or employee, if our Board of Directors, under exceptionaland limited circumstances, determines that the appointment is in our best interests and the best interest of our shareholders, and our Board of Directorsdiscloses, in our next annual report subsequent to the determination, the nature of the relationship and the reasons for that determination. Our Board of Directors has determined that Nurit Benjamini (Chairman) qualifies as an audit committee financial expert as defined by rules of theSEC. In November 2012, our Board of Directors adopted an audit committee charter that added to the responsibilities of our Audit Committee under theCompanies Law, setting forth the responsibilities of the audit committee consistent with the rules of the SEC and the Marketplace Rules of the Nasdaq StockMarket, including the following: •oversight of the company’s independent registered public accounting firm and recommending the engagement, compensation ortermination of engagement of the our independent registered public accounting firm to our Board of Directors in accordance with Israelilaw; •recommending the engagement or termination of the office of the our internal auditor; and •reviewing and pre-approving the terms of audit and non-audit services provided by our independent auditors. 87 Our Audit Committee provides assistance to our Board of Directors in fulfilling its legal and fiduciary obligations in matters involving ouraccounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independentaccountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our Audit Committeealso oversees the audit efforts of our independent accountants and takes those actions it deems necessary to satisfy itself that the accountants are independentof management. Pursuant to the Companies Law, the audit committee of a company shall be responsible for: (i) determining whether there are delinquenciesin the business management practices of a company, including in consultation with an internal auditor or independent auditor, and making recommendationsto the company’s board of directors to improve such practices; (ii) determining whether to approve certain related party transactions (including compensationof office holders or transactions in which an office holder has a personal interest and whether such transaction is material or otherwise an extraordinarytransaction); (iii) where the company’s board of directors approves the working plan of the internal auditor, examining such working plan before itssubmission to the board and proposing amendments thereto; (iv) examining internal controls and the internal auditor’s performance, including whether theinternal auditor has sufficient resources and tools to dispose of his responsibilities (taking into consideration the special needs and size of a company); (v)examining the scope of the auditor’s work and compensation and submitting its recommendation with respect thereto to the corporate body considering theappointment thereof (either the board or the general meeting of shareholders); and (vi) establishing procedures for the handling of employees’ complaints asto the management of the business and the protection to be provided to such employees. Pursuant to Amendment 22, effective as of January 10, 2014, theresponsibilities of the audit committee under the Companies Law also include the following matters: (i) the establishment of procedures to be followed inrespect of related party transactions with a controlling shareholder (where such are not extraordinary transactions), which may include, where applicable, theestablishment of a competitive process for such transaction, under the supervision of the audit committee, or individual, or other committee or body selectedby the audit committee, in accordance with criteria determined by the audit committee; and (ii) to determine procedures for approving certain related partytransactions with a controlling shareholder, which having been determined by the audit committee not to be extraordinary transactions, were also determinedby the audit committee not to be negligible transactions. Under the Companies Law, the approval of the audit committee is required for specified actions andtransactions with office holders and controlling shareholders. See “— Approval of Related Party Transactions under Israeli Law.” Compensation Committee In December 2012, Amendment 20 to the Companies Law, or Amendment 20, went into effect. Amendment 20 requires, among other things, that theboard of directors of Israeli publicly-traded companies appoint a compensation committee comprised of at least three members, including all of the externaldirectors of a company, and one of the external directors must serve as chairman of the committee. Such compensation committee may not include: •the chairman of the company’s board of directors; •a controlling shareholder or a relative of a controlling shareholder of the company (as each such term is defined in the Companies Law); or •any director employed by the company, by a controlling shareholder of the company or by any other entity controlled by a controllingshareholder of the company, or any director who provides services to the company on a permanent basis, to a controlling shareholder of thecompany or to any other entity controlled by a controlling shareholder of the company on a regular basis (other than as a member of theboard of directors), or any other director whose main source of income derives from a controlling shareholder of the company. The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, otherthan by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rightsin a company or has the right to appoint the majority of the directors of the company or its general manager. A majority of the total number of then-serving members of a compensation committee shall constitute a quorum for the transaction of business at thecompensation committee meetings. The compensation committee of a publicly-traded company must consist of a majority of external directors. Any person who is not eligible to serve on the compensation committee is further restricted from participating in its meetings and votes, unless thechairman of the compensation committee determines that such person’s presence is necessary in order to present a certain matter, provided however, thatcompany employees who are not controlling shareholders or relatives of such shareholders may be present in the meetings but not for the actual votes, andlikewise, company counsel and secretary who are not controlling shareholders or relatives of such shareholders may be present in the meetings and for thedecisions if such presence is requested by the compensation committee. 88 The responsibilities of the compensation committee include the following: •to make recommendations to the board of directors as to a compensation policy for officers, as well as to recommend once every three yearsto extend the compensation policy, subject to receipt of the required corporate approvals; •to make recommendations to the board of directors as to any updates to the compensation policy which may be required; •to review the implementation of the compensation policy by the company; •to approve transactions relating to terms of office and employment of certain company office holders, which require the approval of thecompensation committee pursuant to the Companies Law; •to exempt, under certain circumstances, a transaction relating to terms of office and employment from the requirement of approval of theshareholders meeting; and In November 2012, in order to comply with the requirements of Amendment 20, our Board of Directors established a Compensation Committee,comprised of Nurit Benjamini and Dr. Avraham Molcho, our two external directors, and Dr. Raphael Hofstein. Nurit Benjamini serves as the Chairperson ofour Compensation Committee. Under Amendment 20, a board of directors of an Israeli publicly-traded company, following the recommendation of the compensation committee, isrequired to establish a compensation policy, to be approved by the shareholders of the company, and pursuant to which the terms of office and compensationof the company’s officer holders will be decided. A company’s compensation policy shall be determined based on, and take into account, certain parameters set forth in Section 267B(a) and Parts Aand B of Annex 1A of the Companies Law, which were legislated as part of Amendment 20. The board of directors of a publicly-traded company is obligated to adopt a compensation policy after considering the recommendations of thecompensation committee. The final adoption of the compensation policy is subject to the approval of the shareholders of the company, which such approvalis subject to certain special majority requirements, as set forth in Amendment 20, pursuant to which one of the following must be met: (i)the majority of the votes includes at least a majority of all the votes of shareholders who are not controlling shareholders of the company orwho do not have a personal interest in the compensation policy and participating in the vote; abstentions shall not be included in the totalof the votes of the aforesaid shareholders; or (ii)the total of opposing votes from among the shareholders described in subsection (i) above does not exceed 2% of all the voting rights in thecompany. Nonetheless, even if the shareholders of the company do not approve the compensation policy, the board of directors of a company may approve thecompensation policy, provided that the compensation committee and, thereafter, the board of directors resolved, based on detailed, documented, reasons andafter a second review of the compensation policy, that the approval of the compensation policy is for the benefit of the company. In December 2013, a general meeting of our shareholders approved the Compensation Policy which had been recommended by our CompensationCommittee and approved by our Board of Directors. The Compensation Policy governs the terms of compensation for our directors and office holders, inaccordance with the requirements of the Companies Law. Below is a summary discussion of the provisions of the Compensation Policy: The Compensation Policy includes, among other issues prescribed by the Companies Law, a framework for establishing the terms of office andemployment of our office holders, a recoupment policy, and guidelines with respect to the structure of the variable pay of our office holders. 89 Compensation is considered performance-based to the extent that a direct link is maintained between compensation and performance and thatrewards are consistent with long-term stakeholder value creation. At the company level, we analyze the overall compensation trends of the market in order to make informed decisions about our compensationapproach. With specific reference to our office holders, we have used a benchmarking analysis based on an internally developed list of publicly tradedcompanies that represent, as closely as possible, our peer group, and as further set out in the Compensation Policy. According to the Compensation Policy, the fixed components of our office holder compensation will be examined at least every two years andcompared to the market. Our Board of Directors may change the amount of the fixed components for one or more of our office holders after receiving arecommendation for such from our compensation committee. The change may be made if our Board of Directors concludes that such a change would promoteour goals, operating plans and objectives and after taking into account the business and legal implications of the proposed change and its impact on ourinternal labor relations. Any such changes are subject to formal approval by the relevant parties. The fixed component of compensation remunerates thespecific role covered and scope of responsibilities. It also reflects the experience and skills required for each position, as well as the level of excellencedemonstrated and the overall quality of the office holder’s contribution to our business. The weighting of fixed compensation within the overall package isdesigned to reduce the risk of excessively risk-oriented behavior, to discourage initiatives focused on short-term results which might jeopardize our mid andlong-term business sustainability and value creation, and to allow us a flexible compensation approach. We offer our employees benefit plans based oncommon practice in the local labor market of the office holder. As for the variable components of compensation, the types and amounts of such components will be determined with an aim at creating maximummatching between the Compensation Policy and our operating plan and objectives. Variable components of compensation will be primarily based onmeasurable long-term criteria. Nevertheless, we are allowed to base a non-material part of variable compensation on qualitative non-measurable criteria whichfocus on the office holder’s contribution to the Company. Our variable compensation aims to remunerate for achievements by directly linking pay toperformance outcomes in the short and long term. To strengthen the alignment of shareholder interests and the interests of management and employees,performance measurements reflect our actual results overall, as well as of the individual office holder. To support the aforementioned principles, we providetwo types of variable compensation: Short-term - annual bonus; and Long-term - stock option plans. Annual bonuses will be based on achievement of the business goals set out in our annual operating plan approved by the board of directors at thebeginning of each year. The operating plan encompasses all aspects of our activities and as such sets the business targets for each member of the managementteam. Consequently, our compensation committee and board should be able to judge the suitability of a bonus payment by deliberating retrospectively atyear end and comparing actual performance and target achievements against the forecasted operating plan. The annual bonus mechanism will be directly tiedto meeting objectives - both our business objectives and the office holder’s personal objectives. The board’s satisfaction with the officer’s performance willalso affect the bonus amount. Annual bonus payments are subject to the limitations set out in the Compensation Policy and also subject to the discretion ofour compensation committee and approval by the board of directors. In order to maintain some measure of flexibility, after calculating the compensationamount, the board of directors may exercise discretion about the final amount of the bonus. Equity-based compensation may be granted in any form permitted under our share incentive plan in effect from time to time and shall be made inaccordance with the terms of such share incentive plan. Equity-based compensation to office holders shall be granted from time to time and be individuallydetermined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personalresponsibilities of each officer. The vesting period will generally be four years, with the vesting schedule to be determined in accordance with marketcompensation trends. Our policy is to grant equity-based compensation with exercise prices at market value. Furthermore, in order to create a ceiling for thevariable compensation: (1) the aggregate value of annual grants to any one office holder (based on the Black Scholes calculation on the date of grant) will beno more than the higher of 2% of our market capitalization at the end of the measurement period or $1.5 million; and (2) it is our intention that the maximumoutstanding equity awards under its share incentive plan will not exceed 12% of our total fully-diluted share capital. Our board of directors may, followingapproval by our compensation committee, make provisions with respect to the acceleration of the vesting period of any office holder’s awards, including,without limitation, in connection with a corporate transaction involving a change of control. 90 We have also established a defined ratio between the variable and the fixed components of compensation, as well as a maximum amount for allvariable components as of the date on which they are paid (or as of the grant date for non-cash variable equity components), and subject to the limitations onvariable compensation components which are set out in the Compensation Policy. In addition, we have established guidelines under which an office holder will refund to us part of the compensation received, if it was paid based oninformation that was retroactively restated in our financial reports. Office holders shall be required to make restitution for any payments made based on ouroperating performance, if such payments were based on false or restated financial statements prepared at any time during the three years preceding discoveryof the error. All compensation arrangements of office holders are to be approved in the manner prescribed by applicable law. Our Compensation Committee willreview the Compensation Policy on an annual basis, and monitor its implementation, and recommend to our Board of Directors and shareholders to amendthe Policy as it deems necessary from time to time. The term of the Compensation Policy shall be three years as of the date of its adoption on December 19,2013. Following such three year term, the Compensation Policy, including any revisions recommended by our Compensation Committee and approved byour Board of Directors, as applicable, will be brought once again to the shareholders for approval. In September 2014, the general meeting of our shareholders approved an amendment to the Compensation Policy to expressly authorize thepurchase of insurance policies (including run-off policies) to cover the liability of directors and office holders. See “ — Exculpation, insurance andindemnification of office holders” Nominating Committee Our Board of Directors does not currently have a nominating committee, having availed BioLineRx of the exemption available to foreign privateissuers under the Marketplace Rules of the Nasdaq Stock Market. See “Item 16G. Corporate Governance.” Investment Monitoring Committee Our Board of Directors has established an Investment Monitoring Committee consisting of four members: Directors Michael Anghel and NuritBenjamini; Philip Serlin, our Chief Financial Officer and Chief Operating Officer; and Raziel Fried, our Budget Control Manager and Treasurer. The functionof the Investment Monitoring Committee includes providing recommendations to our Board of Directors regarding investment guidelines and performing anon-going review of the fulfillment of established investment guidelines. The Investment Monitoring Committee convenes for a meeting in accordance withour needs, but in any event at least twice per year. The Investment Monitoring Committee reports to our Board of Directors on a semi-annual basis. Internal Auditor Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor recommended by the auditcommittee and nominated by the board of directors. An internal auditor may not be: •a person (or a relative of a person) who holds more than 5% of the company’s shares; •a person (or a relative of a person) who has the power to appoint a director or the general manager of the company; •an executive officer or director of the company; or •a member of the company’s independent accounting firm. The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. Our internalauditor is Linur Dloomy, CPA (Israel), a partner of Brightman Almagor Zohar & Co. (a member firm of Deloitte Touche Tohmatsu Limited). 91 Approval of Related Party Transactions under Israeli Law Fiduciary duties of office holders The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. The duty of care of an office holder is based onthe duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance (New Version) 5728-1968. This duty of care requires anoffice holder to act with the degree of proficiency with which a reasonable office holder in the same position would have acted under the same circumstances.The duty of care includes a duty to use reasonable means, in light of the circumstances, to obtain: •information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and •all other important information pertaining to these actions. The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, and includes the duty to: •refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her other dutiesor personal affairs; •refrain from any activity that is competitive with the business of the company; •refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself or herself orothers; and •disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his orher position as an office holder. We may approve an act performed in breach of the duty of loyalty of an office holder provided that the office holder acted in good faith, the act or itsapproval does not harm the company, and the office holder discloses his or her personal interest, as described below. Disclosure of personal interests of an office holder and approval of acts and transactions The Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all relatedmaterial information or documents relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be madepromptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obliged todisclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is notconsidered as an extraordinary transaction. The term personal interest is defined under the Companies Law to include the personal interest of a person in an action or in the business of acompany, including the personal interest of such person’s relative or the interest of any corporation in which the person is an interested party, but excluding apersonal interest stemming solely from the fact of holding shares in the company. A personal interest furthermore includes the personal interest of a person forwhom the office holder holds a voting proxy or the interest of the office holder with respect to his or her vote on behalf of the shareholder for whom he or sheholds a proxy even if such shareholder itself has no personal interest in the approval of the matter. An office holder is not, however, obliged to disclose apersonal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction which requires approval is defined as any of the following: •a transaction other than in the ordinary course of business; •a transaction that is not on market terms; or •a transaction that may have a material impact on the company’s profitability, assets or liabilities. 92 Under the Companies Law, once an office holder has complied with the disclosure requirement described above, a company may approve atransaction between the company and the office holder or a third party in which the office holder has a personal interest, or approve an action by the officeholder that would otherwise be deemed a breach of duty of loyalty. However, a company may not approve a transaction or action that is adverse to thecompany’s interest or that is not performed by the office holder in good faith. Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder, a transaction with athird party in which the office holder has a personal interest, and an action of an office holder that would otherwise be deemed a breach of duty of loyaltyrequires approval by the board of directors. Our Articles of Association do not provide otherwise. If the transaction or action considered is (i) an extraordinarytransaction or (ii) an action of an office holder that would otherwise be deemed a breach of duty of loyalty and may have a material impact on a company’sprofitability, assets or liabilities, then audit committee approval is required prior to approval by the board of directors. Under Amendment 20, a transaction with an office holder in a public company regarding his or her terms of office and employment should bedetermined in accordance with the company’s compensation policy. Nonetheless, provisions were established that allow a company, under specialcircumstances, to approve terms of office and employment that are not in line with the approved compensation policy. Accordingly, pursuant to Amendment20, the approval requirements for the compensation and/or terms of office of a specific office holder may require the approval of each of the compensationcommittee, board of directors and the shareholders, in that order. As such, under Amendment 20, the following approvals are required for the followingtransactions: A transaction with an office holder in a public company that is neither a director nor the Chief Executive Officer regarding his or her terms of officeand employment requires approval by the (i) compensation committee; and (ii) the board of directors. Approval of terms of office and employment for suchofficers which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensationcommittee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirementsset forth in Amendment 20 with respect to office holder compensation, and (ii) the shareholders of the company have approved the terms by means of thefollowing special majority requirements (the “Special Majority Requirements”), as set forth in Amendment 20, pursuant to which the shareholder approvalmust either include at least one-half of the shares held by non-controlling and disinterested shareholders who actively participate in the voting process(without taking abstaining votes into account), or, alternatively, the total shareholdings of the non-controlling and disinterested shareholders who voteagainst the transaction must not represent more than two percent of the voting rights in the company. A transaction with the chief executive officer in a public company regarding his or her terms of office and employment requires approval by the (i)compensation committee; (ii) the board of directors and (iii) the shareholders of the company by the Special Majority Requirements. Approval of terms ofoffice and employment for the chief executive officer which do not comply with the compensation policy may nonetheless be approved subject to twocumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the variousconsiderations and mandatory requirements set forth in Amendment 20 with respect to office holder compensation, and (ii) the shareholders of the companyhave approved the terms by means of the Special Majority Requirements, as detailed above. A transaction with an office holder in a public company (including the CEO) that is not a director regarding his or her terms of office andemployment may be approved despite shareholder rejection, provided that a company’s compensation committee and thereafter the board of directors havedetermined to approve the proposal, based on detailed reasoning, after having re-examined the terms of office and employment, and taken the shareholderrejection into consideration. In addition, the compensation committee may exempt the transaction regarding terms of office and employment with a CEOwho has no relationship with the controlling shareholder or the company from shareholder approval if it has found, based on detailed reasons, that bringingthe transaction to the approval of the shareholders meeting shall prevent the employment of such candidate by the company. Such approval may be givenonly in respect of terms of office and employment which are in accordance with the company’s compensation policy. A transaction with a director in a public company regarding his or her terms of office and employment requires approval by the (i) compensationcommittee; (ii) the board of directors and (iii) the shareholders of the company. Approval of terms of office and employment for directors of a company whichdo not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee andthereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth inAmendment 20 with respect to office holder compensation, and (ii) the shareholders of the company have approved the terms by means of the SpecialMajority Requirements, as detailed above. A director who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may generally notbe present at the meeting or vote on the matter unless a majority of the directors or members of the audit committee have a personal interest in the matter, or,unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present to present the transaction that issubject to approval. If a majority of the directors have a personal interest in the matter, such matter also requires approval of the shareholders of the company. 93 Disclosure of personal interests of a controlling shareholder and approval of transactions Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.See “— Audit Committee” for the general definition of controlling shareholder under the Companies Law. The definition of “controlling shareholder” inconnection with matters governing: (i) extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest,(ii) certain private placements in which the controlling shareholder has a personal interest, (iii) certain transactions with a controlling shareholder or relativewith respect to services provided to or employment by the company, (iv) the terms of employment and compensation of the general manager, and (v) theterms of employment and compensation of office holders of the company when such terms deviate from the compensation policy previously approved by thecompany’s shareholders, also includes shareholders that hold 25% or more of the voting rights if no other shareholder owns more than 50% of the votingrights in the company (and the holdings of two or more shareholders which each have a personal interest in such matter will be aggregated for the purposes ofdetermining such threshold). Under Amendment 20, extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest,including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directlyor indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, require the approval of the auditcommittee, the board of directors and the shareholders, in that order. Extraordinary Transactions concerning the terms of engagement of a controllingshareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the compensation committee, theboard of directors and the shareholders, in that order. In addition, the approval of such extraordinary transactions by the shareholders require at least amajority of the shares voted by the shareholders of the company participating and voting in a shareholders’ meeting, provided that one of the followingrequirements is fulfilled: •at least a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must bevoted in favor of approving the transaction, excluding abstentions; or •the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than2% of the voting rights in the company. If such extraordinary transaction concerns the terms of office and employment of such controlling shareholder, in his capacity as an office holder oran employee of the company, such terms of office and employment approved by the compensation committee and board of directors shall be in accordancewith the compensation policy of the company. Nonetheless, the compensation committee and the board of directors may approve terms of office andcompensation of a controlling shareholder and which do not comply with the company’s compensation policy, provided that the compensation committeeand, thereafter, the board of directors approve such terms, based on, among other things, the considerations listed under Section 267B(a) and Parts A and B ofAnnex 1A of the Companies Law, as those are described above. Following such approval by the compensation committee and board of directors, shareholderapproval would be required. To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval, in the same mannerdescribed above, is required once every three years, unless, with respect to extraordinary transactions with a controlling shareholder or in which a controllingshareholder has a personal interest, the audit committee determines that the duration of the transaction is reasonable given the circumstances related thereto. 94 Duties of shareholders Under the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptablemanner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, voting at generalmeetings of shareholders on the following matters: •an amendment to the articles of association; •an increase in the company’s authorized share capital; •a merger; and •the approval of related party transactions and acts of office holders that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above mentioned duties, and in the event ofdiscrimination against other shareholders, additional remedies are available to the injured shareholder. In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and anyshareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another powerwith respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty exceptto state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking theshareholder’s position in the company into account. Exculpation, insurance and indemnification of office holders Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company mayexculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty ofcare but only if a provision authorizing such exculpation is included in its articles of association. Our Articles of Association include such a provision. AnIsraeli company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders. An Israeli company may indemnify an office holder in respect of the following liabilities and expenses incurred for acts performed as an officeholder, either in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles of association: •financial liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator’s award approved by acourt. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such anundertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activitieswhen the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonableunder the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; •reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or proceedinginstituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment wasfiled against such office holder as a result of such investigation or proceeding; and (2) no financial liability, such as a criminal penalty, wasimposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financialliability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and •reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings institutedagainst him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the office holderwas acquitted or as a result of a conviction for an offense that does not require proof of criminal intent. 95 An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extentprovided in the company’s articles of association: •a breach of duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe thatthe act would not prejudice the company; •a breach of duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office holder; and •a financial liability imposed on the office holder in favor of a third party. An Israeli company may not indemnify or insure an office holder against any of the following: •a breach of duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the actwould not prejudice the company; •a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; •an act or omission committed with intent to derive illegal personal benefit; or •a fine or forfeit levied against the office holder. Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the audit committee and the board ofdirectors and, with respect to directors, by shareholders. An amendment to the Israeli Securities Law and a corresponding amendment to the Companies Law authorize the Israeli Securities Authority toimpose administrative sanctions against companies like ours, and their office holders for certain violations of the Israeli Securities Law or the CompaniesLaw. These sanctions include monetary sanctions and certain restrictions on serving as a director or senior officer of a public company for certain periods oftime. The amendments to the Israeli Securities Law and to the Companies Law provide that only certain types of such liabilities may be reimbursed byindemnification and insurance. Specifically, legal expenses (including attorneys’ fees) incurred by an individual in the applicable administrativeenforcement proceeding and certain compensation payable to injured parties for damages suffered by them are permitted to be reimbursed viaindemnification or insurance, provided that such indemnification and insurance are authorized by the company’s articles of association, and receive therequisite corporate approvals.Our Articles of Association allow us to indemnify and insure our office holders for any liability imposed on them as a consequence of an act(including any omission) which was performed by virtue of being an office holder. In November 2011, our shareholders approved (i) the amendment of ourArticles of Association to authorize indemnification and insurance in connection with administrative enforcement proceedings, including without limitation,the specific amendments to the Israeli Securities Law and the Companies Law described above; and (ii) a new form of indemnification letter for our directorsand officers so as to reflect the amendment to our Articles of Association, which new form of letter was also approved in October 2011 by our audit committeeand board of directors, and in November 2011 by our shareholders. The terms of such agreements are consistent with the provisions of the CompensationPolicy which was approved by our shareholders in December 2013 and amended as described in the next paragraph. Our office holders are currently covered by a directors and officers’ liability insurance policy. The terms of such directors and officers insurance areconsistent with the provisions of the Compensation Policy which was approved by our shareholders in December 2013, and with the provisions of anamendment to the Compensation Policy which approved by our shareholders in September 2014. The purpose of the amendment was to clarify that we areauthorized to purchase insurance policies (including run-off policies) to cover the liability of directors and office holders that are in office at such time andthat shall be in office from time to time, including directors and office holders that may have a controlling interest in the Company. Such insurance policiesare authorized within the following limits: (1) the premium for each policy period shall not exceed $250,000, (2) the maximum aggregate limit of liabilitypursuant to the policies shall not exceed $20 million for each insurance period, and (3) the maximum deductible shall not exceed $250,000. In addition, theCompensation Committee is authorized to increase the coverage purchased and/or the premium paid for such policies by up to 20% per year, as compared tothe previous year, or cumulatively for a number of years, without an additional shareholders’ approval to the extent permitted under the Companies Law. Asof the date of this Annual Report on Form 20-F, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are notaware of any pending or threatened litigation or proceeding involving any of our directors or officers in which indemnification is sought. Pursuant to theapproval of our shareholders which was obtained in September 2014, we carry directors’ and officers’ insurance covering each of our directors and executiveofficers for acts and omissions. See also “Related Party Transactions — Indemnification Agreements.” 96 There is no pending litigation or proceeding against any of our directors or officers as to which indemnification is being sought, nor are we aware ofany pending or threatened litigation that may result in claims for indemnification by any director or officer. For significant ways in which our corporate governance practices differ from those required by the Marketplace Rules of the Nasdaq Stock Market,see “Item 16G. Corporate Governance.” D. Employees As of December 31, 2015, we had 48 employees, all of whom are employed in Israel. Of our employees, 21 hold M.D. or Ph.D. degrees. December 31, 2013 2014 2015 Management and administration 13 12 12 Research and development 27 31 32 Sales and marketing 3 3 4 While none of our employees are party to any collective bargaining agreements, in Israel we are subject to certain labor statutes and national laborcourt precedent rulings, as well as to certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel)and the Coordination Bureau of Economic Organizations (including the Industrialists’ Associations) are applicable to our employees by virtue of expansionorders issued in accordance with relevant labor laws by the Israel Ministry of Labor and Welfare, and which apply such agreement provisions to ouremployees even though they are not directly part of a union that has signed a collective bargaining agreement. The laws and labor court rulings that apply toour employees principally concern the minimum wage laws, procedures for dismissing employees, determination of severance pay, leaves of absence (such asannual vacation or maternity leave), sick pay and other conditions for employment. The expansion orders which apply to our employees principally concernthe requirement for length of the work day and work week, mandatory contributions to a pension fund, annual recreation allowance, travel expenses paymentand other conditions of employment. We generally provide our employees with benefits and working conditions beyond the required minimums. We have never experienced any employment-related work stoppages and believe our relationship with our employees is good. 97 E. Beneficial Ownership of Executive Officers and Directors The following table sets forth information regarding the beneficial ownership of our outstanding ordinary shares as of March 1, 2016 of each of ourdirectors and executive officers individually and as a group. Number of Shares Beneficially Percent of Held Class Directors Aharon Schwartz(1) 20,836 * Michael J. Anghel(2) 20,836 * Nurit Benjamini(3) 18,750 * B.J. Bormann(4) 19,586 * Raphael Hofstein(5) 40,836 * Avraham Molcho(6) 18,750 * Sandra Panem(7) 17,086 Executive officers Kinneret Savitsky(8) 257,220 * Philip Serlin(9) 117,920 * David Malek(10) 70,500 * Arnon Aharon(11) 15,000 * Merril Gersten – – All directors and executive officers as a group (11 persons)(12) 617,320 1.1% *Less than 1.0%. (1)Includes 20,836 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 14,164 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (2)Includes 20,836 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 14,164 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (3)Includes 18,750 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 1,250 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (4)Includes 19,586 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 15,414 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (5)Includes 40,836 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 14,164 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (6)Includes 18,750 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 1,250 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. 98 (7)Includes 17,086 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 15,414 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (8)Includes 91,603 issued ordinary shares and 165,617 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016.Does not include 241,100 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (9)Includes 117,920 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 249,800 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (10)Includes 70,500 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 238,100 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (11)Includes 15,000 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 235,000 ordinaryshares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. (12)Includes 617,320 ordinary shares issuable upon exercise of outstanding options within 60 days of March 1, 2016. Does not include 1,039,820ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 1, 2016. Equity Compensation Plan 2003 Share Incentive Plan In 2003, we adopted the BioLineRx Ltd. 2003 Share Incentive Plan, or the Plan. The Plan provides for the granting of options, ordinary shares,restricted stock units and performance stock units to our directors, employees, consultants and service providers, and to the directors, employees, consultantsand service providers of our subsidiaries and affiliates. The Plan provides for equity grants to be made at the determination of our Board of Directors inaccordance with applicable law. As of December 31, 2015, there were 3.3 million ordinary shares issuable upon the exercise of outstanding options under thePlan. As of March 1, 2016, there were 4.8 million ordinary shares issuable upon the exercise of outstanding options under the Plan. In August 2013, our Board of Directors approved amendments to the Plan to take into account changes in laws and regulations that had occurredsince its adoption and to extend the term of the plan until November 2023. In January 2016, our Board of Directors approved amendments to the Plan in order to permit the granting of restricted stock units, or RSUs, andperformance stock units, or PSUs, to eligible grantees. From time to time, our Board of Directors has approved an increase in the number of shares reserved for the purpose of equity grants pursuant to thePlan. As of December 31, 2015, the number of shares so reserved was 5.3 million. 99 Administration of Our Share Incentive Plan Our Plan is administered by our Board of Directors for the purposes of making equity grants and approving the terms of those grants, including, inthe case of options, exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration of theseplans. Equity grants made under the Plan to eligible employees and office holders are made under Section 102 of the Israel Income Tax Ordinance pursuant towhich the securities granted must be allocated or issued to a trustee and be held in trust for two years from the date upon which such grant was made,provided that securities granted prior to January 1, 2006, or the ordinary shares issued upon exercise of options, are subject to being held in trust for two yearsfrom the end of the year in which the securities are granted. Under Section 102, any tax payable by an employee from the grant of securities or the exercise ofoptions is deferred until the transfer of the securities (or ordinary shares issued upon the exercise of options) by the trustee to the employee or upon the sale ofthe securities or ordinary shares, as the case may be, and gains may qualify to be taxed as capital gains at a rate equal to 25%, subject to compliance withspecified conditions. Options granted under the Plan generally vest over four years, and they expire between seven to 10 years from the grant date. If we terminate anemployee for cause, all of the employee’s vested and unvested options expire immediately from the time of delivery of the notice of discharge, unlessdetermined otherwise by the Audit Committee or the Board of Directors. Upon termination of employment for any other reason, including due to death ordisability of the employee, vested options may be exercised within three months of the termination date, unless otherwise determined by the AuditCommittee or the Board of Directors. Vested options which are not exercised and unvested options return to the pool of reserved ordinary shares under thePlan for reissuance. The right to receive ordinary shares pursuant to PSUs granted under the Plan will vest upon the grantee’s achievement of certainperformance goals to be established by the Board of Directors. In the event of a merger, consolidation, reorganization or similar transaction or our voluntary liquidation or dissolution, all of our unexercisedvested equity grants and any unvested equity grants will be automatically terminated. However, in the event of a change of control, or merger, consolidation,reorganization or similar transaction resulting in the acquisition of at least 50% of our voting power, or the sale or transfer of all or substantially all of ouroutstanding shares assets, the equity grants then outstanding may be assumed or substituted for an appropriate number of shares of each class of shares orother securities and/or assets of the successor company in such transaction (or a parent or subsidiary or another affiliate of such successor company) as weredistributed to our shareholders in respect of the transaction. 100 ITEM7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders The following table sets forth certain information regarding the beneficial ownership of our outstanding ordinary shares as of March 1, 2016 by eachperson who we know beneficially owns 5.0% or more of the outstanding ordinary shares. Each of our shareholders has identical voting rights with respect toits shares. All of the information with respect to beneficial ownership of the ordinary shares is given to the best of our knowledge. The beneficial ownership ofordinary shares is based on the 54,818,057ordinary shares outstanding as of March 1, 2016 and is determined in accordance with the rules of the SEC andgenerally includes any ordinary shares over which a person exercises sole or shared voting or investment power. For purposes of the table below, we deemshares subject to options or warrants that are currently exercisable or exercisable within 60 days of March 1, 2016, to be outstanding and to be beneficiallyowned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person but we do not treat them asoutstanding for the purpose of computing the percentage ownership of any other person. To our knowledge, none of our shareholders of record are U.S.holders. Our principal shareholders do not have different or special voting rights. Number ofSharesBeneficiallyHeld Percent ofClass Novartis Pharma AG(1) 5,000,000 9.1 Senvest Management, LLC (2) 3,952,950 7.2 Broadfin Healthcare Master Fund, Ltd.(3) 3,500,000 6.4 Pan Atlantic Bank and Trust Limited(4) 3,480,397 6.3 (1)Based upon information provided by the shareholder in its Schedule 13G filed with the SEC on December 22, 2014. Novartis AG is the parent ofNovartis Pharma AG and as such is indicated as sharing voting and dispositive power with respect to the ordinary shares underlying the securities heldby Novartis Pharma AG and is deemed to have beneficial ownership of such securities. The address of the principal business office of each of NovartisPharma AG and Novartis AG is Lichtstrasse 35, 4056 Basel, Switzerland. (2)Includes 349,650 ordinary shares issuable upon exercise of outstanding warrants within 60 days of March 1, 2016. Based upon information providedby the shareholder in its Schedule 13G filed with the SEC on February 12, 2016. The securities indicated above are held in the accounts of SenvestMaster Fund, L.P., Senvest Israel Partners, L.P., and a separately managed account (collectively with the Senvest Funds, the “Investment Vehicles”).Senvest Management, LLC may be deemed to beneficially own the securities held by the Investment Vehicles by virtue of Senvest Management,LLC's position as investment manager of the Investment Vehicles. Richard Mashaal may be deemed to beneficially own the securities held by theInvestment Vehicles by virtue of Mr. Mashaal’s status as the managing member of Senvest Management, LLC. None of the foregoing should beconstrued in and of itself as an admission by either Senvest Management, LLC or Mr. Mashaal as to beneficial ownership of the securities indicatedabove. The address of the principal business office of Senvest Management, LLC is 540 Madison Avenue, 32nd Floor, New York, New York 10022. (3)Based upon information provided by the shareholder in its Schedule 13G filed with the SEC on February 12, 2016. In such filing, Broadfin Capital,LLC (Broadfin Capital) and Kevin Kotler are indicated as having shared voting and dispositive power with respect to the ordinary shares underlyingthe securities held by Broadfin Healthcare Master Fund, Ltd. (Broadfin Fund) and as having beneficial ownership of such securities. Broadfin Capitaland Mr. Kotler disclaim beneficial ownership in the shares reported in the Schedule 13G except to the extent of their pecuniary interest therein. Theaddress of the principal business office of Broadfin Fund is 20 Genesis Close, Ansbacher House, Second Floor, P.O. Box 1344, Grand Cayman KY1-1108, Cayman Islands.(4)Includes 700,000 ordinary shares issuable upon exercise of outstanding warrants within 60 days of March 1, 2016. Based upon information providedby the shareholder in its Schedule 13D/A filed with the SEC on March 10, 2014. Pan Atlantic Bank and Trust Limited is a wholly owned subsidiary ofFCMI Financial Corporation (FCMI). All of the outstanding shares of FCMI are owned by Albert D. Friedberg, members of his family and trusts for thebenefit of members of his family. Mr. Friedberg retains possession of the voting and dispositive power over the FCMI shares held by members of theFriedberg family and trusts for the benefit of members of his family and, as a result, controls and may be deemed the beneficial owner of 100% of theoutstanding shares of and sole controlling person of FCMI. By virtue of his control of FCMI, Mr. Friedberg may be deemed to possess voting anddispositive power over the shares owned directly by its wholly-owned subsidiary, Pan Atlantic Bank and Trust Limited. The address of the principalbusiness office of Pan Atlantic Bank and Trust Limited is “Whitepark House,” 1st Floor, Whitepark Road, St. Michael BB11135, Barbados, WestIndies. 101 B. Related Party Transactions Agreements with Directors and Officers Employment Agreements We have entered into employment agreements with each of our executive officers. See “Item 6. Directors, Senior Management and Employees —Compensation of Directors and Senior Management.” Indemnification Agreements Our Articles of Association and Executive Compensation Policy approved by our shareholders permit us to exculpate, indemnify and insure ourdirectors and officeholders to the fullest extent permitted by the Companies Law. We have entered into agreements with each of our office holdersundertaking to indemnify them to the fullest extent permitted by law, including with respect to liabilities resulting from this offering to the extent that theseliabilities are not covered by insurance. We have obtained directors’ and officers’ insurance for each of our officers and directors. See “Item 6. Directors,Senior Management and Employees — Board Practices — Exculpation, insurance and indemnification of office holders.” C. Interests of Experts and Counsel Not applicable. 102 ITEM8. FINANCIAL INFORMATION A. Consolidated Statements and other Financial Information See Item 18. Legal Proceedings We are not involved in any material legal proceedings. Dividend Distributions We have never declared or paid cash dividends to our shareholders. Currently we do not intend to pay cash dividends. We currently intend toreinvest any future earnings in developing and expanding our business. Any future determination relating to our dividend policy will be at the discretion ofour Board of Directors and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual restrictions,capital requirements, business prospects, applicable Israeli law and other factors our Board of Directors may deem relevant. B. Significant Changes None. 103 ITEM9. THE OFFER AND LISTING A. Offer and Listing Details Price Range of our ADSs Our ADSs have been trading on the Nasdaq Capital Market under the symbol “BLRX” since July 2011. The following table sets forth, for the periods indicated, the reported high and low closing sale prices of our ADSs on the Nasdaq Capital Market indollars. U.S.$ Price PerADS High Low Annual: 2015 2.84 1.23 2014 3.07 1.23 2013 4.75 1.58 2012 5.55 2.23 2011 (from July 25, 2011) 5.44 2.75 Quarterly: Fourth Quarter 2015 1.62 1.24 Third Quarter 2015 2.65 1.23 Second Quarter 2015 2.66 1.85 First Quarter 2015 2.84 1.71 Fourth Quarter 2014 1.83 1.23 Third Quarter 2014 2.19 1.46 Second Quarter 2014 2.27 1.94 First Quarter 2014 3.07 2.21 Most Recent Six Months: March 2016 (through March 8, 2016) 1.14 1.03 February 2016 1.10 0.90 January 2016 1.30 0.94 December 2015 1.62 1.25 November 2015 1.45 1.24 October 2015 1.55 1.32 September 2015 1.81 1.50 On March 8, 2016, the last reported sales price of our ADSs on the Nasdaq Capital Market was $1.13 per ADS. As of March 8, 2016 there was oneshareholder of record of our ADSs. The number of record holders is not representative of the number of beneficial holders of our ADSs. 104 Price Range of our Ordinary Shares Our ordinary shares have been trading on the TASE under the symbol “BLRX” since February 2007. The following table sets forth, for the periods indicated, the reported high and low closing sale prices of our ordinary shares on the TASE in NIS anddollars. Dollar per ordinary share amounts are calculated using the dollar representative rate of exchange on the date to which the high or low market price isapplicable, as reported by the Bank of Israel. NIS U.S.$ Price PerOrdinary Share Price PerOrdinary Share High Low High Low Annual: 2015 10.23 4.94 2.57 1.27 2014 10.49 4.76 3.01 1.24 2013 17.99 5.90 4.89 1.62 2012 21.15 8.92 5.58 2.32 2011 32.40 11.27 9.12 3.03 Quarterly: Fourth Quarter 2015 6.16 5.05 1.58 1.30 Third Quarter 2015 10.21 4.94 2.70 1.27 Second Quarter 2015 9.83 7.36 2.61 1.92 First Quarter 2015 10.23 6.70 2.57 1.72 Fourth Quarter 2014 7.11 4.76 1.81 1.24 Third Quarter 2014 7.33 5.69 2.14 1.56 Second Quarter 2014 8.02 6.76 2.31 1.95 First Quarter 2014 10.49 7.70 3.01 2.21 Most Recent Six Months: March 2016 (through March 8, 2016) 4.55 4.08 1.16 1.05 February 2015 4.27 3.67 1.09 0.94 January 2015 5.21 3.68 1.34 0.92 December 2015 6.14 5.08 1.58 1.30 November 2015 6.16 5.05 1.58 1.30 October 2015 6.05 5.37 1.56 1.39 September 2015 7.25 5.78 1.85 1.47 On March 8, 2016, the last reported sales price of our ordinary shares on the TASE was NIS 4.55 per share, or $1.16 per share (based on the exchange ratereported by the Bank of Israel for such date). On March 8, 2016, the exchange rate of the NIS to the dollar was $1.00 = NIS 3.911, as reported by the Bank ofIsrael. As of March 8, 2016, there were two shareholders of record of our ordinary shares. The number of record holders is not representative of the number ofbeneficial holders of our ordinary shares. B. Plan of Distribution Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 105 ITEM10. ADDITIONAL INFORMATION A. Share Capital Not applicable B. Articles of Association Our number with the Israeli Registrar of Companies is 513398750. Our purpose is set forth in Section 2 of our Articles of Association and includesevery lawful purpose. Our ordinary shares that are fully paid for are issued in registered form and may be freely transferred under our Articles of Association, unless thetransfer is restricted or prohibited by applicable law or the rules of a stock exchange on which the shares are traded. The ownership or voting of our ordinaryshares by non-residents of Israel is not restricted in any way by our Articles of Association or the laws of the State of Israel, except for ownership by nationalsof some countries that are, or have been, in a state of war with Israel. Pursuant to the Companies Law and our Articles of Association, our Board of Directors may exercise all powers and take all actions that are notrequired under law or under our Articles of Association to be exercised or taken by our shareholders, including the power to borrow money for companypurposes. Our Articles of Association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Lawand must be approved by a resolution duly passed by our shareholders at a general or special meeting by voting on such change in the capital. In addition,transactions that have the effect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings andprofits and an issuance of shares for less than their nominal value (under certain circumstances), require a resolution of our Board of Directors and courtapproval. In May 2015, at an Extraordinary General Meeting of our shareholders, they approved a 1-for-10 reverse share split of our ordinary shares and acorresponding amendment to our Articles of Association, and further approved an increase to our share capital from NIS 7,500,000 divided into 75,000,000ordinary shares of a nominal value of NIS 0.10 each to NIS 15,000,000 divided into 150,000,000 ordinary shares of nominal value NIS 0.10, and acorresponding amendment to our Articles of Association, effective immediately after the reverse share split became effective. Dividends We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the CompaniesLaw, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’sarticles of association provide otherwise. Our Articles of Association do not require shareholder approval of a dividend distribution and provide thatdividend distributions may be determined by our Board of Directors. Pursuant to the Companies Law, we may only distribute dividends from our profits accrued over the previous two years, as defined in the CompaniesLaw, according to our then last reviewed or audited financial reports, provided that the date of the financial reports is not more than six months prior to thedate of distribution, or we may distribute dividends with court approval. In each case, we are only permitted to pay a dividend if there is no reasonableconcern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. Election of Directors Our ordinary shares do not have cumulative voting rights in the election of directors. As a result, the holders of a majority of the voting powerrepresented at a shareholders meeting have the power to elect all of our directors, other than with respect to the special approval requirements for the electionof external directors described under “Item 6. Directors, Senior Management and Employees — Board Practices — External Directors.” Pursuant to our Articles of Association, other than the external directors, for whom special election requirements apply under the Companies Law,our directors are elected at a general or special meeting of our shareholders and serve on the Board of Directors until they are removed by the majority of ourshareholders at a general or special meeting of our shareholders or upon the occurrence of certain events, in accordance with the Companies Law and ourArticles of Association. In addition, our Articles of Association allow our Board of Directors to appoint directors to fill vacancies on the Board of Directors toserve until the next general meeting or special meeting, or earlier if required by our Articles of Association or applicable law. We have held elections for eachof our non-external directors at each annual meeting of our shareholders since our initial public offering in Israel. External directors are elected for an initialterm of three years and may be removed from office pursuant to the terms of the Companies Law. See “Item 6. Directors, Senior Management and Employees— Board Practices — External Directors.” 106 Shareholder Meetings Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be no later than 15months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to as specialmeetings. Our Board of Directors may call special meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. Inaddition, the Companies Law and our Articles of Association provide that our Board of Directors is required to convene a special meeting upon the writtenrequest of (a) any two of our directors or one quarter of our Board of Directors or (b) one or more shareholders holding, in the aggregate, either (1) 5% of ouroutstanding shares and 1% of our outstanding voting power or (2) 5% of our outstanding voting power. Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at generalmeetings are the shareholders of record on a date to be decided by the board of directors, which may be between four and 40 days prior to the date of themeeting. Furthermore, the Companies Law and our Articles of Association require that resolutions regarding the following matters must be passed at a generalmeeting of our shareholders: •amendments to our Articles of Association; •appointment or termination of our auditors; •appointment of directors and appointment and dismissal of external directors; •approval of acts and transactions requiring general meeting approval pursuant to the Companies Law; •director compensation, indemnification and change of the principal executive officer; •increases or reductions of our authorized share capital; •a merger; and •the exercise of our Board of Director’s powers by a general meeting, if our Board of Directors is unable to exercise its powers and theexercise of any of its powers is required for our proper management. The Companies Law requires that a notice of any annual or special shareholders meeting be provided at least 21 days prior to the meeting and if theagenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, theapproval of a compensation policy with respect to office holders or an approval of a merger, notice must be provided at least 35 days prior to the meeting. Pursuant to our Articles of Association, holders of our ordinary shares have one vote for each ordinary share held on all matters submitted to a votebefore the shareholders at a general meeting. Quorum The quorum required for our general meetings of shareholders consists of at least two shareholders present in person, by proxy or written ballot whohold or represent between them at least 25% of the total outstanding voting rights. A meeting adjourned for lack of a quorum is adjourned to the same day in the following week at the same time and place or on a later date if sospecified in the summons or notice of the meeting. At the reconvened meeting, any number of our shareholders present in person or by proxy shall constitutea lawful quorum. 107 Resolutions Our Articles of Association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by applicablelaw. Israeli law provides that a shareholder of a public company may vote in a meeting and in a class meeting by means of a written ballot in which theshareholder indicates how he or she votes on resolutions relating to the following matters: •an appointment or removal of directors; •an approval of transactions with office holders or interested or related parties; •an approval of a merger or any other matter in respect of which there is a provision in the articles of association providing that decisions ofthe general meeting may also be passed by written ballot; •authorizing the chairman of the board of directors or his relative to act as the company’s chief executive officer or act with such authority;or authorize the company’s chief executive officer or his relative to act as the chairman of the board of directors or act with such authority;and •other matters which may be prescribed by Israel’s Minister of Justice. The provision allowing the vote by written ballot does not apply where the voting power of the controlling shareholder is sufficient to determine thevote. Our Articles of Association provides that our Board of Directors may prevent voting by means of a written ballot and this determination is required to bestated in the notice convening the general meeting. The Companies Law provides that a shareholder, in exercising his or her rights and performing his or her obligations toward the company and itsother shareholders, must act in good faith and in a customary manner, and avoid abusing his or her power. This is required when voting at general meetingson matters such as changes to the articles of association, increasing the company’s registered capital, mergers and approval of related party transactions. Ashareholder also has a general duty to refrain from depriving any other shareholder of its rights as a shareholder. In addition, any controlling shareholder, anyshareholder who knows that its vote can determine the outcome of a shareholder vote and any shareholder who, under the company’s articles of association,can appoint or prevent the appointment of an office holder, is required to act with fairness towards the company. The Companies Law does not describe thesubstance of this duty except to state that the remedies generally available upon a breach of contract will also apply to a breach of the duty to act withfairness, and, to the best of our knowledge, there is no binding case law that addresses this subject directly. Unless otherwise stated under the Companies Law, or provided in a company’s articles of association a resolution at a shareholders meeting requiresapproval by a simple majority of the voting rights represented at the meeting, in person, by proxy or written ballot, and voting on the resolution. Under theCompanies Law, unless otherwise provided in a company’s articles of association or under applicable law, all resolutions of the shareholders of a companyrequire a simple majority. Under Amendment 20, the board of directors of an Israeli publicly traded company is required to establish a compensation policy, to be approved bythe shareholders of the company, pursuant to which the terms of office and compensation of the company’s officer holders will be decided. The final adoptionof such compensation policy is subject to the approval of the shareholders, which approval is subject to certain special majority requirements, as set forth inthe Companies Law, pursuant to which one of the following must be met: (i)the majority of the votes includes at least a majority of all the votes of shareholders who are not controlling shareholders of the company orwho do not have a personal interest in the compensation policy and participating in the vote; abstentions shall not be included in the totalof the votes of the aforesaid shareholders; or (ii)the total of opposing votes from among the shareholders described in subsection (i) above does not exceed 2% of all the voting rights in thecompany. For this purpose, under the Companies Law “personal interest” is defined as: (1) a shareholder’s personal interest in the approval of an act or atransaction of the company, including (i) the personal interest of his or her relative (which includes for these purposes any members of his/her (or his/herspouse’s) immediate family or the spouses of any such members of his or her (or his/her spouse’s) immediate family); and (ii) a personal interest of a bodycorporate in which a shareholder or any of his/her aforementioned relatives serves as a director or the chief executive officer, owns at least 5% of its issuedshare capital or its voting rights or has the right to appoint a director or chief executive officer, but (2) excluding a personal interest arising solely from thefact of holding shares in the company or in a body corporate. 108 In addition, pursuant to the Companies Law, terms of office and employment of office holders in a public company, and terms of employment and/orterms of office of a controlling shareholder in a public company, require the approval of the shareholders, which such approval is subject to the specialmajority required for approving the compensation policy (as detailed above). See “Item 6. Directors, Senior Management and Employees — Approval ofRelated Party Transactions under Israeli Law” for information regarding the shareholders’ approval, and any additional approvals that might be required, withrespect to the approval of terms of office and employment of office holders in a public company, pursuant to the Companies Law. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares inproportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distributionrights to the holders of a class of shares with preferential dividend or distribution rights that may be authorized in the future. Access to Corporate Records Under the Companies Law, all shareholders of a company generally have the right to review minutes of the company’s general meetings, itsshareholders register and principal shareholders register, articles of association, financial statements and any document it is required by law to file publiclywith the Israeli Companies Registrar and the Israeli Securities Authority. Furthermore, any of our shareholders may request access to review any document inour possession that relates to any action or transaction with a related party, interested party or office holder that requires shareholder approval under theCompanies Law. However, we may deny such a request to review a document if we determine that the request was not made in good faith, that the documentcontains a commercial secret or a patent or that the document’s disclosure may otherwise prejudice our interests. Acquisitions under Israeli Law Full Tender Offer A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the target company’s issued andoutstanding share capital is required by the Companies Law to make a tender offer to all of the company’s shareholders for the purchase of all of the issuedand outstanding shares of the company. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the issuedand outstanding share capital of a certain class of shares is required to make a tender offer to all of the shareholders who hold shares of the same class for thepurchase of all of the issued and outstanding shares of the same class. If the shareholders who do not accept the offer hold less than 5% of the issued andoutstanding share capital of the company or of the applicable class, all of the shares that the acquirer offered to purchase will be transferred to the acquirer byoperation of law (provided that a majority of the offerees that do not have a personal interest in such tender offer shall have approved the tender offer exceptthat if the total votes to reject the tender offer represent less than 2% of the company’s issued and outstanding share capital, in the aggregate, approval by amajority of the offerees that do not have a personal interest in such tender offer is not required to complete the tender offer). However, a shareholder that hadits shares so transferred may petition the court within six months from the date of acceptance of the full tender offer, whether or not such shareholder agreed tothe tender, to determine whether the tender offer was for less than fair value and whether the fair value should be paid as determined by the court unless theacquirer stipulated in the tender offer that a shareholder that accepts the offer may not seek appraisal rights. If the shareholders who did not accept the tenderoffer hold 5% or more of the issued and outstanding share capital of the company or of the applicable class, the acquirer may not acquire shares of thecompany that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the applicable class from shareholderswho accepted the tender offer. 109 Special Tender Offer The Companies Law provides that an acquisition of shares of a public Israeli company must be made by means of a special tender offer if as a resultof the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company, unless one of the exemptions in the CompaniesLaw is met. This rule does not apply if there is already another holder of at least 25% of the voting rights in the company. Similarly, the Companies Lawprovides that an acquisition of shares in a public company must be made by means of a tender offer if as a result of the acquisition the purchaser wouldbecome a holder of 45% or more of the voting rights in the company, if there is no other shareholder of the company who holds 45% or more of the votingrights in the company, unless one of the exemptions in the Companies Law is met. A special tender offer must be extended to all shareholders of a company but the offeror is not required to purchase shares representing more than 5%of the voting power attached to the company’s outstanding shares, regardless of how many shares are tendered by shareholders. A special tender offer may beconsummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (ii) the number ofshares tendered in the offer exceeds the number of shares whose holders objected to the offer.If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or suchcontrolling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with thetarget company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger inthe initial special tender offer. Merger The Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under theCompanies Law are met, a majority of each party’s shares voted on the proposed merger at a shareholders’ meeting called with at least 35 days’ prior notice. For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares represented atthe shareholders meeting that are held by parties other than the other party to the merger, or by any person who holds 25% or more of the outstanding sharesor the right to appoint 25% or more of the directors of the other party, vote against the merger. If the transaction would have been approved but for theseparate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the requestof holders of at least 25% of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the value of theparties to the merger and the consideration offered to the shareholders. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists areasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger, and mayfurther give instructions to secure the rights of creditors. In addition, a merger may not be completed unless at least 50 days have passed from the date that a proposal for approval of the merger was filed byeach party with the Israeli Registrar of Companies and 30 days have passed from the date the merger was approved by the shareholders of each party. Antitakeover Measures The Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including sharesproviding certain preferred rights, distributions or other matters and shares having preemptive rights. As of the date of this annual report, we do not have anyauthorized or issued shares other than our ordinary shares. In the future, if we do create and issue a class of shares other than ordinary shares, such class ofshares, depending on the specific rights that may be attached to them, may delay or prevent a takeover or otherwise prevent our shareholders from realizing apotential premium over the market value of their ordinary shares. The authorization of a new class of shares will require an amendment to our Articles ofAssociation which requires the prior approval of the holders of a majority of our shares at a general meeting. Shareholders voting in such meeting will besubject to the restrictions provided in the Companies Law as described above. In addition, the Israeli Securities Law and the rules and regulations of theTASE also limit the terms permitted with respect to a new class of shares created by a public company whose shares are traded on the TASE, and prohibit anysuch new class of shares from having voting rights. 110 C. Material Contracts For a discussion of our out-licensing and in-licensing agreements, see Item 4. The following are summary descriptions of certain other material contracts towhich we are a party. The descriptions provided below do not purport to be complete and are qualified in their entirety by the complete agreements, whichare attached as exhibits to this Annual Report on Form 20-F. Share Purchase Agreement with LPC On May 28, 2014, we entered into a purchase agreement with LPC, pursuant to which LPC agreed to purchase from us up to $20 million of our ADSs(subject to certain limitations) from time to time over a 36-month period. Also on May 28, 2014, we entered into a registration rights agreement with LPC,pursuant to which we filed a registration statement on May 30, 2014 with the SEC for 10,400,000 of our ADSs, covering the ADSs that have been issued ormay be issued to LPC under the purchase agreement. The registration statement was declared effective on June 12, 2014. In consideration for entering into the purchase agreement, we issued to 150,000 ADSs to LPC upon execution of the purchase agreement as an initialcommitment fee, and we will issue additional ADSs to LPC as an additional commitment fee in connection with each purchase by LPC under the purchaseagreement equal to 2.5% of the amount of ADSs issued on each applicable purchase date. We will issue these additional commitment ADSs only when, and if,we elect to sell ADSs to LPC under the purchase agreement. We can sell up to $200,000 worth of ADSs to LPC (which amount may be increased based on the trading price of our ADSs on the applicablepurchase date), so long as at least one business day has passed between (i) the date on which LPC received all of the purchased ADSs in connection with themost recent prior purchase and (ii) the date we direct LPC to make a purchase. We control the timing and amount of any sales of our ADSs to LPC. Each timewe direct LPC to purchase ADSs, subject to the terms of the purchase agreement, LPC will be obligated to purchase such amounts directed by us. LPC doesnot have the right to require us to sell any ADSs to them under the purchase agreement and we have no obligation to sell any shares under the purchaseagreement. The purchase price of the ADSs sold to LPC under the purchase agreement will be based on the market price of our ADSs immediately preceding thetime of sale as computed under the purchase agreement, without any fixed discount and as more fully described in the purchase agreement. In addition, onany business day on which we have properly directed LPC to make a regular purchase, we can also accelerate the amount of our ADSs to be purchased undercertain circumstances. Accelerated purchases may be made in amounts of up to the lesser of (i) 25% of the aggregate ADSs traded on Nasdaq during normaltrading hours on the accelerated purchase date and (ii) three times the number of ADSs purchased pursuant to the corresponding regular purchase. LPC may not assign or transfer its rights and obligations under the purchase agreement. We may at any time in our sole discretion terminate thepurchase agreement without fee, penalty or cost. The purchase agreement will automatically terminate on July 1, 2017. As of the date of this report, we have sold 1,292,601 ADSs to LPC in accordance with the purchase agreement. Investment and Collaboration Agreement with Novartis In December 2014, we entered into a multi-year strategic collaboration agreement with Novartis Pharma AG, or Novartis designed to facilitatedevelopment and commercialization of Israeli-sourced pharmaceutical candidates. Novartis will evaluate projects identified and presented by us for co-development and future licensing under the collaboration. The parties intend to co-develop a number of pre-clinical and clinical therapeutic projects up toclinical proof of concept. As part of the agreement, Novartis made an initial equity investment in BioLineRx of $10 million, for 12.8% of our then currentshares outstanding. Novartis has agreed to certain restrictions on the percentage of our outstanding capital it may own, on the exercise of its rights as ashareholder and on its sales of the shares it owns. 111 The parties have agreed on the establishment of a joint steering committee, or JSC, to oversee, implement and coordinate the collaborationcontemplated by the agreement and on a process for screening and selecting projects. For each clinical project which the JSC selects for in-licensing by uswithin the framework of the collaboration (a “Selected Project”), Novartis will pay us a fixed, non-refundable option fee of $5 million (the “Option Fee”), aswell as fund 50% of the anticipated remaining development costs associated with establishing clinical proof-of-concept, in the form of an additional equityinvestment in BioLineRx. The parties have agreed on procedures for funding and continuing the development of a Selected Project if cost overruns arise. Wewill retain full control over the development process of Selected Projects; provided, however, Novartis and we will continue to consult on the progress of theimplementation of the development plan for the Selected Project. For each Selected Project, Novartis will have, during a defined period (the “ROFN Period”), a first right to commence exclusive negotiations toobtain a sublicense with respect to the particular Selected Project. If no definitive sublicense agreement has been entered into prior to the end of the ROFNPeriod (or any longer period that may be agreed in writing between the parties), we will be entitled to pursue licensing or similar opportunities with thirdparties (“Third Party Opportunities”) with respect to such Selected Project. In cases of pre-clinical projects selected by the JSC (a “Flagged Project”), we will develop these Flagged Projects under the guidance of the JSC, andonce these projects reach the IND (i.e., clinical) stage, Novartis will have the right to define the project as a Selected Project under all the same terms asdescribed above. The arrangements between Novartis and us set out in the agreement are to be mutually exclusive and neither may take any action to circumvent theother with respect to the matters set out in the Agreement. Before entering into a sublicense agreement with Novartis with respect to a specific project, all data, results, developments, inventions and know-how and all intellectual property rights therein and thereto, generated or discovered in the course of performing research and development activities in thecontext of any project (“Project IP”) shall be our exclusive property, regardless of whether Novartis has funded any activities that resulted in Project IP. The term of the Agreement, unless earlier terminated as permitted by the agreement, will continue in effect until the first to occur of (i) payment byNovartis of the Option Fee in respect of a certain number of “Projects,” as defined in the Agreement or (ii) the later of (A) three years from the effective date ofthe agreement or (B) the presentation by us to Novartis at the JSC of a certain number of projects of the types agreed on by the parties. D. Exchange Controls There are no Israeli government laws, decrees or regulations that restrict or that affect our export or import of capital or the remittance of dividends,interest or other payments to non-resident holders of our securities, including the availability of cash and cash equivalents for use by us and our wholly-owned subsidiaries, except or otherwise as set forth under “Item 10E. Additional Information — Taxation.” E. Taxation The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of ourordinary shares or ADSs, both referred to in this Item 10E as the Shares. You should consult your own tax advisor concerning the tax consequences of yourparticular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign, including Israeli, or other taxingjurisdiction. Israeli Tax Considerations The following is a summary of the material Israeli tax laws applicable to us. This section also contains a discussion of material Israeli taxconsequences concerning the ownership and disposition of our Shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant toa particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law.Examples of this kind of investor include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion.Because certain parts of this discussion are based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannotassure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. 112 General Corporate Tax Structure in Israel Israeli companies are generally subject to corporate tax on their taxable income. The regular corporate tax rate in Israel for the year 2013 was 25%,for the years 2014 and 2015 it was 26.5% and it is now set to be 25% for the year 2016 and thereafter. Capital gains derived by an Israeli company are nowgenerally subject to tax at the same rate as the corporate tax rate. In May 2012, the Israeli Tax Authority, or ITA, approved our eligibility for tax benefits as a “Benefited Enterprise” under the Law for theEncouragement of Capital Investments, 5719-1959, as amended, or Investments Law, with respect to a portion of the consideration deriving from certain ofour development programs, or Eligible Projects. Subject to compliance with the applicable requirements, the portion of our undistributed income derivedfrom our Benefited Enterprise programs will be entitled to a seven-year period of tax benefits due to the Company’s location in Modi’in (a tax exemption fora period of two years, followed by five years at the Benefited Enterprise tax rate of 25%) commencing in the first year in which we generate taxable incomeafter setting off our losses for Israeli tax purposes from prior years in the amount of approximately $152 million. The seven-year period may not extendbeyond 12 years from the beginning of the Benefited Enterprise’s election year. We received Benefited Enterprise status with respect to the Eligible Projectsin 2009 and 2012 tax years, so depending on when the Benefited Enterprise programs begin to generate taxable income, the benefit period could continuethrough 2023. However, any distribution of income derived from exempt income sourced in our Benefited Enterprise programs will result in such incomebeing subject to a rate of corporate tax no greater than 25%. We have the option to transition to a “Preferred Enterprise” regime under the Investments Law with respect to the year 2016 (through May 31, 2016),according to which all of our income which is eligible for benefits under the regime would be subject to flat corporate tax rates of 16% in 2016 and thereafter,whether or not distributed. A transition to a Preferred Enterprise regime may not be reversed. In addition, the ITA approved certain of our operations as an “Industrial Enterprise” under the Investments Law, meaning that we are eligible foraccelerated depreciation with respect to certain tangible assets belonging to our Benefited Enterprise. Should we not meet the requirements for maintaining these benefits, they may be reduced or cancelled and, among other things, our income derivingfrom the Eligible Projects (assuming we are profitable for tax purposes after offsetting losses) would be subject to regular corporate tax rate in Israel at thestandard rate. If these tax benefits are reduced or eliminated, the amount of taxes that we pay would likely increase, as all of our operations wouldconsequently be subject to corporate tax at the standard rate, which could adversely affect our results of operations. Taxation of Israeli Individual Shareholders on Receipt of Dividends. Israeli residents who are individuals are generally subject to Israeli income taxfor dividends paid on our ordinary shares (other than bonus shares or share dividends) at a rate of either 25% or, if the recipient of such dividend is asubstantial shareholder (as defined below) at the time of distribution or at any time during the preceding 12-month period 30%. Taxation of Israeli Resident Corporations on Receipt of Dividends. Israeli resident corporations are generally exempt from Israeli corporate tax fordividends paid on our Shares. However, in the case of both Israeli individual shareholders and Israeli resident corporations, under the Investments Law, dividends distributed fromtaxable income accrued during the period of benefit of a Benefited Enterprise and which are attributable to a Benefited Enterprise are subject to tax at the rateof 15%, if the dividend is distributed during the tax benefit period under the Investment Law or within 12 years after that period. A weighted average ratemay be set if the dividend is distributed from mixed types of income (regular and Benefited Enterprise income). Different tax rates might apply to dividendssourced from profits attributable to a Preferred Enterprise, but this matter is not currently relevant to the Company. Taxation of Non-Israeli Shareholders on Receipt of Dividends. Non-residents of Israel are generally subject to Israeli income tax on the receipt ofdividends paid on our Shares at the rate of 25% (or 30% if such person is a “substantial shareholder” at the time receiving the dividend or on any date in the12 months preceding such date), which tax will be withheld at the source, unless a lower rate is provided in a tax treaty between Israel and the shareholder’scountry of residence. If the income out of which the dividend is being paid is sourced from profits attributable to a Benefited Enterprise under theInvestments Law, the rate is generally not more than 15%. 113 Under the U.S.-Israel Tax Treaty, Israeli withholding tax on dividends paid to a U.S. resident for treaty purposes may not, in general, exceed 25%, or15% in the case of dividends paid out of the profits of a Benefited Enterprise, subject to certain conditions. Where the recipient is a U.S. corporation owning10% or more of the voting stock of the paying corporation during the part of the paying corporation’s taxable year which precedes the date of payment of thedividend and during the whole of its prior taxable year (if any) and the dividend is not paid from the profits of a Benefited Enterprise, the Israeli tax withheldmay not exceed 12.5%, subject to certain conditions. A “substantial shareholder” is generally a person who alone, or together with his relative or another person who collaborates with him on a regularbasis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote,receive profits, nominate a director or an officer, receive assets upon liquidation, or instruct someone who holds any of the aforesaid rights regarding themanner in which he or she is to exercise such right(s), and all regardless of the source of such right. A non-resident of Israel who receives dividends from which tax was withheld is generally exempt from the duty to file returns in Israel in respect ofsuch income, provided such income was not derived from a business conducted in Israel by the taxpayer, and the taxpayer has no other taxable sources ofincome in Israel. Taxation of Capital Gains. Israeli law imposes a capital gains tax on the sale of any capital assets by residents of Israel, as defined for Israeli taxpurposes, and on the sale of assets located in Israel, including shares in Israeli companies, by non-residents of Israel, unless a specific exemption is availableor unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The law distinguishes between real gain and inflationarysurplus. The inflationary surplus is a portion of the total capital gain that is equivalent to the increase of the relevant asset’s purchase price which isattributable to the increase in the Israeli consumer price index or, in certain circumstances, a foreign currency exchange rate, between the date of purchase andthe date of sale. The real gain is the excess of the total capital gain over the inflationary surplus. Capital Gains Taxes Applicable to Israeli Resident Shareholders. An individual is subject to a tax at a rate of 25% on actual capital gains derivedfrom the sale of shares, as long as the individual is not a substantial shareholder in the company issuing the shares. An individual who is a substantial shareholder is subject to tax at a rate of 30% in respect of actual capital gains derived from the sale of sharesissued by the company in which he or she is a substantial shareholder. The determination of whether the individual is a substantial shareholder will be madeon the date that the securities are sold. In addition, the individual will be deemed to be a substantial shareholder if at any time during the 12 monthspreceding the date he or she had been a substantial shareholder. Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders. Shareholders that are not Israeli residents are generally exempt from Israelicapital gains tax on any gains derived from the sale, exchange or disposition of our Shares, provided that such shareholders did not acquire their Shares priorto our initial public offering on the TASE and such gains were not derived from a permanent establishment or business activity of such shareholders in Israel.However, non-Israeli corporations will not be entitled to the foregoing exemptions if one or more Israeli residents (a) have a controlling interest of 25% ormore in such non-Israeli corporation or (b) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation,whether directly or indirectly. In addition, under the U.S.-Israel Tax Treaty, the sale, exchange or disposition of our Shares by a shareholder who is a U.S. resident (for purposes ofthe U.S.-Israel Tax Treaty) holding the Shares as a capital asset is exempt from Israeli capital gains tax unless (1) the shareholder holds, directly or indirectly,shares representing 10% or more of our voting capital during any part of the 12-month period preceding such sale, exchange or disposition; (2) the capitalgains arising from such sale are attributable to a permanent establishment of the shareholder located in Israel; (3) a shareholder who is an individual is presentin Israel for a period or periods aggregating 183 days or more during a taxable year. In either case, the sale, exchange or disposition of Shares would besubject to Israeli tax, to the extent applicable; however, under the U.S.-Israel Tax Treaty, the U.S. resident would be permitted to claim a credit for the taxagainst the U.S. federal income tax imposed with respect to the sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign taxcredits. The U.S.-Israel Tax Treaty does not relate to U.S. state or local taxes. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the timeof sale. 114 U.S. Federal Income Tax Considerations The following is a general summary of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of ourShares by U.S. Investors (as defined below) that hold such Shares as capital assets. This summary is based on the Internal Revenue Code of 1986, as amended,or the Code, the regulations of the U.S. Department of the Treasury issued pursuant to the Code, or the Treasury Regulations, and administrative and judicialinterpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different interpretation.This summary is for general information only and does not address all of the tax considerations that may be relevant to specific U.S. Investors in light of theirparticular circumstances or to U.S. Investors subject to special treatment under U.S. federal income tax law (such as banks, insurance companies, tax-exemptentities, retirement plans, regulated investment companies, partnerships, dealers in securities, brokers, real estate investment trusts, certain former citizens orresidents of the United States, persons who acquire Shares as part of a straddle, hedge, conversion transaction or other integrated investment, persons thathave a “functional currency” other than the dollar, persons that own (or are deemed to own, indirectly or by attribution) 10% or more of our shares or personsthat generally mark their securities to market for U.S. federal income tax purposes). This summary does not address any U.S. state or local or non-U.S. taxconsiderations or any U.S. federal estate, gift or alternative minimum tax considerations. As used in this summary, the term “U.S. Investor” means a beneficial owner of Shares that is, for U.S. federal income tax purposes, (i) an individualcitizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized inor under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxregardless of its source or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over its administration andone or more U.S. persons have the authority to control all of its substantial decisions, or an electing trust that was in existence on August 19, 1996 and wastreated as a domestic trust on that date. If an entity treated as a partnership for U.S. federal income tax purposes holds Shares, the tax treatment of such partnership and each partner thereofwill generally depend upon the status and activities of the partnership and such partner. A holder that is treated as a partnership for U.S. federal income taxpurposes should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase, ownershipand disposition of Shares. Prospective investors should be aware that this summary does not address the tax consequences to investors who are not U.S. Investors.Prospective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase,ownership and disposition of Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws. Taxation of U.S. Investors The discussions under “— Distributions” and under “— Sale, Exchange or Other Disposition of Ordinary Shares” below assumes that we will not betreated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. However, we have not determined whether we will be a PFICin 2016, and it is possible that we will be a PFIC in 2016 or in any subsequent year. For a discussion of the rules that would apply if we are treated as a PFIC,see the discussion under “— Passive Foreign Investment Company.” Distributions. We have no current plans to pay dividends. To the extent we pay any dividends, a U.S. Investor will be required to include in grossincome as a taxable dividend the amount of any distributions made on the Shares, including the amount of any Israeli taxes withheld, to the extent that thosedistributions are paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distributions in excess ofour earnings and profits will be applied against and will reduce the U.S. Investor’s tax basis in its Shares and to the extent they exceed that tax basis, will betreated as gain from the sale or exchange of those Shares. If we were to pay dividends, we expect to pay such dividends in NIS; however, dividends paid toholders of our ADSs will be paid in U.S. Dollars. A dividend paid in NIS, including the amount of any Israeli taxes withheld, will be includible in a U.S.Investor’s income as a dollar amount calculated by reference to the exchange rate in effect on the date such dividend is received, regardless of whether thepayment is in fact converted into dollars. If the dividend is converted to dollars on the date of receipt, a U.S. Investor generally will not recognize a foreigncurrency gain or loss. However, if the U.S. Investor converts the NIS into dollars on a later date, the U.S. Investor must include, in computing its income, anygain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the dollar value of the amount includedin income when the dividend was received and (ii) the amount received on the conversion of the NIS into dollars. Such gain or loss will generally be ordinaryincome or loss and United States source for U.S. foreign tax credit purposes. U.S. Investors should consult their own tax advisors regarding the taxconsequences to them if we pay dividends in NIS or any other non-U.S. currency. 115 Subject to certain significant conditions and limitations, including potential limitations under the United States-Israel income tax treaty, any Israelitaxes paid on or withheld from distributions from us and not refundable to a U.S. Investor may be credited against the investor’s U.S. federal income taxliability or, alternatively, may be deducted from the investor’s taxable income. This election is made on a year-by-year basis and applies to all foreign taxespaid by a U.S. Investor or withheld from a U.S. Investor that year. Dividends paid on the Shares generally will constitute income from sources outside theUnited States and be categorized as “passive category income” or, in the case of some U.S. Investors, as “general category income” for U.S. foreign tax creditpurposes. Since the rules governing foreign tax credits are complex, U.S. Investors should consult their own tax advisor regarding the availability of foreigntax credits in their particular circumstances. In addition, the U.S. Treasury Department has expressed concerns that parties to whom ADSs are pre-released maybe taking actions that are inconsistent with the claiming of foreign tax credits by U.S. holders of ADSs. Accordingly, the creditability of Israeli taxes could beaffected by future actions that may be taken by the U.S. Treasury Department or parties to whom ADSs are pre-released. Dividends paid on the Shares will not be eligible for the “dividends-received” deduction generally allowed to corporate U.S. Investors with respectto dividends received from U.S. corporations. Distributions treated as dividends that are received by an individual U.S. Investor from “qualified foreign corporations” generally qualify for areduced maximum tax rate so long as certain holding period and other requirements are met. Dividends paid by us in a taxable year in which we are not aPFIC are expected to be eligible for the reduced maximum tax rate. However, any dividend paid by us in a taxable year in which we are a PFIC will be subjectto tax at regular ordinary income rates. As mentioned above, we have not determined whether we are currently a PFIC or not. Sale, Exchange or Other Disposition of Ordinary Shares. Subject to the discussion under “— Passive Foreign Investment Company” below, a U.S.Investor generally will recognize capital gain or loss upon the sale, exchange or other disposition of Shares in an amount equal to the difference between theamount realized on the sale, exchange or other disposition and the U.S. Investor’s adjusted tax basis in such Shares. This capital gain or loss will be long-termcapital gain or loss if the U.S. Investor’s holding period in the Shares exceeds one year. Preferential tax rates for long-term capital gain will apply toindividual U.S. Investors. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sources within theUnited States for U.S. foreign tax credit purposes. Medicare Tax. Certain U.S. persons, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax on unearnedincome. For individuals, the additional Medicare tax applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted grossincome” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals thetaxpayer’s gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income suchas interest, dividends, annuities, royalties, rents, and capital gains. U.S. Investors are urged to consult their own tax advisors regarding the implications of theadditional Medicare tax resulting from their ownership and disposition of Shares. U.S. Investors should consult their own tax advisors regarding the U.S. federal income tax consequences of receiving currency other than dollarsupon the disposition of Shares. 116 Passive Foreign Investment Company In general, a corporation organized outside the United States will be treated as a PFIC for U.S. federal income tax purposes in any taxable year inwhich either (i) at least 75% of its gross income is “passive income” or (ii) on average at least 50% of its assets by value produce passive income or are heldfor the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents andgains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includesamounts derived by reason of the temporary investment of funds, including those raised in the public offering. In determining whether a non-U.S. corporationis a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is takeninto account. Under the tests described above, whether or not we are a PFIC will be determined annually based upon the composition of our income and thecomposition and valuation of our assets, all of which are subject to change. We believe that we were a PFIC for U.S. federal income tax purposes for years prior to 2009 and in 2011, 2012, 2014 and 2015. We were not a PFICin 2009, 2010 and 2013, and we have not yet determined whether we will be a PFIC in 2016. Because the PFIC determination is highly fact intensive andmade at the end of each taxable year, there can be no assurance that we will not be a PFIC in 2016 or in any subsequent year. Upon request, we will annuallyinform U.S. Investors if we and any of our subsidiaries were a PFIC with respect to the preceding year. U.S. Investors should be aware of certain tax consequences of investing directly or indirectly in us if we are a PFIC. A U.S. Investor is subject todifferent rules depending on whether the U.S. Investor makes an election to treat us as a “qualified electing fund,” known as a QEF election, for the firsttaxable year that the U.S. Investor holds Shares, which is referred to in this disclosure as a “timely QEF election,” makes a “mark-to-market” election withrespect to the Shares (if such election is available) or makes neither election. QEF Election. A U.S. Investor who makes a timely QEF election, referred to in this disclosure as an “Electing U.S. Investor,” with respect to us mustreport for U.S. federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for our taxable year that ends with or withinthe taxable year of the Electing U.S. Investor. The “net capital gain” of a PFIC is the excess, if any, of the PFIC’s net long-term capital gains over its net short-term capital losses. The amount so included in income generally will be treated as ordinary income to the extent of such Electing U.S. Investor’s allocableshare of the PFIC’s ordinary earnings and as long-term capital gain to the extent of such Electing U.S. Investor’s allocable share of the PFIC’s net capitalgains. Such Electing U.S. Investor generally will be required to translate such income into dollars based on the average exchange rate for the PFIC’s taxableyear with respect to the PFIC’s functional currency. Such income generally will be treated as income from sources outside the United States for U.S. foreigntax credit purposes. Amounts previously included in income by such Electing U.S. Investor under the QEF rules generally will not be subject to tax whenthey are distributed to such Electing U.S. Investor. The Electing U.S. Investor’s tax basis in Shares generally will increase by any amounts so included underthe QEF rules and decrease by any amounts not included in income when distributed. An Electing U.S. Investor will be subject to U.S. federal income tax on such amounts for each taxable year in which we are a PFIC, regardless ofwhether such amounts are actually distributed to such Electing U.S. Investor. However, an Electing U.S. Investor may, subject to certain limitations, elect todefer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If an Electing U.S. Investor is an individual, any such interestwill be treated as non-deductible “personal interest.” Any net operating losses or net capital losses of a PFIC will not pass through to the Electing U.S. Investor and will not offset any ordinary earningsor net capital gain of a PFIC recognized by Electing U.S. Investors in subsequent years (although such losses would ultimately reduce the gain, or increasethe loss, recognized by the Electing U.S. Investor on its disposition of the Shares). So long as an Electing U.S. Investor’s QEF election with respect to us is in effect with respect to the entire holding period for Shares, any gain or lossrecognized by such Electing U.S. Investor on the sale, exchange or other disposition of such Shares generally will be long-term capital gain or loss if suchElecting U.S. Investor has held such Shares for more than one year at the time of such sale, exchange or other disposition. Preferential tax rates for long-termcapital gain will apply to individual U.S. Investors. The deductibility of capital losses is subject to limitations. 117 A U.S. Investor makes a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto.Upon request, we will annually furnish U.S. Investors with information needed in order to complete IRS Form 8621 (which form would be required to be filedwith the IRS on an annual basis by the U.S. Investor) and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are aPFIC. A QEF election will not apply to any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable yearin which we become a PFIC. Each U.S. Investor is encouraged to consult its own tax advisor with respect to tax consequences of a QEF election with respectto us. Mark-to-Market Election. Alternatively, if our Shares are treated as “marketable stock,” a U.S. Investor would be allowed to make a “mark-to-market” election with respect to our Shares, provided the U.S. Investor completes and files IRS Form 8621 in accordance with the relevant instructions andrelated Treasury Regulations. If that election is made, the U.S. Investor generally would include as ordinary income in each taxable year the excess, if any, ofthe fair market value of the Shares at the end of the taxable year over such holder’s adjusted tax basis in the Shares. The U.S. Investor would also be permittedan ordinary loss in respect of the excess, if any, of the U.S. Investor’s adjusted tax basis in the Shares over their fair market value at the end of the taxable year,but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Investor’s tax basis in the Shareswould be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of the Shares would be treated asordinary income, and any loss realized on the sale, exchange or other disposition of the Shares would be treated as ordinary loss to the extent that such lossdoes not exceed the net mark-to-market gains previously included in income by the U.S. Investor, and any loss in excess of such amount will be treated ascapital loss. Amounts treated as ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capitalgains. Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable Treasuryregulations. A class of stock is regularly traded on an exchange during any calendar year during which such class of stock is traded, other than in de minimisquantities, on at least 15 days during each calendar quarter. Our ADSs will be marketable stock as long as they remain listed on the Nasdaq Capital Marketand are regularly traded. A mark-to-market election will not apply to our ADSs held by a U.S. Investor for any taxable year during which we are not a PFIC,but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any PFIC subsidiary that weown. Each U.S. Investor is encouraged to consult its own tax advisor with respect to the availability and tax consequences of a mark-to-market election withrespect to our ADSs. Default PFIC Rules. A U.S. Investor who does not make a timely QEF election or a mark-to-market election, referred to in this disclosure as a “Non-Electing U.S. Investor,” will be subject to special rules with respect to (a) any “excess distribution” (generally, the portion of any distributions received bythe Non-Electing U.S. Investor on the Shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing U.S.Investor in the three preceding taxable years, or, if shorter, the Non-Electing U.S. Investor’s holding period for his Shares), and (b) any gain realized on thesale or other disposition of such Shares. Under these rules: •the excess distribution or gain would be allocated ratably over the Non-Electing U.S. Investor’s holding period for the Shares; •the amount allocated to the current taxable year and any year prior to us becoming a PFIC would be taxed as ordinary income; and •the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class oftaxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributableto each such other taxable year. If a Non-Electing U.S. Investor who is an individual dies while owning our Shares, the Non-Electing U.S. Investor’s successor would be ineligible toreceive a step-up in tax basis of the Shares. Non-Electing U.S. Investors are encouraged to consult their tax advisors regarding the application of the PFICrules to their specific situation. A Non-Electing U.S. Investor who wishes to make a QEF election for a subsequent year may be able to make a special “purging election” pursuant toSection 1291(d) of the Code. Pursuant to this election, a Non-Electing U.S. Investor would be treated as selling his or her stock for fair market value on thefirst day of the taxable year for which the QEF election is made. Any gain on such deemed sale would be subject to tax under the rules for Non-Electing U.S.Investors as discussed above. Non-Electing U.S. Investors are encouraged to consult their tax advisors regarding the availability of a “purging election” aswell as other available elections. 118 To the extent a distribution on our Shares does not constitute an excess distribution to a Non-Electing U.S. Investor, such Non-Electing U.S. Investorgenerally will be required to include the amount of such distribution in gross income as a dividend to the extent of our current or accumulated earnings andprofits (as determined for U.S. federal income tax purposes) that are not allocated to excess distributions. The tax consequences of such distributions arediscussed above under “— Taxation of U.S. Investors — Distributions.” Each U.S. Investor is encouraged to consult its own tax advisor with respect to theappropriate U.S. federal income tax treatment of any distribution on our Shares. If we are treated as a PFIC for any taxable year during the holding period of a Non-Electing U.S. Investor, we will continue to be treated as a PFIC forall succeeding years during which the Non-Electing U.S. Investor is treated as a direct or indirect Non-Electing U.S. Investor even if we are not a PFIC forsuch years. A U.S. Investor is encouraged to consult its tax advisor with respect to any available elections that may be applicable in such a situation,including the “deemed sale” election of Code Section 1298(b)(1). In addition, U.S. Investors should consult their tax advisors regarding the IRS informationreporting and filing obligations that may arise as a result of the ownership of shares in a PFIC. We may invest in the equity of foreign corporations that are PFICs or may own subsidiaries that own PFICs. U.S. Investors will be subject to the PFICrules with respect to their indirect ownership interests in such PFICs, such that a disposition of the shares of the PFIC or receipt by us of a distribution fromthe PFIC generally will be treated as a deemed disposition of such shares or the deemed receipt of such distribution by the U.S. Investor, subject to taxationunder the PFIC rules. There can be no assurance that a U.S. Investor will be able to make a QEF election or a mark-to-market election with respect to PFICs inwhich we invest. Each U.S. Investor is encouraged to consult its own tax advisor with respect to tax consequences of an investment by us in a corporation thatis a PFIC. The U.S. federal income tax rules relating to PFICs are complex. U.S. Investors are urged to consult their own tax advisors with respect to thepurchase, ownership and disposition of Shares, any elections available with respect to such Shares and the IRS information reporting obligations withrespect to the purchase, ownership and disposition of Shares. Certain Reporting Requirements Certain U.S. Investors are required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and certain U.S. Investorsmay be required to file IRS Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, reporting transfers of cash or otherproperty to us and information relating to the U.S. Investor and us. Substantial penalties may be imposed upon a U.S. Investor that fails to comply. Each U.S.Investor should consult its own tax advisor regarding these requirements. In addition, recently enacted legislation imposes new reporting requirements for the holder of certain foreign financial assets, including equity offoreign entities, if the aggregate value of all of these assets exceeds $50,000. The Shares are expected to be subject to these new reporting requirements unlessthe Shares are held in an account at a domestic financial institution. The requirement to file a report is effective for taxable years beginning after March 18,2010. Penalties apply to any failure to file a required report. U.S. Investors should consult their own tax advisors regarding the application of this legislation. Backup Withholding Tax and Information Reporting Requirements Generally, information reporting requirements will apply to distributions on our Shares or proceeds on the disposition of our Shares paid within theUnited States (and, in certain cases, outside the United States) to U.S. Investors other than certain exempt recipients, such as corporations. Furthermore,backup withholding (currently at 28%) may apply to such amounts if the U.S. Investor fails to (i) provide a correct taxpayer identification number, (ii) reportinterest and dividends required to be shown on its U.S. federal income tax return, or (iii) make other appropriate certifications in the required manner. U.S.Investors who are required to establish their exempt status generally must provide such certification on IRS Form W-9. 119 Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment may be credited against a U.S. Investor’sU.S. federal income tax liability and such U.S. Investor may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund withthe IRS and furnishing any required information in a timely manner. U.S. Investors should consult their own tax advisors concerning the tax consequences relating to the purchase, ownership and disposition of theShares. F. Dividends and Paying Agents Not applicable G. Statement by Experts Not applicable. H. Documents on Display We are currently subject to the information and periodic reporting requirements of the Exchange Act, and file periodic reports and other informationwith the SEC through its electronic data gathering, analysis and retrieval (EDGAR) system. Our securities filings, including this Annual Report and theexhibits thereto, are available for inspection and copying at the public reference facilities of the SEC located at 100 F Street, N.E., Washington, D.C. 20549.You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.govfrom which certain filings may be accessed. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and ourofficers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of theExchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC asfrequently or as promptly as United States companies whose securities are registered under the Exchange Act. In addition, since our ordinary shares are traded on the TASE, we also file periodic and immediate reports with, and furnish information to, the TASEand the Israel Securities Authority, or the ISA, as required under Chapter Six of the Israel Securities Law, 1968 and the regulations enacted pursuant thereof,as applicable to a public company which also trades on the Nasdaq Capital Market. Copies of our filings with the Israeli Securities Authority can be retrievedelectronically through the MAGNA distribution site of the Israeli Securities Authority (www.magna.isa.gov.il) and the TASE website (www.maya.tase.co.il). We maintain a corporate website at www.biolinerx.com. Information contained on, or that can be accessed through, our website does not constitute apart of this Annual Report on Form 20-F. We have included our website address in this Annual Report on Form 20-F solely as an inactive textual reference. I. Subsidiary Information Not applicable. ITEM11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ON MARKET RISK Market risk is the risk of loss related to changes in market prices, including interest rates and foreign exchange rates, of financial instruments thatmay adversely impact our consolidated financial position, results of operations or cash flows. We do not use derivative financial instruments for tradingpurposes. Accordingly, we have concluded that there is no material market risk exposure of the type contemplated by Item 11, and that no quantitativetabular disclosures are required. We are exposed to certain other types of market risks, as described below. Risk of Interest Rate Fluctuation Our investments consist primarily of cash, cash equivalents and short-term bank deposits. We may also invest in investment-grade marketablesecurities with maturities of up to three years, including commercial paper, money market funds, and government/non-government debt securities. Theprimary objective of our investment activities is to preserve principal while maximizing the income that we receive from our investments withoutsignificantly increasing risk and loss. Our investments are exposed to market risk due to fluctuation in interest rates, which may affect our interest income andthe fair market value of our investments. We manage this exposure by performing ongoing evaluations of our investments. Due to the short-term maturities ofour investments to date, their carrying value has always approximated their fair value. It will be our policy to hold investments to maturity in order to limitour exposure to interest rate fluctuations. 120 Foreign Currency Exchange Risk Effective January 1, 2015, our reporting and functional currency is the dollar. However, we pay a significant portion of our expenses in NIS, and weexpect this to continue. If the dollar weakens against the NIS in the future, there may be a negative impact on our results of operations. The revenues from ourcurrent out-licensing and co-development arrangements are payable in dollars and euros. Although we expect our revenues from future licensingarrangements to be denominated primarily in dollars, we are exposed to the currency fluctuation risks relating to the recording of our revenues in currenciesother than dollars. For example, if the euro strengthens against the dollar, our reported revenues in dollars may be lower than anticipated. To date,fluctuations in the exchange rates have not materially affected our results of operations or financial condition for the periods under review. From time to time, we have engaged in currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchangerates of our principal operating currencies, and we may continue to do so in the future. These measures, however, may not adequately protect us from thematerial adverse effects of such fluctuations. ITEM12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A. Debt Securities Not applicable. B. Warrants and Rights Not applicable. C. Other Securities Not applicable. D. American Depositary Shares Set forth below is a summary of the material terms of the deposit agreement, as amended, among our company, The Bank of New York Mellon asdepositary, or the Depositary, and the owners and holders from time to time of our ADSs. Description of the ADSs Each of our ADSs represents one of our ordinary shares. Our ADSs trade on the Nasdaq Capital Market. The form of the deposit agreement for the ADS and the form of American Depositary Receipt (ADR) that represents an ADS have been incorporatedby reference as exhibits to this Annual Report on Form 20-F. Copies of the deposit agreement are available for inspection at the principal office of The Bankof New York Mellon, located at 101 Barclay Street, New York, New York 10286, and at the principal office of our custodians, Bank Leumi Le-Israel, 34Yehuda Halevi St., Tel-Aviv 65546, Israel and Bank Hapoalim B.M., 104 Hayarkon Street, Tel Aviv 63432, Israel. Dividends, Other Distributions and Rights Amounts distributed to ADS holders will be reduced by any taxes or other governmental charges required to be withheld by the custodian or theDepositary. If the Depositary determines that any distribution in cash or property is subject to any tax or governmental charges that the Depositary or thecustodian is obligated to withhold, the Depositary may use the cash or sell or otherwise dispose of all or a portion of that property to pay the taxes orgovernmental charges. The Depositary will then distribute the balance of the cash and/or property to the ADS holders entitled to the distribution, inproportion to their holdings. 121 Cash dividends and cash distributions. The Depositary will convert into dollars all cash dividends and other cash distributions that it or thecustodian receives in a foreign currency. The Depositary will distribute to the ADS holders the amount it receives, after deducting any currency conversionexpenses. If the Depositary determines that any foreign currency it receives cannot be converted and transferred on a reasonable basis, it may distribute theforeign currency (or an appropriate document evidencing the right to receive the currency), or hold that foreign currency uninvested, without liability forinterest, for the accounts of the ADS holders entitled to receive it. Distributions of ordinary shares. If we distribute ordinary shares as a dividend or free distribution, the Depositary may, with our approval, and will,at our request, distribute to ADS holders new ADSs representing the ordinary shares. The Depositary will distribute only whole ADSs. It will sell the ordinaryshares that would have required it to use fractional ADSs and then distribute the proceeds in the same way it distributes cash. If the Depositary deposits theordinary shares but does not distribute additional ADSs, the existing ADSs will also represent the new ordinary shares. If holders of ordinary shares have the option of receiving a dividend in cash or in shares, we may also grant that option to ADS holders. Other distributions. If the Depositary or the custodian receives a distribution of anything other than cash or shares, the Depositary will distribute theproperty or securities to the ADS holder, in proportion to such holder’s holdings upon payment of its fees. If the Depositary determines that it cannotdistribute the property or securities in this manner or that it is not feasible to do so, then, after consultation with us, it may distribute the property or securitiesby any means it thinks are equitable and practical, or it may sell the property or securities and distribute the net proceeds of the sale to the ADS holders. TheDepositary may sell a portion of any distributed property that is sufficient to pay its fees. Rights to subscribe for additional ordinary shares and other rights. If we offer our holders of ordinary shares any rights to subscribe for additionalordinary shares or any other rights, the Depositary will, if requested by us: •make the rights available to all or certain holders of ADSs, by means of warrants or otherwise, if lawful and practically feasible; or •if it is not lawful or practically feasible to make the rights available, attempt to sell those rights or warrants or other instruments. In that case, the Depositary will allocate the net proceeds of the sales to the account of the ADS holders entitled to the rights. The allocation will bemade on an averaged or other practicable basis without regard to any distinctions among holders. If registration under the Securities Act of 1933, as amended, is required in order to offer or sell to the ADS holders the securities represented by anyrights, the Depositary will not make the rights available to ADS holders unless a registration statement is in effect or such securities are exempt fromregistration. We do not, however, have any obligation to file a registration statement or to have a registration statement declared effective. If the Depositarycannot make any rights available to ADS holders and cannot dispose of the rights and make the net proceeds available to ADS holders, then it will allow therights to lapse, and the ADS holders will not receive any value for them. Voting of the underlying shares. Under the deposit agreement, an ADS holder is entitled, subject to any applicable provisions of Israeli law, ourArticles of Association and bylaws and the deposited securities, to exercise voting rights pertaining to the shares represented by its ADSs. If we so request, theDepositary will send to ADS holders such information as is contained in the notice of meeting that the Depositary receives from us, as well as a statement thatholders of as the close of business on the specified record date will be entitled to instruct the Depositary as to the exercise of voting rights and a statement asto the manner in which the such instructions may be given. Under the terms of the Deposit Agreement, the Depositary shall endeavor (insofar as is practicableand in accordance with the applicable law and the articles of association of the Company) to vote or cause to be voted the number of shares represented byADSs in accordance with the instructions provided by the holders of ADSs to the Depositary. If no instructions are received by the Depositary from anyholder of ADSs with respect to any of the shares represented by the ADSs evidenced by such holder’s receipts on or before the date established by theDepositary for such purpose, then the Depositary will deem the holder of the shares to have instructed the Depositary to give a discretionary proxy to a persondesignated by us with respect to the shares represented by such ADSs, and the Depositary will give such instruction. In such case, the restrictions of the IsraeliCompanies Law with respect to “personal interest,” as described elsewhere in this annual report, would apply as well. 122 Changes affecting deposited securities. If there is any change in nominal value or any split-up, consolidation, cancellation or other reclassificationof deposited securities, or any recapitalization, reorganization, business combination or consolidation or sale of assets involving us, then any securities thatthe Depositary receives in respect of deposited securities will become new deposited securities. Each ADS will automatically represent its share of the newdeposited securities, unless the Depositary delivers new ADSs as described in the following sentence. The Depositary may distribute new ADSs or ask ADSholders to surrender their outstanding ADRs in exchange for new ADRs describing the new deposited securities. Amendment of the deposit agreement. The Depositary and we may agree to amend the form of the ADSs and the deposit agreement at any time,without the consent of the ADS holders. If the amendment adds or increases any fees or charges (other than taxes or other governmental charges) or prejudicesan important right of ADS holders, it will not take effect as to outstanding ADSs until 30 days after the Depositary has sent the ADS holders a notice of theamendment. At the expiration of that 30-day period, each ADS holder will be considered by continuing to hold its ADSs to agree to the amendment and to bebound by the deposit agreement as so amended. The Depositary and we may not amend the deposit agreement or the form of ADRs to impair the ADSholder’s right to surrender its ADSs and receive the ordinary shares and any other property represented by the ADRs, except to comply with mandatoryprovisions of applicable law. Termination of the deposit agreement. The Depositary will terminate the deposit agreement if we ask it to do so and will notify the ADS holders atleast 30 days before the date of termination. The Depositary may also terminate the deposit agreement if it resigns and a successor depositary has not beenappointed by us and accepted its appointment within 60 days after the Depositary has given us notice of its resignation. After termination of the depositagreement, the Depositary will no longer register transfers of ADSs, distribute dividends to the ADS holders, accept deposits of ordinary shares, give anynotices, or perform any other acts under the deposit agreement whatsoever, except that the Depositary will continue to: •collect dividends and other distributions pertaining to deposited securities; •sell rights as described under the heading “Dividends, Other Distributions and Rights — Rights to subscribe for additional shares and otherrights” above; and •deliver deposited securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the saleof any rights or other property, in exchange for surrendered ADRs. Four months after termination, the Depositary may sell the deposited securities and hold the proceeds of the sale, together with any other cash thenheld by it, for the pro rata benefit of ADS holders that have not surrendered their ADSs. The Depositary will not have liability for interest on the sale proceedsor any cash it holds. Charges of Depositary We will pay the fees, reasonable expenses and out-of-pocket charges of the Depositary and those of any registrar only in accordance with agreementsin writing entered into between us and the Depositary from time to time. The following charges shall be incurred by any party depositing or withdrawingordinary shares or by any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stocksplit declared by us or an exchange of stock regarding the ADRs or deposited ordinary shares or a distribution of ADRs pursuant to the terms of the depositagreement): •taxes and other governmental charges; •any applicable transfer or registration fees; •certain cable, telex and facsimile transmission charges as provided in the Deposit Agreement; 123 •any expenses incurred in the conversion of foreign currency; •a fee of $5.00 or less per 100 ADSs (or a portion thereof) for the execution and delivery of ADRs and the surrender of ADRs; •a fee of $.05 or less per ADS (or portion thereof) for any cash distribution made pursuant to the Deposit Agreement; •a fee for the distribution of securities pursuant to the Deposit Agreement; •in addition to any fee charged for a cash distribution, a fee of $.05 or less per ADS (or portion thereof) per annum for depositary services; •a fee for the distribution of proceeds of rights that the Depositary sells pursuant to the Deposit Agreement; and •any other charges payable by the Depositary, any of the Depositary’s agents, or the agents of the Depositary’s agents in connection with theservicing of Shares or other Deposited Securities. The Depositary may own and deal in our securities and in our ADRs. Liability of Holders for Taxes, Duties or Other Charges Any tax or other governmental charge with respect to ADRs or any deposited ordinary shares represented by any ADR shall be payable by the holderof such ADR to the Depositary. The Depositary may refuse to effect transfer of such ADR or any withdrawal of deposited ordinary shares represented by suchADR until such payment is made, and may withhold any dividends or other distributions or may sell for the account of the holder any part or all of thedeposited ordinary shares represented by such ADR and may apply such dividends or distributions or the proceeds of any such sale in payment of any suchtax or other governmental charge and the holder of such ADR shall remain liable for any deficiency. ITEM13. DEFAULTS, DIVIDENDS, ARREARAGES AND DELINQUENCIES Not applicable. ITEM14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable. ITEM15. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures We have performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that the materialfinancial and non-financial information required to be disclosed to the SEC is recorded, processed, summarized and reported timely. Based on our evaluation,our management, including the CEO and CFO, has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of theSecurities Exchange Act of 1934, as amended) as of the end of the period covered by this report are effective. Notwithstanding the foregoing, there can be noassurance that our disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material informationotherwise required to be set forth in our reports. (b) Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule13a-15(f) promulgated under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board ofdirectors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes inaccordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore,even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation andmay not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. 124 Our management, including the CEO and CFO, conducted an evaluation, pursuant to Rule 13a-15(c) promulgated under the Exchange Act, of theeffectiveness, as of the end of the period covered by this Annual Report, of its internal control over financial reporting based on the framework in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on the results of thisevaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2015. (c) Attestation Report of Registered Public Accounting Firm Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Ltd., our independent registered public accounting firm, has issuedan attestation report on the effectiveness of our internal control over financial reporting, appearing under Item 18, “Financial Statements” on page F-2, andsuch report is incorporated herein by reference. (d) Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2015 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM16. [RESERVED] ITEM16A. AUDIT COMMITTEE FINANCIAL EXPERTS Our Board of Directors has determined that Nurit Benjamini is the audit committee financial expert. Ms. Benjamini is one of our independentdirectors for the purposes of the Nasdaq rules. ITEM16B. CODE OF ETHICS In July 2011, our Board of Directors adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all our employees, includingwithout limitation our chief executive officer, chief financial officer and controller. Our Code may be viewed on our website at www.biolinerx.com. A copy ofour Code may be obtained, without charge, upon a written request addressed to our investor relations department, 2 HaMa’ayan Street, Modi’in 7177871,Israel (Telephone no. +972-8-642-9100) (e-mail: info@BioLineRx.com). ITEM16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES Fees Paid to Independent Registered Public Accounting Firm The following table sets forth, for each of the years indicated, the fees billed by Kesselman & Kesselman, a member firm of PricewaterhouseCoopersInternational Ltd., our independent registered public accounting firm: Year Ended December 31, 2014 2015 Services Rendered ( in thousands of U.S. dollars) Audit Fees(1) 110 110 Audit-Related Fees(2) 13 7 Tax Fees(3) 22 26 All Other Fees – – Total 145 143 (1)Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including servicesthat generally only the independent accountant can reasonably provide.(2)Audit related services relate to reports to the OCS and work regarding a public listing or offering.(3)Tax fees relate to tax compliance, planning and advice. Our Audit Committee, in accordance with its charter, reviews and pre-approves all audit services and permitted non-audit services (including the feesand other terms) to be provided by our independent auditors. 125 ITEM16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. ITEM16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not applicable. ITEM16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM16G. CORPORATE GOVERNANCE Nasdaq Listing Rules and Home Country Practices The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, such as us, to comply withvarious corporate governance practices. In complying with the Marketplace Rules of the Nasdaq Stock Market, we have elected to follow certain corporategovernance practices permitted under the Companies Law and the rules of the TASE in lieu of compliance with certain corporate governance requirementsotherwise required by the Marketplace Rules of the Nasdaq Stock Market. In accordance with Israeli law and practice and subject to the exemption set forth in Rule 5615 of the Marketplace Rules of the Nasdaq StockMarket, we follow the provisions of the Companies Law, rather than the Marketplace Rules of the Nasdaq Stock Market, with respect to the followingrequirements: •Distribution of annual and quarterly reports to shareholders. Under Israeli law, as a public company whose shares are traded on the TASE,we are not required to distribute annual and quarterly reports directly to shareholders and the generally accepted business practice in Israelis not to distribute such reports to shareholders but to make such reports publicly available through the website of the Israeli SecuritiesAuthority and the TASE. In addition, we make our audited financial statements available to our shareholders at our offices. As a foreignprivate issuer, we are generally exempt from the SEC’s proxy solicitation rules. •Quorum. While the Marketplace Rules of the Nasdaq Stock Market require that the quorum for purposes of any meeting of the holders of alisted company’s common voting stock, as specified in the company’s bylaws, be no less than 33 1/3% of the company’s outstandingcommon voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders andpercentage of holdings required for a quorum at a shareholders meeting. Our Articles of Association provide that a quorum of two or moreshareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting.However, the quorum set forth in our Articles of Association with respect to an adjourned meeting consists of any number of shareholderspresent in person or by proxy. •Independent Directors. Our Board of Directors includes two external directors in accordance with the provisions contained in Sections 239-249 of the Companies Law and Rule 10A-3 of the general rules and regulations promulgated under the Securities Act of 1933, rather than amajority of external directors. Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at whichonly they are present. We are required, however, to ensure that all members of our Audit Committee are “independent” under the applicableNasdaq and SEC criteria for independence (as a foreign private issuer we are not exempt from the SEC independence requirement), and wemust also ensure that a majority of the members of our Audit Committee are unaffiliated directors as defined in the Companies Law.Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they arepresent, which the Marketplace Rules of the Nasdaq Stock Market otherwise require. 126 •Audit Committee. Our Audit Committee complies with all of the requirements under Israeli law, and is composed of two external directors,which are all of our external directors, and only one other director, who cannot be the chairman of our Board of Directors. Consistent withIsraeli law, the independent auditors are elected at a meeting of shareholders instead of being appointed by the Audit Committee. •Nomination of our Directors. With the exception of our external directors and directors elected by our Board of Directors due to vacancy,our directors are elected by a general or special meeting of our shareholders, to hold office until they are removed from office by themajority of our shareholders at a general or special meeting of our shareholders. See “Item 6. Directors, Senior Management and Employees— Board Practices — Board of Directors.” The nominations for directors, which are presented to our shareholders, are generally made byour directors, but nominations may be made by one or more of our shareholders as provided in our Articles of Association, under theCompanies Law or in an agreement between us and our shareholders. Currently, there is no agreement between us and any shareholderregarding the nomination of directors. In accordance with our Articles of Association, under the Companies Law, any one or moreshareholders holding, in the aggregate, either (1) 5% of our outstanding shares and 1% of our outstanding voting power or (2) 5% of ouroutstanding voting power, may nominate one or more persons for election as directors at a general or special meeting by delivering awritten notice of such shareholder’s intent to make such nomination or nominations to our registered office. Each such notice must set forthall of the details and information as required to be provided in our Articles of Association. •Compensation Committee and Compensation of Officers. Israeli law, and our amended and restated articles of association, do not requirethat a compensation committee composed solely of independent members of our Board of Directors determine (or recommend to the boardof directors for determination) an executive officer’s compensation, as required under Nasdaq’s listing standards related to compensationcommittee independence and responsibilities; nor do they require that the Company adopt and file a compensation committeecharter. Instead, our compensation committee has been established and conducts itself in accordance with provisions governing thecomposition of and the responsibilities of a compensation committee as set forth in the Companies Law, and is composed of two externaldirectors, which are all of our external directors, and one additional director, who is not the chairman of our Board of Directors or otherwiseemployed by the Company. Additionally, we comply with the requirements set forth under the Companies Law, pursuant to whichtransactions with office holders regarding their terms of office and employment, and transaction with a controlling shareholder in acompany regarding his or her employment and/or his or her terms of office with the company, may require the approval of the compensationcommittee, the board of directors and under certain circumstances the shareholders, either in accordance with our previously approvedcompensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations set forth in theCompanies Law. See “Item 6. Directors, Senior Management and Employees — Board Practices — Compensation Committee” forinformation regarding the Compensation Committee, and “Item 6. Directors, Senior Management and Employees — Approval of RelatedParty Transactions under Israeli Law” for information regarding the special approvals required with respect to approval of terms of officeand employment of office holders, pursuant to the Companies Law, as set forth under Amendment 20. The requirements for shareholderapproval of any office holder compensation, and the relevant majority or special majority for such approval, are all as set forth in theCompanies Law. Thus, we will seek shareholder approval for all corporate actions with respect to office holder compensation requiring suchapproval under the requirements of the Companies Law, including seeking prior approval of the shareholders for the compensation policyand for certain office holder compensation, rather than seeking approval for such corporate actions in accordance with Nasdaq ListingRules. 127 •Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures forapproval of interested party acts and transactions, set forth in sections 268 to 275 of the Companies Law, and the regulations promulgatedthereunder, which require the approval of the audit committee, the compensation committee, the board of directors and shareholders, as maybe applicable, for specified transactions, rather than approval by the audit committee or other independent body of our Board of Directorsas required under the Marketplace Rules of the Nasdaq Stock Market. •Shareholder Approval. We seek shareholder approval for all corporate actions requiring such approval in accordance with the requirementsof the Companies Law, which are different or in addition to the requirements for seeking shareholder approval under Nasdaq Listing Rule5635, rather than seeking approval for corporation actions in accordance with such listing rules. •Equity Compensation Plans. We do not necessarily seek shareholder approval shareholder approval for the establishment of, andamendments to, stock option or equity compensation plans (as set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subjectto shareholder approval under Israeli law. Our equity compensation plan is available to our employees, none of whom are currently U.S.employees, and provide features necessary to comply with applicable non-U.S. tax laws. ITEM16H. MINE SAFETY DISCLOSURE Not applicable. ITEM17. FINANCIAL STATEMENTS The Registrant has responded to Item 18 in lieu of responding to this Item. ITEM18. FINANCIAL STATEMENTS See the financial statements beginning on page F-1. The following financial statements and financial statement schedules are filed as part of thisAnnual Report on Form 20-F together with the report of the independent registered public accounting firm: 128 ITEM19. EXHIBITS ExhibitNumber Exhibit Description 2.1(5) Articles of Association, as amended May 31, 2015 2.2(2) Form of Deposit Agreement dated as of July 21, 2011 among the Registrant, The Bank of New York Mellon, as Depositary, and all Owners andHolders from time to time of American Depositary Shares issued thereunder 2.3(2) Form of American Depositary Receipt; the Form is Exhibit A of the Form of Depositary Agreement 4.3(1) Employment Agreement with Kinneret Savitsky, Ph.D., dated October 13, 2004 4.5(1) Employment Agreement with Philip Serlin, dated May 24, 2009 4.6†(1) License Agreement entered into as of January 10, 2005, between BioLine Innovations Jerusalem L.P. and B.G. Negev Technologies andApplications Ltd. 4.7(1) Assignment Agreement entered into as of January 1, 2009 entered into between BioLine Innovations Jerusalem L.P. and the Registrant 4.16†(1) License Agreement entered into as of November 25, 2007 between BioLine Innovations Jerusalem L.P. and Innovative PharmaceuticalConcepts, Inc. 4.17(11)† Amended and Restated License and Commercialization Agreement among Ikaria Development Subsidiary One LLC, the Registrant andBioLine Innovations Jerusalem L.P. dated August 26, 2009, as amended and supplemented 4.18 BioLineRx Ltd. Amended and Restated 2003 Share Incentive Plan 4.20(1) Amendment to Employment Agreement with Kinneret Savitsky, Ph.D., dated January 2, 2004. 4.30(4) Employment Agreement with David Malek, dated August 8, 2011 4.31(3) Form of Warrant to purchase American Depositary Shares 4.32(7) Form of Warrant to purchase American Depositary Shares 4.33†(8) License Agreement entered into as of September 2, 2012 by and between the Registrant and Biokine Therapeutics Ltd. 4.34(10) Consulting Agreement with Arnon Aharon, M.D., dated January 1, 2014 4.35(10)† License Agreement entered into as of February 15, 2011 between the Registrant and Valorisation-Recherche, Limited Partnership 4.36(9) Executive Compensation Plan 4.37(11) Lease Agreement entered into as of August 7, 2014 between S.M.L. Solomon Industrial Buildings Ltd. and Infrastructure Management andDevelopment Established by C.P.M. Ltd. as Lessor and the Registrant as Lessee, as amended (English summary of the Hebrew original) 4.38(11)† Investment and Collaboration Agreement entered into as of December 16, 2014 between the Registrant and Novartis Pharma AG 129 ExhibitNumber Exhibit Description 4.39(11)† License Agreement entered into as of December 22, 2014 between the Registrant and Wartner Europe BV 4.40† Clinical Trial Collaboration and Supply Agreement entered into as of January 11, 2016 between Merck Sharp & Dohme B.V. and theRegistrant 4.41 Employment Agreement with Merril Gersten, dated March 1, 2016 12.1 Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2 Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 13.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 15.1(3) Form of Purchase Agreement between the Registrant and the Purchasers named therein, dated February 2012 15.4(7) Subscription Agreement entered into as of February 6, 2013 between the Registrant and OrbiMed Israel Partners Limited Partnership 15.5 Consent of Kesselman & Kesselman, Certified Public Accountant (Isr.), a member of PricewaterhouseCoopers International Limited,independent registered public accounting firm for the Registrant 15.6(6) Purchase Agreement entered into as of May 28, 2014 between the Registrant and Lincoln Park Capital Fund, LLC 15.7(6) Registration Rights Agreement entered into as of May 28, 2014 between the Registrant and Lincoln Park Capital Fund, LLC †Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatmentrequest. (1)Incorporated by reference to the Registrant’s Registration Statement on Form 20-F (No. 001-35223) filed on July 1, 2011. (2)Incorporated by reference to Exhibit 1 of the Registration Statement on Form F-6 (No. 333-175360) filed by the Bank of New York Mellon withrespect to the Registrant’s American Depositary Receipts. (3)Incorporated by reference to the Registrant’s Form 6-K filed on February 15, 2012. (4)Incorporated by reference to the Registrant’s Registration Statement on Form F-1 (No. 333-179792) filed on February 29, 2012. (5)Incorporated by reference to the Registrant’s Registration Statement on Form F-3 (No. 333-205700) filed on July 16, 2015. (6)Incorporated by reference to the Registrant’s Form 6-K filed on May 30, 2014. (7)Incorporated by reference to the Registrant’s Form 6-K filed on February 6, 2013. (8)Incorporated by reference to the Registrant’s Form 6-K filed on October 16, 2012. (9)Incorporated by reference to the Registrant’s Form 6-K filed on November 13, 2013. (10)Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 17, 2014. (11)Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 23, 2015. 130 SIGNATURES The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to signthis annual report on its behalf. BIOLINERX LTD. By:/s/ Kinneret Savitsky Kinneret Savitsky, Ph.D. Chief Executive Officer Date: March 10, 2016 131  INDEX TO CONSOLIDATED FINANCIAL STATEMENTSAudited Consolidated Financial Statements at December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 Page Report of Independent Registered Public Accounting FirmF-2Consolidated Statements of Financial PositionF-3Consolidated Statements of Comprehensive LossF-4Statements of Changes in EquityF-5Consolidated Cash Flow StatementsF-6Notes to the Financial StatementsF-8  REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders of BIOLINERX LTD. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in shareholders’ equity andcash flows present fairly, in all material respects, the financial position of BioLineRx Ltd. and its subsidiaries at December 31, 2015, 2014 and 2013, and theresults of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with International FinancialReporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Also, in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsiblefor these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal controlover financial reporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting” appearing under Item15(b). Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on ourintegrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatementand whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includedexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. Without qualifying our opinion above, we draw attention to note 2c, as from January 1, 2015, the Company changed its functional and reporting currencyfrom New Israeli Shekels to US dollars. Tel-Aviv, Israel/s/ Kesselman & KesselmanMarch 8, 2016Kesselman & Kesselman Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,P.O Box 50oo5 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/ilKesselman & Kesselman is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity F - 2 BioLineRx Ltd. CONSOLIDATEDSTATEMENTS OF FINANCIAL POSITION Note December 31, 2013(*) 2014 2015 in USD thousands Assets CURRENT ASSETS Cash and cash equivalents5 8,899 5,790 5,544 Short-term bank deposits6 9,319 28,890 42,119 Prepaid expenses 258 221 229 Other receivables15a 360 257 291 Total current assets 18,836 35,158 48,183 NON-CURRENT ASSETS Restricted deposits13b 165 166 - Long-term prepaid expenses15b 49 49 58 Property and equipment, net7 712 721 2,909 Intangible assets, net8 253 117 152 Total non-current assets 1,179 1,053 3,119 Total assets 20,015 36,211 51,302 Liabilities and equity CURRENT LIABILITIES Current maturities of long-term bank loan9 - - 93 Accounts payable and accruals: Trade15c 2,289 1,654 1,910 Other15c 764 1,252 1,137 Total current liabilities 3,053 2,906 3,140 NON-CURRENT LIABILITIES Long-term bank loan, net of current maturities9 - - 344 Warrants10c 5,240 1,500 208 Total non-current liabilities 5,240 1,500 552 COMMITMENTS AND CONTINGENT LIABILITIES13 Total liabilities 8,293 4,406 3,692 EQUITY10 Ordinary shares 640 1,055 1,455 Share premium 134,390 167,331 196,201 Other comprehensive income (loss) 1,418 (1,416) (1,416)Capital reserve 9,163 9,800 10,735 Accumulated deficit (133,889) (144,965) (159,365)Total equity 11,722 31,805 47,610 Total liabilities and equity 20,015 36,211 51,302 (*) See note 2c regarding the presentation of 2013 balance sheet information.The accompanying notes are an integral part of the financial statements. F - 3 BioLineRx Ltd. CONSOLIDATEDSTATEMENTS OF COMPREHENSIVE LOSS Note Year ended December 31, 2013 2014 2015 in USD thousands RESEARCH AND DEVELOPMENT EXPENSES, NET 15d (12,208) (11,866) (11,489)SALES AND MARKETING EXPENSES 15e (1,136) (1,589) (1,003)GENERAL AND ADMINISTRATIVE EXPENSES 15f (3,664) (3,800) (3,704)OPERATING LOSS (17,008) (17,255) (16,196)NON-OPERATING INCOME, NET 15g 1,161 3,061 1,445 FINANCIAL INCOME 15h 720 3,566 457 FINANCIAL EXPENSES 15i (1,897) (448) (106)NET LOSS (17,024) (11,076) (14,400)OTHER COMPREHENSIVE INCOME (LOSS): CURRENCY TRANSLATION DIFFERENCES 1,097 (2,834) - COMPREHENSIVE LOSS (15,927) (13,910) (14,400) in USD LOSS PER ORDINARY SHARE – BASIC AND DILUTED 12 (0.76) (0.34) (0.28) WEIGHTED AVERAGE NUMBER OF SHARES USED INCALCULATION OF LOSS PER ORDINARY SHARE 12 22,488,516 32,433,883 51,406,434 The accompanying notes are an integral part of the financial statements. F - 4 BioLineRx Ltd. STATEMENTSOF CHANGES IN EQUITY Ordinaryshares Sharepremium Capitalreserve Othercomprehensiveincome (loss) Accumulateddeficit Total in USD thousands BALANCE AT JANUARY 1, 2013 482 121,998 9,046 321 (116,865) 14,982 CHANGES IN 2013: Issuance of share capital, net 157 11,596 - - - 11,753 Employee stock options exercised 1 396 (394) - - 3 Warrants exercised - 69 - - 69 Employee stock options forfeited andexpired - 331 (331) - - - Share-based compensation - - 842 - - 842 Other comprehensive income - - - 1,097 - 1,097 Comprehensive loss for the year - - - - (17,024) (17,024)BALANCE AT DECEMBER 31, 2013 640 134,390 9,163 1,418 (133,889) 11,722 CHANGES IN 2014: Issuance of share capital, net 415 32,523 - - 32,938 Employee stock options exercised - 22 (22) - - Employee stock options forfeited andexpired - 396 (396) - - Share-based compensation - - 1,055 - 1,055 Other comprehensive loss - - - (2,834) - (2,834) Comprehensive loss for the year - - - (11,076) (11,076)BALANCE AT DECEMBER 31, 2014 1,055 167,331 9,800 (1,416) (144,965) 31,805 CHANGES IN 2015: Issuance of share capital, net 400 28,653 - - - 29,053 Employee stock options exercised - - - - - - Employee stock options forfeited andexpired - 217 (217) - - - Share-based compensation - - 1,152 - - 1,152 Comprehensive loss for the year - - - - (14,400) (14,400)BALANCE AT DECEMBER 31, 2015 1,455 196,201 10,735 (1,416) (159,365) 47,610 The accompanying notes are an integral part of the financial statements. F - 5 BioLineRx Ltd. CONSOLIDATEDCASH FLOW STATEMENTS Year ended December 31, 2013 2014 2015 in USD thousands CASH FLOWS - OPERATING ACTIVITIES Net loss (17,024) (11,076) (14,400)Adjustments required to reflect net cash used in operating activities (see appendix below) (2,501) (4,674) 232 Net cash used in operating activities (19,525) (15,750) (14,168) CASH FLOWS - INVESTING ACTIVITIES Investments in short-term deposits (35,665) (57,186) (63,130) Maturities of short-term deposits 29,669 37,650 50,083 Maturities of restricted deposits 795 - 166 Purchase of property and equipment (85) (187) (2,683)Purchase of intangible assets (32) (6) (36)Net cash used in investing activities (5,318) (19,729) (15,600) CASH FLOWS - FINANCING ACTIVITIES Issuance of share capital and warrants, net of issuance costs 15,108 32,635 29,053 Proceeds of bank loan - - 467 Repayments of bank loan (37) - (31)Proceeds from exercise of employee stock options 3 - - Net cash provided by financing activities 15,074 32,635 29,489 DECREASE IN CASH AND CASH EQUIVALENTS (9,769) (2,844) (279)CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 18,307 8,899 5,790 EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS 361 (265) 33 CASH AND CASH EQUIVALENTS - END OF YEAR 8,899 5,790 5,544 The accompanying notes are an integral part of the financial statements. F - 6 BioLineRx Ltd. CONSOLIDATED CASH FLOW STATEMENTS Year ended December 31, 2013 2014 2015 in USD thousands APPENDIX Adjustments required to reflect net cash used in operating activities: Income and expenses not involving cash flows: Depreciation and amortization 318 269 441 Write-off of intangible assets 38 105 - Retirement benefit obligations 2 (42) - Long-term prepaid expenses 10 (6) (9)Exchange differences on cash and cash equivalents 653 (261) (33)Warrant issuance costs 130 - - Gain on adjustment of warrants to fair value (1,432) (3,454) (1,292)Commitment fee paid by issuance of share capital - 303 - Share-based compensation 842 1,055 1,152 Interest and exchange differences on short-term deposits 395 (2,787) (182)Interest and linkage differences on bank loan (3) - 1 Interest and exchange differences on restricted deposits 11 (20) - 964 (4,838) 78 Changes in operating asset and liability items: Decrease (increase) in trade accounts receivable and other receivables 253 80 (42)Increase (decrease) in accounts payable and accruals (3,718) 84 196 (3,465) 164 154 (2,501) (4,674) 232 Supplementary information on investing and financing activities not involving cashflows: Credit received in connection with purchase of property and equipment - 143 87 Supplementary information on interest received in cash 139 97 173 The accompanying notes are an integral part of the financial statements. F - 7 BioLineRx Ltd. NOTESTO THE FINANCIAL STATEMENTS NOTE 1 – GENERAL INFORMATION a.GeneralBioLineRx Ltd. (“BioLineRx”), headquartered in Modi’in, Israel, was incorporated and commenced operations in April 2003.Since incorporation, BioLineRx and its consolidated entities (collectively, the “Company”) have been engaged in the development oftherapeutics, from pre-clinical development to advanced clinical trials, for a wide range of medical needs.In December 2004, BioLineRx registered a limited partnership, BioLine Innovations Jerusalem L.P. (“BIJ LP”), which commencedoperations in January 2005. BioLineRx held a 99% interest in BIJ LP, with the remaining 1% held by a wholly owned subsidiary ofBioLineRx, BioLine Innovations Ltd. (“BIJ Ltd.”). BIJ LP was established to operate a biotechnology incubator located in Jerusalem (the“Incubator”) under an agreement with the State of Israel. The agreement with the State of Israel relating to the Incubator terminated onDecember 31, 2013, and BIJ LP was liquidated in 2014. BIJ Ltd. was liquidated in 2015. See Note 13a(1).In February 2007, BioLineRx listed its ordinary shares on the Tel Aviv Stock Exchange (“TASE”) and they have been traded on the TASEsince that time. Since July 2011, BioLineRx’s American Depositary Shares (“ADSs”) have also been traded on the NASDAQ CapitalMarket.The Company has been engaged in drug development since its incorporation. Although the Company has generated significant revenuesfrom a number of out-licensing transactions, the Company cannot determine with reasonable certainty when and if it will have sustainableprofits. b.Approval of consolidated financial statements The consolidated financial statements of the Company for the year ended December 31, 2015 were approved by the Board of Directors onMarch 8, 2016, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial and OperatingOfficer. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES a.Basis of presentationThe Company’s consolidated financial statements as of December 31, 2015 and 2014, and for each of the three years in the period endedDecember 31, 2015, have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by theInternational Accounting Standards Board (“IASB”). The significant accounting policies described below have been applied on aconsistent basis for all years presented, unless noted otherwise.The consolidated financial statements have been prepared on the basis of historical cost, subject to adjustment of financial assets andliabilities to their fair value through profit or loss and adjustment of assets and liabilities in connection with retirement benefit obligations. F - 8 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) a.Basis of presentation (cont.)The Company classifies its expenses on the statement of comprehensive loss based on the operating characteristics of such expenses.The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgment in the process of applying the Company’s accounting policies. Areas involving a higher degree ofjudgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed inNote 4. Actual results may differ materially from estimates and assumptions used by the Company’s management. b.Consolidation of the financial statementsConsolidated entities are all entities over which BioLineRx has control. BioLineRx controls an entity when it is exposed to, or has rightsto, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.Consolidated entities are fully consolidated from the date on which control of such entities is transferred to BioLineRx and they are de-consolidated from the date that control ceases. c.Functional and reporting currencyEffective January 1, 2015, the Company changed its functional currency to the U.S. dollar (“dollar”, “USD” or “$”) from the New IsraeliShekel (“NIS”). This change was based on an assessment by Company management that the dollar is the primary currency of the economicenvironment in which the Company operates. Accordingly, the functional and reporting currency of the Company in these financialstatements is the U.S. dollar.In determining the appropriate functional currency to be used, the Company followed the guidance in International Accounting Standard(IAS) 21, which states that economic factors relating to sales, costs and expenses, financing activities and cash flows, as well as otherpotential factors, should be considered both individually and collectively. In this regard, a significant element in the Company’s decisionto effect the functional currency change resulted from the strategic collaboration agreement that it entered into with Novartis in December2014, which will be managed solely in dollars. In addition, the Company expects a significant increase in expenses denominated in dollarsrelating to advanced clinical trials. These changes, as well as the fact that the Company’s principal source of financing is the U.S. capitalmarket, and all of the Company’s budgeting and planning is conducted solely in dollars, led to the decision to make the change infunctional currency as of January 1, 2015, as indicated above.In effecting the change in functional currency to the dollar, as of January 1, 2015, all assets and liabilities of the Company were translatedusing the current rate method, using the dollar exchange rate as of December 31, 2014, and equity was translated using historical exchangerates at the relevant transaction dates. The resulting amounts translated into dollars for non-monetary items have been treated as theirhistorical cost. Translation differences resulting from the change in functional currency have been reported as a component of shareholders'equity. In accordance with paragraph 40 of IAS 1, due to the aforementioned change in functional currency, an additional balance sheet as ofDecember 31, 2013 has been presented in the financial statements. IAS 1 does not require such additional information in the detailedfinancial statement notes. F - 9 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) c.Functional and reporting currency (cont.)For presentation purposes, comparative figures in these financial statements have been translated into dollars on the following basis: (i)assets and liabilities have been translated using the exchange rate prevailing at December 31, 2014; (ii) the statement of comprehensiveloss has been translated at the average exchange rates for the relevant reporting periods; and (iii) the results of translation differences havebeen recorded as “currency translation differences” within other comprehensive income (loss). d.Property and equipmentProperty and equipment are stated at historical cost less depreciation and related grants received from the Office of the Chief Scientist of theIsraeli Ministry of Industry, Trade and Labor (the “OCS”) – see also 2g below. Historical cost includes expenditures that are directlyattributable to the acquisition of the items. Assets are depreciated by the straight-line method over the estimated useful lives of the assets,provided that the Company’s management believes the residual values of the assets to be negligible, as follows: %Computers and communications equipment20-33Office furniture and equipment6-15Laboratory equipment15-20 The assets’ residual values, methods of depreciation and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimatedrecoverable amount.Leasehold improvements are amortized by the straight-line method over the shorter of the lease term or the estimated useful life of theimprovements. e.Intangible assetsThe Company applies the cost method of accounting for initial and subsequent measurements of intangible assets. Under this method ofaccounting, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.Intellectual propertyThe Company recognizes in its financial statements intangible assets developed by the Company to the extent that the conditionsstipulated in p. below are met. Intellectual property acquired by the Company is initially measured at cost. Intellectual property acquired bythe Company for development purposes is not amortized and is tested annually for impairment. See f. below.Computer softwareAcquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software.These costs are amortized over the estimated useful lives of the software (3-5 years). F - 10 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) f.Impairment of non-financial assetsImpairment testing of intellectual property is required when the Company decides to terminate or suspend the development of a projectbased on such intellectual property. The Company performs impairment reviews on an annual basis, or more frequently if events or changesin circumstances indicate a potential impairment. Property and equipment, as well as computer software, are tested for impairment wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized equal to theamount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair valueless costs to sell and the asset’s value in use to the Company. g.Government grants related to fixed assetsGovernment grants related to fixed assets are recorded as a reduction in the book value of the related assets, and are charged to profit andloss in accordance with the straight-line method. h.Financial assets 1)ClassificationThe Company classifies its financial assets in the following categories: (i) at fair value through profit or loss and (ii) loans andreceivables. The classification depends on the purpose for which each financial asset was acquired. The Company’s managementdetermines the classification of financial assets at initial recognition. a)Financial assets at fair value through profit or lossThe Company’s investment policy with regard to its excess cash, as adopted by its Board of Directors, is composed of thefollowing objectives: (i) preserving investment principal, (ii) providing liquidity and (iii) providing optimum yields pursuant tothe policy guidelines and market conditions. The policy provides detailed guidelines as to the securities and other financialinstruments in which the Company is allowed to invest. In addition, in order to maintain liquidity, investments are structured toprovide flexibility to liquidate at least 50% of all investments within 15 business days. Information about these assets, includingdetails of the portfolio and income earned, is provided internally on at least a quarterly basis to the Company’s key managementpersonnel and on a semi-annual basis to the Investment Monitoring Committee of the Board of Directors. Any divergence fromthis investment policy requires approval from the Board of Directors. F - 11 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) h.Financial assets (cont.) b)Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an activemarket. These assets are included in current assets, except for installments which are due more than 12 months subsequent to thebalance sheet date. Such installments are included in non-current assets. The Company’s loans and receivables include “otherreceivables,” “cash and cash equivalents”, “bank deposits” and “restricted deposits” on the balance sheet. See Notes 2i and 2j. 2)Recognition and measurementInvestments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profitor loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs areexpensed in profit or loss. Financial assets are de-recognized when the rights to receive cash flows from the investments have expiredor have been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables aresubsequently carried at amortized cost using the effective interest method. 3)Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right tooffset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liabilitysimultaneously. i.Cash equivalentsCash and cash equivalents include cash on hand and short-term bank deposits (up to three months from date of deposit) that are notrestricted as to withdrawal or use, and are therefore considered to be cash equivalents. j.Restricted depositsThe Company has placed a lien on dollar bank deposits to secure its liabilities and commitments to the lessor of its premises. Thosedeposits are presented separately as non-current assets, in accordance with the timing of the relevant restrictions. See Note 13b. F - 12 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) k.WarrantsReceipts in respect of warrants are classified as equity to the extent that they confer the right to purchase a fixed number of shares for a fixedexercise price. In the event that the exercise price is not deemed to be fixed, the warrants are classified as a non-current derivative financialliability. This liability is initially recognized at its fair value on the date the contract is entered into and subsequently accounted for at fairvalue at each reporting date. The fair value changes are charged to non-operating income and expense on the statement of comprehensiveloss. Issuance costs allocable to warrants are also recorded as non-operating expense on the statement of comprehensive loss. l.Share capital and reverse split of ordinary sharesBioLineRx’s ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are shown inequity as a deduction from the issuance proceeds.In June 2015, BioLineRx effected a 1:10 reverse split of its ordinary shares. All share and per share amounts in these financial statementshave been retroactively adjusted to reflect the reverse split as if it had been effected prior to the earliest financial statement period includedherein. Following the reverse split, one ordinary share traded on the TASE is equivalent to one ADS traded on NASDAQ (prior to the split,the ratio of ordinary shares to ADSs was 10:1). In connection with the reverse split, shareholders also approved an increase in BioLineRx’sauthorized share capital to 150,000,000 ordinary shares, NIS 0.10 par value each. m.Trade payablesTrade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Thesepayables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. n.Deferred taxesDeferred taxes are recognized using the liability method, on temporary differences arising between the tax bases of assets and liabilities andtheir carrying amounts in the consolidated financial statements. Deferred income tax assets are recognized only to the extent that it isprobable that future taxable income will be available against which the temporary differences can be utilized. As the Company is currently engaged primarily in development activities and is not expected to generate taxable income in the foreseeablefuture, no deferred tax assets are included in the financial statements. F - 13 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) o.Revenue recognitionThe Company recognizes revenue in accordance with International Accounting Standard (“IAS”) 18 – “Revenue,” including guidanceregarding arrangements with multiple deliverables. Pursuant to this guidance, the Company applies revenue recognition criteria to theseparately identifiable components of a single transaction. The consideration from the arrangement is allocated among the separatelyidentifiable components by reference to their fair value.Revenues incurred in connection with out-licensing of the Company’s patents and other intellectual property are recognized when all ofthe following criteria have been met as of the balance sheet date: ·The Company has transferred to the buyer the significant risks and rewards of ownership of the patents and intellectual property. ·The Company does not retain either the continuing managerial involvement to the degree usually associated with ownership or theeffective control over the patent and intellectual property. ·The amount of revenue can be measured reliably. ·It is probable that the economic benefits associated with the transaction will flow to the Company. ·The costs incurred or to be incurred in respect of the sale can be measured reliably. Revenues in connection with rendering of services are recognized by reference to the stage of completion of the transaction as of thebalance sheet date, if and when the outcome of the transaction can be estimated reliably. Revenues from royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement. F - 14 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) p.Research and development expensesResearch expenses are charged to profit or loss as incurred.An intangible asset arising from development (or from the development phase of an internal project) is recognized if all of the followingconditions are fulfilled: ·technological feasibility exists for completing development of the intangible asset so that it will be available for use or sale. ·it is management’s intention to complete development of the intangible asset for use or sale. ·the Company has the ability to use or sell the intangible asset. ·it is probable that the intangible asset will generate future economic benefits, including existence of a market for the output of theintangible asset or the intangible asset itself or, if the intangible asset is to be used internally, the usefulness of the intangible asset. ·adequate technical, financial and other resources are available to complete development of the intangible asset, as well as the use orsale thereof. ·the Company has the ability to reliably measure the expenditure attributable to the intangible asset during its development. Other development costs that do not meet the foregoing conditions are charged to profit or loss as incurred. Development costs previouslyexpensed are not recognized as an asset in subsequent periods. As of December 31, 2015, the Company has not yet capitalized developmentexpenses. q.Government participation in research and development expensesThe Company has received participation in research and development expenses from the State of Israel through the OCS, both in the formof loans extended to the Incubator for research and development, as described in Note 13a(1), and in the form of grants, as described in Note13a(2). The agreement with the State of Israel relating to the Incubator terminated on December 31, 2013; accordingly, the Company doesnot expect to receive additional funding in the form of loans extended to the Incubator.Despite the formal difference between the two types of support from the OCS, there is no material financial difference between them. Eachloan and grant qualifies as a “forgivable loan” in accordance with IAS 20, “Accounting for Government Grants and Disclosure ofGovernment Assistance,” since the loans and grants are repayable only if the Company generates revenues related to the project that is thesubject of the loan or grant. F - 15 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) q.Government participation in research and development expenses (cont.)The Company recognizes each forgivable loan on a systematic basis at the same time the Company records, as an expense, the relateddevelopment costs for which the grant/loan is received, provided that there is reasonable assurance that (a) the Company complies with theconditions attached to the grant/loan, and (b) the grant/loan will be received. The amount of the forgivable loan is recognized based on theparticipation rate approved by the OCS.The Company accounts for each forgivable loan as a liability unless it is more likely than not that the Company will meet the terms offorgiveness, in which case the forgivable loan is accounted for as a government grant and carried to income as a reduction of research anddevelopment expenses.If forgivable loans are initially carried to income, as described above, and, in subsequent periods, it appears more likely than not that theproject will be successful and that the loans will be repaid or royalties paid to the OCS, the Company recognizes a liability which ismeasured based on the Company’s best estimate of the amount required to settle the Company’s obligation at the end of each reportingperiod. r.Employee benefits 1)Pension and severance pay obligationsIsraeli labor laws and the Company’s employment agreements require the Company to pay retirement benefits to employeesterminated or leaving their employment in certain other circumstances. Most of the Company’s employees are covered by a definedcontribution plan under Section 14 of the Israel Severance Pay Law.With respect to the remaining employees, the Company records a liability on its balance sheet for defined benefit plans thatrepresents the present value of the defined benefit obligation as of each reporting date, net of the fair value of plan assets. The presentvalue of the defined benefit liability is determined by discounting the anticipated future cash outflows, using interest rates that aredenominated in the currency in which the benefits will be payable.The amounts recorded as an employee benefit expense in respect of pension and severance pay obligations for the years 2013, 2014and 2015 were $484,000, $465,000 and $466,000, respectively. F - 16 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) r.Employee benefits (cont.) 2)Vacation days and recreation payLabor laws in Israel entitle every employee to vacation days and recreation pay, both of which are computed annually. Theentitlement with respect to each employee is based on the employee’s length of service at the Company. The Company recognizes aliability and an expense in respect of vacation and recreation pay based on the individual entitlement of each employee. 3)Share-based paymentsThe Company operates an equity-settled, share-based compensation plan, under which it receives services from employees asconsideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for thegrant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of theoptions granted: ·including any market performance conditions (for example, the Company’s share price); and ·excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growthtargets and the employee remaining with the entity over a specified time period).Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are tobe satisfied.When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transactioncosts, are credited to share capital (at par value) and share premium when the options are exercised. s.Loss per share 1)BasicThe basic loss per share is calculated by dividing the loss attributable to the holders of ordinary shares by the weighted averagenumber of ordinary shares outstanding during the year. 2)DilutedThe diluted loss per share is calculated by adjusting the weighted average number of outstanding ordinary shares, assumingconversion of all dilutive potential shares. The Company’s dilutive potential shares consist of warrants issued to investors, as well asoptions granted to employees and service providers. The dilutive potential shares were not taken into account in computing loss pershare in 2013, 2014 and 2015, as their effect would not have been dilutive. F - 17 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) t.Changes in accounting policy and disclosuresNew and amended standards adopted by the CompanyThe following standards have been adopted by the Company for the first time for the fiscal year beginning January 1, 2015: ·Annual Improvements to IFRSs – 2010-2012 Cycle; 2011-2013 Cycle ·Defined Benefit Plans: Employee Contributions – Amendments to IAS 19The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect futureperiods.In addition, the Company also elected to early adopt the following two amendments: ·Annual Improvements to IFRSs – 2012-2014 Cycle ·Disclosure Initiative: Amendments to IAS 1.As these amendments merely clarify the existing requirements, they do not affect the Company’s accounting policies or any of thedisclosures.New standards and interpretations not yet adoptedCertain new accounting standards and interpretations have been published that are not mandatory for reporting period prior to January 1,2016, and have not been early adopted by the Company. The Company’s assessment of the impact of these new standards andinterpretations is set out below.IFRS 9, “Financial Instruments”, addresses the classification, measurement and derecognition of financial assets and financial liabilities andintroduces new rules for hedge accounting, and it must be applied for financial years commencing on or after January 1, 2018. In July 2014,the IASB made further changes to the classification and measurement rules and also introduced a new impairment model. These latestamendments now complete the new financial instruments standard.Following the changes approved by the IASB in July 2014, the Company no longer expects any impact from the new classification,measurement and derecognition rules on the Company’s financial assets and financial liabilities. In addition, while the Company has yet toundertake a detailed assessment of the debt instruments currently classified as available-for-sale financial assets, it would appear that theywould satisfy the conditions for classification as at fair value through other comprehensive income (FVOCI) based on their current businessmodel for these assets. Hence there will be no change to the accounting for these assets. There will also be no impact on the Company’saccounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fairvalue through profit or loss and the Company does not have any such liabilities. F - 18 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) t.Changes in accounting policy and disclosures (cont.)The new hedging rules align hedge accounting more closely with the Company’s risk management practices. As a general rule it will beeasier to apply hedge accounting going forward as the standard introduces a more principles-based approach. The new standard alsointroduces expanded disclosure requirements and changes in presentation. The new impairment model is an expected credit loss (ECL)model which may result in the earlier recognition of credit losses. The Company has not yet assessed how its own hedging arrangementsand impairment provisions would be affected by the new rules.IFRS 15, “Revenue from Contracts with Customers”, is a new standard for the recognition of revenue issued by the IASB. This will replaceIAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The standard permits a modifiedretrospective approach for the adoption. Under this approach, entities will recognize transitional adjustments in retained earnings on thedate of initial application (January 1, 2017) – i.e., without restating the comparative period; and will only need to apply the new rules tocontracts that are not completed as of the date of initial application. The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer – i.e., thenotion of control replaces the existing notion of risks and rewards. Management is currently assessing the impact of the new rules and hasidentified the following areas that are likely to be affected: ·extended warranties, which will need to be accounted for as separate performance obligations, which will delay the recognition of aportion of the revenue ·consignment sales where recognition of revenue will depend on the passing of control rather than the passing of risks and rewards ·the balance sheet presentation of rights of return, which will have to be grossed up in future (separate recognition of the right torecover the goods from the customer and the refund obligation) In January 2016, the IASB issued IFRS 16, “Leases”, which sets out the principles for the recognition, measurement, presentation anddisclosure of leases for both parties to a contract and replaces the previous lease standard, IAS 17, “Leases”. IFRS 16 eliminates theclassification of leases for the lessee as either operating leases or finance leases as required by IAS 17, and instead introduces a single lesseeaccounting model whereby a lessee is required to recognize assets and liabilities for all leases with a term that is greater than 12 months,unless the underlying asset is of low value, and to recognize amortization of lease assets separately from interest on lease liabilities in theincome statement. IFRS 16 is effective from January 1, 2019, with early adoption allowed only if IFRS 15, “ Revenue from Contracts withCustomers,” is also applied. At this stage, the Company is not able to estimate the impact of the new rules on the Company’s financial statements. The Company willmake more detailed assessments of the impact over the next twelve months.There are no other standards that are not yet effective and that would be expected to have a material impact on the Company in the currentor future reporting periods and on foreseeable future transactions. F - 19 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 3 – FINANCIAL RISK MANAGEMENTBased on assessments by Company management, the Company’s exposure to credit risk as of December 31, 2015 is immaterial (see Note 3b). Theactivities of the Company expose it to market risk, particularly as a result of currency risk.The Company’s Finance Department is responsible for carrying out risk management activities in accordance with policies approved by its Boardof Directors. In this regard, the Finance Department identifies, defines and assesses financial risks in close cooperation with other Companydepartments. The Board of Directors provides written guidelines for overall risk management, as well as written policies dealing with specificareas, such as exchange rate risk, interest rate risk, credit risk, use of financial instruments, and investment of excess cash. a.Market risk 1)Concentration of currency riskThe Company’s activities are partly denominated in non-dollar currencies (primarily the NIS), which exposes the Company to risksresulting from changes in exchange rates.The effect of fluctuations in various exchange rates on the Company’s income and equity is as follows: December 31, 2015 Income (loss) Value on Income (loss) Sensitive instrument 10%increase 5% increase balancesheet 5% decrease 10%decrease in USD thousands NIS-linked balances: Cash and cash equivalents (199) (104) 2,192 244 115 Other receivables (24) (13) 266 30 14 Trade payables 34 18 (374) (42) (20)Other payables 103 54 (1,137) (126) (60)Total NIS-linked balances (86) (45) 947 106 49 Euro-linked trade payables (16) (8) (169) 19 9 Total (102) (53) 778 125 58 * See also Note 13b. The Company also maintains cash and cash equivalent balances that are linked to other currencies in amounts that are not material. December 31, 2014 Income (loss) Value on Income (loss) Sensitive instrument 10%increase 5% increase balancesheet 5% decrease 10%decrease in USD thousands NIS-linked balances: Cash and cash equivalents (215) (112) 2,360 262 124 Other receivables (23) (12) 257 29 14 Trade payables 51 27 (558) (62) (29)Other payables 114 60 (1,252) (139) (66)Total NIS-linked balances (73) (37) 807 90 43 Euro-linked trade payables 19 10 (208) (23) (11)Total (54) (27) 599 67 32 * See also Note 13b. F - 20 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 3 – FINANCIAL RISK MANAGEMENT (cont.) a.Market risk (cont.) 1)Concentration of currency risk (cont.)Set forth below is certain data regarding dollar exchange rates and the Israeli CPI: Exchangerate ofNIS per $1 Exchangerate ofEuro per $1 Israeli CPI* USD USD Points As of December 31: 2014 3.889 0.823 132.78 2015 3.902 0.919 131.45 Percentage increase (decrease) in: 2014 12.0% 13.0% (0.2)%2015 0.3% 11.7% (1.0)% *Based on the CPI index for the month ending on each balance sheet date, on the basis that the average for year 2000 = 100.Set forth below is information on the linkage of monetary items: December 31, 2014 December 31, 2015 Dollar NIS Other currencies Dollar NIS Othercurrencies USD in thousands Assets: Current assets: Cash and cash equivalents 3,423 2,360 7 3,352 2,192 - Short term bank deposits 28,890 - - 42,119 - - Other receivables - 257 - - 266 25 Non-current assets: Restricted deposits 166 - - - - - Total assets 32,479 2,617 7 45,471 2,458 25 Liabilities: Current liabilities: Current maturities of bank loan - - - 93 - - Accounts payable and accruals: Trade 831 558 265 1,218 374 318 Other - 1,252 - - 1,137 - Non-current liabilities Long-term bank loan, net ofcurrent maturities - - - 344 - - 831 1,810 265 1,655 1,511 318 Net asset value 31,648 807 (258) 43,816 947 (293) December 31, 2014 December 31, 2015 Dollar NIS Other currencies Dollar NIS Othercurrencies USD in thousands Assets: Current assets: Cash and cash equivalents 3,423 2,360 7 3,352 2,192 - Short term bank deposits 28,890 - - 42,119 - - Other receivables - 257 - - 266 25 Non-current assets: Restricted deposits 166 - - - - - Total assets 32,479 2,617 7 45,471 2,458 25 Liabilities: Current liabilities: Current maturities of bank loan - - - 93 - - Accounts payable and accruals: Trade 831 558 265 1,218 374 318 Other - 1,252 - - 1,137 - Non-current liabilities Long-term bank loan, net of currentmaturities - - - 344 - - 831 1,810 265 1,655 1,511 318 Net asset value 31,648 807 (258) 43,816 947 (293) F - 21 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 3 – FINANCIAL RISK MANAGEMENT (cont.) a.Market risk (cont.) 2)Fair value of financial instruments As of December 31, 2015, the financial instruments of the Company consist of non-derivative assets and liabilities (primarilyworking capital items and restricted deposits), as well as a liability on account of warrants. With regard to non-derivative assets and liabilities, in view of their nature, the fair value of the financial instruments included inworking capital is generally close or identical to their carrying amount. The fair value of the restricted cash in long-term depositsalso approximates the carrying amount, as these financial instruments bear interest at a rate approximating the prevailing interestrate. With regard to the liability on account of warrants, see Note 10c(1), 10c(2). 3)Exposure to market risk and the management thereof In the opinion of Company management, the market risk to which the Company is exposed is primarily related to currency riskexposure, as mentioned above. Additionally, Company management does not consider the interest rate risk mentioned in paragraph4 below to be material. 4)Interest rate risk Company management does not consider interest rate risk to be material, as the Company holds deposits and short-term governmentbonds whose fair value and/or cash flows are not materially affected by changes in interest rates. b.Credit risk Credit risk is managed at the Company level. These risks relate to cash and cash equivalents, bank deposits and other receivables. The Company’s cash, cash equivalents and short-term bank deposits at December 31, 2014 and 2015 were mainly deposited with highly-rated major Israeli and U.S. banks. In the Company’s opinion, the credit risk in respect of these balances is remote. The Company considers its maximum exposure to credit risk to be as follows: December 31, 2014 2015 in USD thousands Assets: Cash and cash equivalents 5,790 5,544 Short-term bank deposits 28,890 42,119 Other receivables 257 291 Restricted deposits 166 - Total 35,103 47,954 c.Liquidity risk Company management monitors rolling forecasts of the Company’s liquidity reserves on the basis of anticipated cash flows and maintainsthe liquidity balances at a level that is sufficient to meet its needs. F - 22 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 3 – FINANCIAL RISK MANAGEMENT (cont.) c.Liquidity risk (cont.) Although the Company has succeeded in generating significant revenues from number of out-licensing transactions, it cannot determinewith reasonable certainty if and when it will become profitable on a current basis. Management believes that the Company’s current cashand other resources will be sufficient to fund its projected cash requirements into 2018. Accordingly, in the event that the Company doesnot continue to generate cash from its operating activities, the Company will need to raise additional capital in the future. Inability to raiseadditional capital would have a material adverse effect on the financial condition of the Company. d.Financial instruments As of December 31, 2014 and 2015, the Company’s financial instruments consisted of loans and receivables, and a liability on account ofwarrants. e.Fair value estimations In February 2012 and 2013, BioLineRx completed financing transactions in which it issued ADSs and warrants to purchase additionalADSs – see Note 10c. The fair value of the warrants, which are not traded on an active market, is determined by using valuation techniques.These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specificestimates.NOTE 4 – CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS As part of the financial reporting process, Company management is required to make estimates that affect the value of assets, liabilities, income,expenses and certain disclosures included in the Company’s consolidated financial statements. By their very nature, such estimates are subjectiveand complex and consequently may differ from actual results. The accounting estimates used in the preparation of the financial statements are continually evaluated and adjusted based on historical experienceand other factors, including expectation of future events that are believed to be reasonable under the circumstances. Described below are the critical accounting estimates used in the preparation of the financial statements, the formulation of which requiredCompany management to make assumptions as to circumstances and events that involve significant uncertainty. In using its judgment todetermine the accounting estimates, the Company takes into consideration, as appropriate, the relevant facts, past experience, the effect of externalfactors and reasonable assumptions under the circumstances. a.Development expenses Development expenses are capitalized in accordance with the accounting policy described in Note 2p. The capitalization of costs is basedon management’s judgment of technological and economic feasibility, which is usually achieved when a development project reaches apredefined milestone, or when the Company enters into a transaction to sell the know-how that resulted from the development process. Indetermining the amount to be capitalized, management makes assumptions as to the future anticipated cash inflows from the assets, and theanticipated period of future benefits. Company management has concluded that, as of December 31, 2015, the foregoing conditions havenot been met and therefore development expenses have not been capitalized for any project. If management had determined that the aforementioned conditions had been met, the capitalization of development costs would haveresulted in an increase in the Company’s profit or a decrease in its loss. F - 23 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 4 – CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (cont.) b.Grants/loans from the OCS In accordance with the accounting treatment prescribed in Note 2q, Company management is required to evaluate whether there isreasonable assurance that the grant/loan received will be paid or repaid. Additionally, whenever the grant/loan is initially recognized asincome, management is required to evaluate whether the payment of royalties/repayment of loans to the OCS is considered more likely thannot. See Notes 13a(1) and 13a(2) with regard to the potential amount repayable to the OCS as of December 31, 2015.NOTE 5 – CASH AND CASH EQUIVALENTS December 31, 2014 2015 in USD thousands Cash on hand and in bank 2,233 747 Short-term bank deposits 3,557 4,797 5,790 5,544 The short-term bank deposits included in cash and cash equivalents bear interest at annual rates of between 0.06% and 0.30%. The carryingamount of cash and cash equivalents approximates their fair value, since they bear interest at rates similar to prevailing market interest rates. NOTE 6 – SHORT-TERM BANK DEPOSITS The short-term bank deposits are linked to the dollar and bear interest at annual rates of between 0.42% and 1.41%. F - 24 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 7 – PROPERTY AND EQUIPMENTSet forth below are the composition of property and equipment and the related accumulated depreciation, grouped by major classifications, as wellas the changes therein for the respective years: Cost Accumulated depreciation Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2012 2013 In USD thousands In USD thousands In USD thousands Composition in 2013 Office furniture andequipment 233 - - 233 79 13 - 92 155 141 Computers andcommunicationsequipment 432 37 (120) 349 327 74 (120) 281 105 68 Laboratory equipment,net* 1,365 40 (842) 563 858 156 (842) 172 507 391 Leasehold improvements 1,099 - (908) 191 1,050 14 (908) 156 49 35 3,129 77 (1,870) 1,336 2,314 257 (1,870) 701 816 635 *Item is net of OCSgrants received - see13a(1) 579 - - 579 549 24 - 573 30 5 Cost Accumulated depreciation Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2013 2014 In USD thousands In USD thousands In USDthousands Composition in 2014 Office furniture andequipment 233 - - 233 92 13 - 105 141 128 Computers andcommunicationsequipment 349 40 - 389 281 53 - 334 67 55 Laboratory equipment,net* 563 63 - 626 172 156 - 328 392 298 Leasehold improvements 191 213 - 404 156 8 - 164 35 240 1,336 316 - 1,652 701 230 - 931 635 721 *Item is net of OCSgrants received – see13a(1) 579 - - 579 573 5 - 578 5 1 F - 25 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 7 – PROPERTY AND EQUIPMENT (cont.) Cost Accumulated depreciation Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2014 2015 In USD thousands In USD thousands In USD thousands Composition in 2015 Office furniture andequipment 233 177 (212) 198 105 120 (212) 13 128 185 Computers andcommunicationsequipment 389 78 (21) 446 334 42 (21) 355 55 91 Laboratory equipment,net* 626 568 - 1,194 328 154 - 482 298 712 Leasehold improvements 404 1,791 (170) 2,025 164 110 (170) 104 240 1,921 1,652 2,614 (403) 3,863 931 426 (403) 954 721 2,909 *Item is net of OCSgrants received – see13a(1) 579 - - 579 578 1 - 579 1 - F - 26 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 8 – INTANGIBLE ASSETS Cost Accumulated depreciation and impairment Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2011 2013 In USD thousands In USD thousands In USD thousands Composition in 2013 Intellectual property 422 - (35) 387 193 - - 193 229 194 Computer software 309 25 (62) 272 265 37 (62) 240 44 32 731 25 (97) 659 458 37 (62) 433 273 226 Cost Accumulated depreciation and impairment Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2013 2014 In USD thousands In USD thousands In USD thousands Composition in 2014 Intellectual property 387 - (194) 193 193 - (97) 96 194 97 Computer software 272 5 - 277 240 17 - 257 32 20 659 5 (194) 470 433 17 (97) 353 226 117 Cost Accumulated depreciation and impairment Balanceat Additions Deletions Balanceat Balanceat Additions Deletions Balanceat Net book value beginning during during end of beginning during during end of December 31, of year year year year of year year year year 2014 2015 In USD thousands In USD thousands In USD thousands Composition in 2015 Intellectual property 193 - - 193 96 - - 96 97 97 Computer software 277 51 - 328 257 16 - 273 20 55 470 51 - 521 353 16 - 369 117 152 During 2013, the Company wrote-off intellectual property in the total amount of $35,000 in respect of the termination of BL-5040. During 2014,the Company wrote-off intellectual property in the total amount of $97,000 in respect of the out-licensing of BL-5010.Depreciation in respect of computer software for all years presented, as well as the impairment of intellectual property for 2013, was included inresearch and development expenses. F - 27 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 9 – LONG-TERM BANK LOAN a.Composition December 31, 2014 2015 In USD thousands Loan balance - 437 Less current maturities - (93) - 344 The loan is denominated in USD and bears interest at an annual rate of 3.75%. The book value of the loan approximates its fair value. The loan is repayable in 60 monthly installments and is collateralized by certain lab equipment. b.Future repayments Future repayments of the long-term bank loan (other than current maturities) in the years subsequent to the balance sheet date are as follows(in USD thousands):2017 93 2018 thru 2020 251 344 F - 28 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY a.Share capitalAs of December 31, 2015 and 2014, share capital is composed of ordinary shares, as follows: Number of Ordinary Shares December 31, 2014* 2015 Authorized share capital 75,000,000 150,000,000 Issued and paid-up share capital 39,115,051 54,818,057 In USD and NIS December 31, 2014 2015 Authorized share capital (in NIS) 7,500,000 15,000,000 Issued and paid-up share capital (in NIS) 3,911,505 5,481,806 Issued and paid-up share capital (in USD) 1,054,851 1,455,159 *Number of ordinary shares for 2014 reflects, on a retroactive basis, the 1:10 reverse split carried out by BioLineRx in June 2015. See Note2L.As of December 31, 2015, the market price on NASDAQ of BioLineRx’s ADSs was $1.30, and the market price on the Tel Aviv StockExchange of BioLineRx’s ordinary shares was NIS 5.12. b.Rights related to sharesThe ordinary shares confer upon their holders voting and dividend rights and the right to receive assets of the Company upon itsliquidation. As of December 31, 2015 and 2014, all outstanding share capital consisted of ordinary shares. F - 29 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) c.Changes in the Company’s equity 1)In February 2012, BioLineRx issued in a private placement warrants to purchase up to 2,622,157 ADSs at an exercise price of $3.57per ADS. The warrants are exercisable over a period of five years from the date of their issuance. Since the exercise price was notdeemed to be fixed, the warrants did not qualify for classification as an equity instrument and have therefore been classified as a non-current derivative financial liability. The amount of the private placement consideration allocated to the warrants was approximately$4,800,000 as of the issuance date, based on their fair value as calculated on the basis of the Black-Scholes model. The changes infair value for the years ended December 31, 2013, 2014 and 2015, of approximately $100,000, $2,000,000 and $700,000,respectively, have been recorded as non-operating income on the statement of comprehensive loss. 2)In February 2013, the Company completed a direct placement to leading healthcare investor, OrbiMed Israel Partners LimitedPartnership, an affiliate of OrbiMed Advisors LLC. The placement consisted of 2,666,667 ADSs and 1,600,000 warrants to purchasean additional 1,600,000 ADSs, at a unit price of $3.00. The warrants have an exercise price of $3.94 per ADS and are exercisable for aterm of five years. The offering raised a total of $8,000,000, with net proceeds of approximately $7,700,000, after deducting fees andexpenses. Since the exercise price was not deemed to be fixed, the warrants did not qualify for classification as an equity instrumentand have therefore been classified as a non-current derivative financial liability.The amount of the direct placement consideration allocated to the warrants was approximately $3,400,000, as calculated on the basisof the Black-Scholes model, which reflected their fair value as of the issuance date. The portion of total issuance costs allocable tothe warrants, in the amount of approximately $130,000, was recorded as a non-operating expense on the statement of comprehensiveloss. The change in fair value from the date of issuance through December 31, 2013, and for the years ended December 31, 2014 and2015, amounting to approximately $1,600,000, $1,100,000, and $600,000, respectively, has been recorded as non-operating incomeon the statement of comprehensive loss. F - 30 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) c.Changes in the Company’s equity (cont.) 3)In March 2014, the Company completed an underwritten public offering of 9,660,000 ADSs at a public offering price of $2.50 perADS. The offering raised a total of $24.2 million, with net proceeds of approximately $22.3 million, after deducting fees andexpenses. 4)In March 2015, the Company completed an underwritten public offering of 14,375,000 ADSs at a public offering price of $2.00 perADS. The offering raised a total of $28.8 million, with net proceeds of approximately $26.4 million, after deducting fees andexpenses. d.Share purchase agreement In September 2012, BioLineRx and Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“LPC”), entered into a $15million purchase agreement, together with a registration rights agreement, whereby LPC agreed to purchase, from time to time, up to $15million of BioLineRx’s ADSs, subject to certain limitations, during the 36-month term of the Purchase Agreement. In consideration for entering into the $15 million agreement, BioLineRx paid to LPC an initial commitment fee, as well as an initial finder’sfee, in cash, to Oberon Securities, LLC Additional commitment and finder’s fees associated with the agreement, payable only upon theissuance of shares, were recorded as issuance expenses against share premium on the statement of financial position. On a cumulative basis, from the effective date of the $15,000,000 purchase agreement through its termination in May 2014, BioLineRx solda total of 3,793,209 ADSs to LPC for aggregate gross proceeds of $9,731,000. In connection with these issuances, a total of 94,832 ADSswas issued to LPC as an additional commitment fee and a total of $195,000 was paid to Oberon Securities as an additional finder’s fee. F - 31 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) d.Share purchase agreement (cont.) In May 2014, BioLineRx and LPC entered into a new $20 million, 36-month purchase agreement, and terminated the previous $15 millionagreement. The terms of the new purchase agreement are substantially identical to the terms of the previous purchase agreement. In consideration for entering into the new $20 million purchase agreement, BioLineRx paid to LPC an initial commitment fee of $300,000,paid via the issuance of 150,000 ADSs, and will pay a further commitment fee of up to $500,000, pro rata, as the facility is used over time,which will be paid in ADSs valued based on the prevailing market prices of BioLineRx’s ADSs at such time. The new purchase agreementmay be terminated by BioLineRx at any time, at its sole discretion, without any cost or penalty. In connection with the new purchase Agreement, BioLineRx agreed to pay an initial cash finder’s fee to Oberon Securities of $50,000, andwill pay an additional cash finder’s fee equal to 2.0% of the dollar amount of ADSs sold under the new agreement, up to an aggregateadditional finder’s fee of $200,000. BioLineRx has no other obligations to Oberon Securities with respect to this or any other potentialfuture agreement. The initial commitment fee payable to LPC and the initial finder’s fee payable to Oberon Securities, in the total aggregate amount of$350,000, were recorded as a non-operating expense in the statement of comprehensive loss for the year ended December 31, 2014. Futurecommitment and finders fees payable, if and when the facility is used over time, will be recorded as issuance expenses against sharepremium on the statement of financial position.During the year ended December 31, 2015 and on a cumulative basis, BioLineRx sold a total of 1,292,601 ADSs to LPC for aggregate grossproceeds of $2,643,000. In connection with these issuances, a total of 32,315 ADSs was issued to LPC as a commitment fee and a total of$53,000 was paid to Oberon Securities as a finder’s fee. e.Share-based payments 1)Stock option plan – general In 2003, BioLineRx adopted the 2003 Share Option Plan (the “Plan”). The Plan provides for the granting of options and ordinaryshares to the Company’s employees, directors, consultants and other service providers. Options are issued at the determination of theBoard of Directors in accordance with applicable law. The options are generally exercisable for a seven-year period and the grantsgenerally vest over a four-year period. During 2013, the Company’s Board of Directors approved amendments to the Plan to take intoaccount changes in laws and regulations that had occurred since its adoption and to extend the term of the plan until November2023. As of December 31, 2015, there were 3,560,152 ordinary shares issuable upon the exercise of outstanding options under thePlan.Ordinary shares resulting from grants under the Plan confer the same rights as all other ordinary shares of BioLineRx. F - 32 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) e.Share-based payments (cont.) 1)Stock option plan – general (cont.)Company employees and directors are granted options under Section 102 of the Israeli Income Tax Ordinance (the “Ordinance”),primarily under the “capital gains” track. Non-employees of the Company (consultants and other service providers), as well ascontrolling shareholders in BioLineRx (as this term is defined in Section 32(9) of the Ordinance), are granted options under Section3(i) of the Ordinance.In November 2014 and December 2015, the Company’s Board of Directors approved increases of 1.6 million and 5.0 million shares,respectively, to the total pool of authorized ordinary shares reserved for purposes of the Plan and any other present or future shareincentive plans of the Company, bringing the pool to an aggregate of 9.6 million shares. As of December 31, 2015, there were 5.3million remaining authorized but unissued ordinary shares in the pool reserved for future share-based incentive grants. F - 33 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) e.Share-based payments (cont.) 2)Employee stock options (cont.)The following table contains additional information concerning options granted to employees and directors under the existingstock-option plans. Year ended December 31, 2013 2014 2015 Numberof options Weightedaverageexerciseprice(in NIS) Numberof options Weightedaverageexerciseprice(in NIS) Numberof options Weightedaverageexerciseprice(in NIS) Outstanding at beginning of year 1,293,602 13.2 1,861,280 12.0 3,187,092 9.1 Granted 755,800 9.7 1,478,200 5.7 500,800 6.8 Forfeited and expired (162,976) 13.5 (150,985) 13.0 (187,630) 11.1 Exercised (25,146) 4.0 (1,403) 4.0 - - Outstanding at end of year 1,861,280 12.0 3,187,092 9.1 3,500,262 8.7 Exercisable at end of year 273,780 20.4 641,960 15.1 1,169,540 12.6 The total consideration received from the exercise of stock options during 2013, 2014 and 2015 was not material.The weighted average prices of BioLineRx’s shares on the dates of exercise were NIS 0.78 and NIS 0.77 for 2013 and 2014,respectively. Set forth below is data regarding the range of exercise prices and weighted-average remaining contractual life (in years) for theoptions outstanding at the end of each of the years indicated. Year ended December 31, 2013 2014 2015 Range ofexerciseprices(in NIS) Numberof optionsoutstanding Weightedaverageremainingcontractual life(in yrs.) Numberof optionsoutstanding Weightedaverageremainingcontractual life(in yrs.) Numberof optionsoutstanding Weightedaverageremainingcontractual life(in yrs.) Up to 10.00 250,889 6.12 1,717,686 6.61 2,117,886 5.76 10.01-20.00 1,547,594 5.78 1,406,609 4.84 1,334,866 3.81 20.01-30.00 10,903 2.82 10,903 1.82 10,340 0.88 30.01-40.00 11,125 1.56 11,125 2.36 10,000 1.55 Over 40.00 40,770 2.24 40,770 1.34 27,170 1.00 1,861,280 5.70 3,187,092 5.73 3,500,262 4.96 F - 34 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – EQUITY (cont.) e.Share-based payments (cont.) 2)Employee stock options (cont.)The fair value of all options granted to employees through December 31, 2015 has been determined using the Black-Scholes option-pricing model. These values are based on the following assumptions as of the applicable grant dates: 2013 2014 2015 Expected dividend yield 0% 0% 0%Expected volatility 69% 65% 68%Risk-free interest rate 2% 2% 2%Expected life of options (in years) 7 5 5 3)Stock options to consultants From inception through December 31, 2012, the Company issued to consultants options for the purchase of 76,523 ordinary shares ata weighted average exercise price of NIS 21.54 per share. In 2015, the Company issued options to consultants for the purchase of 5,000 ordinary shares at a weighted average exercise price ofNIS 7.62 per share. No options were issued to consultants in 2013 and 2014. The options to consultants generally vest over four years and may be exercised for periods of between five and ten years. As ofDecember 31, 2015, 59,890 options to consultants were outstanding, with a weighted average exercise price of NIS 21.9 per shareand a weighted average contractual life of 1.68 years. Company management estimates the fair value of the options granted to consultants based on the value of services received over thevesting period of the applicable options. The value of such services (primarily in respect of clinical advisory services) is estimatedbased on the additional cash compensation the Company would need to pay if such options were not granted. The value of servicesrecorded in 2013, 2014 and 2015 amounted to $40,000 each year. F - 35 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 11 – TAXES ON INCOME a.Corporate taxation in IsraelThe income of BioLineRx and BIJ Ltd. is taxed at standard Israeli corporate tax rates, which were 25% in 2013, and 26.5% in 2014 and2015. The corporate tax rates for 2016 and thereafter are currently set at 25%. Capital gains are generally subject to tax at the same rate asthe corporate tax rate.During its existence, BIJ LP was not subject to tax under Israeli tax law; rather, each of the partners thereof (BioLineRx and BIJ Ltd.) wasliable for the tax applicable to the operations of BIJ LP in proportion to their respective share in BIJ LP’s results. b.Approved enterprise benefits In May 2012, the Israeli Tax Authority (“ITA”) approved BioLineRx’s eligibility for tax benefits as a “Benefited Enterprise” under the Lawfor the Encouragement of Capital Investments, 5719-1959, as amended (the “Investments Law”), with respect to certain developmentprograms (the “Eligible Projects”). Subject to compliance with the applicable requirements, the portion of undistributed income derived from Benefited Enterprise programswill be entitled to a tax exemption for a period of two years, followed by five years at the Benefited Enterprise tax rate of 25%, commencingin the first year in which BioLineRx generates taxable income after setting off losses for Israeli tax purposes from prior years (see c. below).The seven-year period may not extend beyond 12 years from the beginning of the Benefited Enterprise’s election year. BioLineRx receivedBenefited Enterprise status with respect to Eligible Projects in the 2009 and 2012 tax years, so depending on when the Benefited Enterpriseprograms begin to generate taxable income, the benefit period could continue through 2023. However, any distribution of income derivedfrom exempt income sourced in the Benefited Enterprise programs will result in such income being subject to a rate of corporate tax nogreater than 25%. BioLineRx has the option to transition to a “Preferred Enterprise” regime under the Investments Law, according to which all income whichis eligible for benefits under the regime would be subject to a flat corporate tax rate of 16%, whether or not distributed. A transition to aPreferred Enterprise regime may not be reversed. In addition, the ITA approved BioLineRx’s operations as an “Industrial Enterprise” under the Investments Law, meaning that BioLineRx iseligible for accelerated depreciation with respect to certain tangible assets belonging to its Benefited Enterprise. Should BioLineRx notmeet the requirements for maintaining these benefits, they may be reduced or cancelled and, among other things, income deriving from theEligible Projects would be subject to Israeli corporate tax at the standard rate of 25%. F - 36 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 11 – TAXES ON INCOME (cont.) c.Tax loss carryforwards As of December 31, 2014 and 2015, the tax loss carryforwards of BioLineRx were approximately $135 million and $152 million,respectively. The tax loss carryforwards have no expiration date. The Company has not created deferred tax assets in respect of these tax loss carryforwards. See Note 2n. d.Tax assessmentsIn accordance with Israeli tax regulations, the tax returns filed by BioLineRx and BIJ Ltd. through the 2011 tax year are considered final. e.Theoretical taxes As described in Note 2n, the Company has not recognized any deferred tax assets in the financial statements, as it does not expect togenerate taxable income in the foreseeable future. The tax on the Company’s income before taxes differs from the theoretical amount thatwould arise using the weighted average tax rate applicable to income of the consolidated entities as follows: Year ended December 31, 2013 2014 2015 USD in USD in USD in thousands thousands thousands Loss before taxes 25% (17,024) 26.5% (11,076) 26.5% (14,400) Theoretical tax benefit (4,256) (2,935) (3,816)Disallowed deductions (tax exempt income): Gain on adjustment of warrants to fair value (358) (915) (342)Share-based compensation 211 280 305 Other 18 15 14 Increase in taxes for tax losses and timing differencesincurred in the reporting year for which deferredtaxes were not created 4,385 3,555 3,839 Taxes on income for the reported year - - - F - 37 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 12 – LOSS PER SHARE The following table contains the data used in the computation of the basic loss per share: Year ended December 31, 2013 2014 2015 In USD thousands Loss attributed to ordinary shares (17,024) (11,076) (14,400)Number of shares used in basic calculation (in thousands) 22,488 32,434 51,406 in USD Basic loss per ordinary share (0.76) (0.34) (0.28)Diluted loss per ordinary share (0.76) (0.34) (0.28)NOTE 13 – COMMITMENTS AND CONTINGENT LIABILITIES a.Commitments 1)Agreement with the State of Israel for operation of the Incubator Pursuant to an agreement with the State of Israel, the Company operated the Incubator from January 1, 2005 through December 31,2013. Following expiration of the agreement on December 31, 2013, the Company terminated the activities of the Incubator andapplied to the courts for a formal liquidation of BIJ LP, which took effect on December 31, 2014. As part of the Incubator agreement between BIJ LP and the State of Israel, represented by the OCS, the State of Israel agreed to grantloans to BIJ LP to partially finance projects approved by the OCS. As security for such loans, the Incubator registered first-rankingpledges in favor of the OCS on a project-specific basis, which included a restriction on the transfer of, and/or licensing rights in,technologies which originated from the project, and on any equipment purchased for use in the project. In addition, the Incubatoragreement contained various restrictions regarding compliance with the Israel R&D Law (the Encouragement of Research andDevelopment in Industry Law) related to maintaining the intellectual property and manufacturing rights relating to each OCS-fundedproject in Israel.The proceeds from the sale or use of project-related intellectual property serve as the exclusive source for repayment of OCS loansfinancing such projects, and the sole collateral for the repayment of project loans are pledges on project-related intellectual propertyand assets purchased with loan proceeds. Upon termination of a project, loan amounts are forgiven in their entirety by the OCS.As of December 31, 2015, the Company has no further liabilities to the OCS in respect of loans received under the Incubator.With respect to the accounting treatment of State loans, see Note 2q. F - 38 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) a.Commitments (cont.) 2)Obligation to pay royalties to the State of Israel – regular OCS fundingThe Company is required to pay royalties to the State of Israel (represented by the OCS), computed on the basis of proceeds from thesale or license of products whose development was supported by State grants. This obligation relates solely to the State’s financialparticipation in the development of products by the Company outside the framework of the Incubator that was operated by BIJ LPthrough December 31, 2013.In accordance with the terms of grants provided by the OCS, the State is entitled to royalties on the sale or license of any productwhose development was supported with State participation. These royalties are generally 3% in the first three years from initialrepayment, 4% of sales in the three subsequent years and 5% of sales in the seventh year until repayment of 100% of the grants(linked to the dollar) received by the Company, plus annual interest at the LIBOR rate. Under certain circumstances, the royalty rateis calculated according to a formula based on the ratio of participation by the OCS in the project to the total project costs incurred bythe Company. As of December 31, 2015, the contingent liability for potential royalties payable by the Company for OCS grantsreceived (other than BL-8040 – see below) amounts to $0.2 million.In connection with the in-licensing of BL-8040 from Biokine Therapeutics Ltd. (“Biokine”), and as a condition to OCS consent tothe transaction, the Company agreed to abide by any obligations resulting from funds previously received by Biokine from the OCS.The contingent liability to the OCS assumed by the Company relating to this transaction amounts to approximately $2.7 million asof December 31, 2015. The Company has a full right of offset for amounts payable to the OCS from payments due to Biokine in thefuture. Therefore, in the opinion of management, the likelihood of any future Company payment obligation to the OCS with regardto this matter is remote. 3)Licensing agreementsFrom time to time, the Company enters into in-licensing agreements with academic institutions, research institutions and companies(the “licensors”) in connection with the development of therapeutic compounds. Pursuant to these licensing agreements, theCompany generally obtains the rights for one or more therapeutic compounds in pre-clinical and early-clinical stages ofdevelopment, in order to continue development of the compounds through more advanced stages of development and, subsequently,to manufacture, distribute and market the drugs or to out-license the development, manufacturing and commercialization rights tothird parties. Such development activities are carried out by either the Company and/or by companies or institutions to which theCompany has entered into an out-license agreement, subject to certain restrictions stipulated in the various agreements. F - 39 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) a.Commitments (cont.) 3)Licensing agreements (cont.)The licenses that have been granted to the Company are broad and comprehensive, and generally include various provisions andusage rights as follows: (i) territorial scope of the license (global); (ii) term of the license (unrestricted but not shorter than the life ofthe patent); and (iii) development of the therapeutic compound (allowing the Company to perform all development activities on itsown, or by outsourcing under Company supervision, as well as out-licensing development under the license to other companies,subject to the provisions of the licensing agreements).According to the provisions of the licensing agreements, the intellectual property rights in the development of any licensedtechnology, through the date the applicable license agreement is effective, remain with the licensor, while the rights in productsand/or other deliverables developed by the Company after the license is granted belong to the Company. In cases where the licensorhas a claim to an invention that was jointly developed with the Company, the licensor also co-owns the related intellectual property.In any event, the scope of the license also covers these rights.In addition, the Company generally undertakes in the licensing agreements to protect registered patents resulting from developmentsunder the various licenses, to promote the registration of patents covering new developments in cooperation with the licensor, and tobear responsibility for all related costs. Pursuant to the various agreements, the Company generally works to register the variouspatents on a broad basis worldwide, and if the Company decides not to initiate or continue a patent registration proceeding in agiven country, the Company is required to notify the applicable licensor to this effect and the licensor is entitled to take action forregistration of the patent in such country.The consideration paid pursuant to the licensing agreements generally includes several components that may be payable over thelicense period and that relate, inter alia, to the progress made in research and development activities, as well as commercial success,as follows: (a) one-time payment of up to $200,000 and/or periodic payments of up to $30,000 per year; (b) payments through theearly stages of development ( i.e. through the end of phase 2) of up to $150,000; (c) payments of up to $2,000,000 upon theachievement of milestones necessary for advancing to phase 3; (d) payments of up to $5,000,000 from the end of a successful phase 3trial through approval of the therapeutic compound; and e) royalties on sales of the final product resulting from development underthe license or including any component thereof, ranging between 3%-5% of the Company’s net sales of the product, although inspecific instances the royalty rate has been higher or lower than this range. In instances where the Company has outlicensed theproduct for further development, the Company pays a percentage of the net consideration received from the licensee (“SublicenseReceipts”) to the upstream licensor that generally range from 20% to 29.5% of such consideration , although in specific instances thepercentage paid has been higher or lower than this range. These Sublicense Receipts generally take the place of most or all of themilestone and royalty payments set forth in (b) through (e) above. F - 40 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) a.Commitments (cont.) 3)Licensing agreements (cont.)The license agreements may be cancelled by the licensor only in specific circumstances, generally upon the occurrence of one of thefollowing events: (a) the Company’s failure to meet certain milestones stipulated in the applicable license agreement and appendedtimetables; (b) default, insolvency, receivership, liquidation, etc. of the Company that is not imposed and/or lifted within thetimeframe stipulated in the license agreement; and (c) fundamental breach of the license agreement that is not corrected within thestipulated timeframe. The Company may generally cancel a license agreement with prior notice of 30 to 90 days, due to unsuccessfuldevelopment or any other cause.The Company has undertaken to indemnify certain licensors, their employees, officers, representatives or anyone acting on theirbehalf for any damage and/or expense that they may incur in connection with the Company’s use of a license granted to it, all inaccordance with the terms stipulated in the applicable license agreements.Some of the license agreements are accompanied by consulting, support and cooperation agreements, pursuant to which theCompany is committed to pay the various licensers a fixed monthly amount over the period stipulated in the agreement for theirassistance in the continued research and development under the license. 4)Lease agreements a)In August 2014, the Company entered into an operating lease agreement in connection with the lease of new premises. Paymentsunder the new lease commenced in June 2015 and will expire in June 2020. The monthly lease fee is approximately $27,000(including maintenance fees and parking). The Company has the option to extend the lease for 4 additional lease periodstotaling up to an additional 10 years, each option at a 5% increase to the preceding lease payment amount.As to guarantees provided to secure the Company’s liability under the lease agreements, see Note 13b. b)The Company has entered into operating lease agreements in connection with a number of vehicles. The lease periods aregenerally for three years. The annual lease fees, linked to the CPI, are approximately $240,000. To secure the terms of the leaseagreements, the Company has made certain prepayments to the leasing companies, representing approximately two months oflease payments. These amounts have been recorded as prepaid expenses. See also Note 15b. F - 41 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) a.Commitments (cont.) 5)Early Development Program (“EDP”) agreementOn the signature date of an investment agreement with Pan Atlantic Bank and Trust Limited (“Pan Atlantic”) in 2007, BioLineRxalso entered into an agreement with Pan Atlantic for the funding of an early development program (the “EDP Agreement”).According to the EDP Agreement, Pan Atlantic undertook to provide grants for the promotion of drug-development projects in thepreliminary stages of research in an aggregate amount of up to $5,000,000, in semi-annual “calls” of up to $625,000 each. In parallel,for every dollar of EDP project funding provided by Pan Atlantic, BioLineRx committed to provide twenty cents of funding (i.e., afunding ratio of 5:1). Pan Atlantic’s undertakings under the EDP agreement were not subject to Pan Atlantic being a lender to, or ashareholder of, BioLineRx. During 2012, Pan Atlantic fulfilled its entire $5,000,000 funding commitment under the EDP agreement,and during 2013, the Company utilized the remaining funds available under the program. Amounts recognized as a reduction ofresearch and development expenses in 2013 related to the EDP program were $669,000. b.Contingent liabilitiesGuarantees and liens:To secure the Company’s lease obligation on its premises, the Company has provided a bank guarantee in the amount of $100,000 for thebenefit of the lessor, which was outstanding as of December 31, 2015. As of December 31, 2014, the Company had pledged several dollar-denominated bank deposits in the aggregate amount of $166,000 to secure the lease on its premises.See Note 9a regarding equipment pledged as collateral to secure a bank loan. F - 42 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTSNOTE 14 – TRANSACTIONS AND BALANCES WITH RELATED PARTIESTransactions with related partiesExpenses (income): Year ended December 31, 2013 2014 2015 In USD thousands Participation in EDP project funding* (669) - - Benefits to related parties: Compensation and benefits to senior management, including benefit component ofoption grants 1,590 2,084 1,843 Number of individuals to which this benefit related 5 5 5 Compensation and benefits to directors, including benefit component of optiongrants 192 218 233 Number of individuals to which this benefit related 6 7 7 *This amount relates to a grant received from Pan Atlantic, in accordance with the EDP Agreement as detailed in Note 13a(5). Key management compensationKey management includes directors (executive and non-executive), executive officers and the internal auditor. The compensation paid orpayable to key management for services during each of the years indicated is presented below. Year ended December 31, 2013 2014 2015 In USD thousands Salaries and other short-term employee benefits 1,271 1,704 1,412 Post-employment benefits 121 130 120 Other long-term benefits 16 30 27 Share-based compensation 374 438 517 1,782 2,302 2,076 F - 43 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 15 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION a.Other receivables December 31, 2014 2015 In USD thousands Institutions 250 255 Income receivables - 26 Other 7 10 257 291 b.Long-term prepaid expensesThe prepaid expenses relate to operating lease agreements in respect of the vehicles leased by the Company. c.Accounts payable and accruals December 31, 2014 2015 In USD thousands 1)Trade: Accounts payable: In Israel 558 374 Overseas 1,096 1,536 1,654 1,910 2)Other: Payroll and related expenses 361 209 Accrual for vacation and recreationpay 277 213 Accrued expenses 610 705 Other 4 10 1,252 1,137 The carrying amounts of accounts payable and accruals approximate their fair value, as the effect of discounting is not material. F - 44 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 15 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (cont.) d.Research and development expenses – net Year ended December 31, 2013 2014 2015 In USD thousands Payroll and related expenses, including vehicles 3,545 3,771 3,754 Depreciation and amortization 226 253 414 Write-off of intellectual property 38 97 - Research and development services 7,078 6,050 5,455 Professional fees 1,082 682 772 Materials 17 18 39 Overseas travel 13 12 2 Lab, occupancy and telephone 878 940 926 Other 63 43 127 12,940 11,866 11,489 Less – OCS participation in research and development costs - see also Notes 13a(1) and(2) (63) - - Less – participation in research and development costs by a related party - see Note 14 (669) - - 12,208 11,866 11,489 e.Sales and marketing expenses Year ended December 31, 2013 2014 2015 In USD thousands Payroll and related expenses, including vehicles 486 668 690 Marketing 554 799 243 Overseas travel 96 122 70 1,136 1,589 1,003 F - 45 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 15 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (cont.) f.General and administrative expenses Year ended December 31, 2013 2014 2015 In USD thousands Payroll and related expenses, including vehicles 1,900 2,283 2,003 Professional fees 1,159 884 1,053 Office supplies and telephone 15 14 13 Office maintenance 18 17 30 Insurance 142 146 155 Depreciation 91 16 27 Other 339 440 423 3,664 3,800 3,704 g.Non-operating income, net Year ended December 31, 2013 2014 2015 In USD thousands Issuance costs (271) (103) - Changes in fair value of warrants 1,432 3,454 1,292 Cost reimbursement related to prior year - - 153 Initial commitment and finder’s fees associated with LPC agreement - (290) - 1,161 3,061 1,445 h.Financial income Year ended December 31, 2013 2014 2015 In USD thousands Income from interest and exchange differences on deposits 720 3,566 457 i.Financial expenses Year ended December 31, 2013 2014 2015 In USD thousands Exchange differences 1,877 428 91 Bank commissions 20 20 15 1,897 448 106 F - 46 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 16 – STRATEGIC COLLABORATION AGREEMENT WITH NOVARTISIn December 2014, the Company entered into a multi-year strategic collaboration agreement with Novartis Pharma AG (“Novartis”) designed tofacilitate development and commercialization of Israeli-sourced drug candidates. Novartis will evaluate projects identified and presented by theCompany for co-development and future licensing under the collaboration. The parties intend to co-develop a number of pre-clinical and clinicaltherapeutic projects up to clinical proof of concept.Under the terms of the agreement, Novartis acquired an initial 5,000,000 of the Company’s ADSs, representing 12.8% of the Company’s thenoutstanding share capital, in a private transaction at a price of $2.00 per ADS, for a total equity investment of $10 million. Novartis will not haveany governance rights and has agreed to certain standstill provisions. Novartis and the Company will jointly evaluate both clinical and pre-clinical stage projects presented by the Company via a Joint Steering Committee, which will determine which projects to advance further indevelopment and on what terms. Projects at or reaching the clinical stage will be eligible for selection by Novartis. Upon selection of a project,Novartis will pay the Company an option fee of $5 million, as well as fund 50% of the anticipated remaining development costs associated withestablishing clinical proof-of-concept, in the form of an additional equity investment in the Company. Novartis will have an exclusive right offirst negotiation to license from the Company each selected project upon establishment of clinical proof-of-concept. The companies intend todevelop up to three programs through clinical proof-of-concept pursuant to this collaboration.NOTE 17 – AGREEMENT WITH OMEGA PHARMAIn December 2014, the Company entered into an exclusive out-licensing arrangement with a subsidiary of Omega Pharma NV (“Omega Pharma”)for the rights to BL-5010 for OTC indications in the territory of Europe, Australia and additional selected countries. The Company will retain theOTC rights to BL-5010 in the United States and the rest of the world, as well as the non-OTC rights on a global basis. Under the out-licensingarrangement with Omega Pharma, Omega Pharma is obligated to use commercially reasonable best efforts to obtain regulatory approval in thelicensed territory for at least two OTC indications and to commercialize BL-5010 for those two OTC indications. In addition, Omega Pharma willsponsor and manufacture BL-5010 in the relevant regions. Omega Pharma will pay the Company an agreed amount for each unit sold, and theCompany will be entitled to certain commercial milestone payments. In addition, the Company will have full access to all clinical anddevelopment data generated during the performance of the development plan and may use these data in order to develop or license the product inother territories and fields of use where the Company retains the rights. F - 47 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 18 – OTHER OUT-LICENSING AGREEMENTS a.Agreement with BellerophonIn 2009, the Company entered into an out-licensing agreement with Bellerophon BCM, LLC (“Bellerophon”), pursuant to which theCompany granted Bellerophon an exclusive, worldwide license to develop, manufacture and commercialize BL-1040, a compound for thetreatment of patients that have suffered an acute myocardial infarction. In accordance with the agreement, Bellerophon is obligated to usecommercially reasonable efforts to complete clinical development of and to commercialize BL-1040, and will bear all subsequent costsinvolved in the continued development of the product, the conduct and funding of its commercialization, and the prosecution andmaintenance of patents.Total payments to the Company under the agreement (not including royalties) may reach up to $282,500,000, subject to the achievementof certain milestones. The Company has received payments totaling $17,000,000 since 2009. Approximately 50% of the remainingpayments are subject to development and regulatory milestones and the rest are subject to commercialization milestones. Theabovementioned payments were recognized as revenues in 2009, and future milestone payments will be recognized as revenues if and whentheir receipt will become probable and their amount can be reliably measured. The Company is also entitled to royalties on the net sales ofany product developed under the agreement, ranging from 11% to 15%, depending on annual net sales levels. The out-licensing agreementwith Bellerophon terminates on the date that the last patent rights in respect of BL-1040 are still valid (through at least 2029).In July 2015, Bellerophon reported top-line results from the clinical trial it had been conducting, which showed no statistically significantdifference between patients treated with BL-1040 versus placebo for both the primary and the secondary endpoints of the study. TheCompany has not yet received formal notification from Bellerophon about its plans regarding the future of its development program for BL-8040.The Company is required to pay to the licensors of the BL-1040 compound 28% of all consideration received under the agreement. b.CTTQ Agreement In June 2014, the Company signed an out-licensing agreement with Jiangsu Chia-tai Tianqing Pharmaceutical Co., Ltd. (“CTTQ”), theleading Chinese pharmaceutical company in the liver disease therapeutic area, for the development and commercialization of BL-8030, anorally available treatment for HCV in the pre-clinical stages of development. Under the terms of the agreement, the Company granted CTTQexclusive rights to develop, manufacture and commercialize BL-8030 in China and Hong Kong. In January 2016, CTTQ notified theCompany of its intention to terminate the agreement, which will take effect in April 2016. F - 48 BioLineRx Ltd. NOTES TO THE FINANCIAL STATEMENTS NOTE 19 – EVENT SUBSEQUENT TO THE BALANCE SHEET DATEIn January 2016, the Company announced a collaboration with MSD, known as Merck in the US and Canada, in the field of cancerimmunotherapy. The Company plans to sponsor and conduct a Phase 2 study investigating the Company’s BL-8040 oncology compound incombination with KEYTRUDA®, MSD’s anti-PD-1 therapy, in patients with pancreatic cancer. The study is planned to commence by mid-2016.Upon completion of the study, or at any earlier point, both parties will have the option to expand the collaboration to include a pivotalregistration study. F - 49 Exhibit 4.18 BioLineRx Ltd.Amended and Restated 2003 Share Incentive Plan(as approved effective as of January 7, 2016)(In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002) 1.NameThis plan, as amended from time to time, shall be known as the “BioLineRx Ltd. Amended and Restated 2003 Share Incentive Plan” (the “Plan”). 2.Purpose The purpose and intent of the Plan is to provide incentive: (i) to retain, in the employ of the Company and its Affiliates (as defined below), persons oftraining, experience and ability, (ii) to attract new employees, directors, consultants, service providers and other entities, the services of which shall beconsidered valuable to the Company by the Board of the Company, (iii) to encourage the sense of proprietorship of such persons, and (iv) to stimulatethe active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase shares inthe Company, pursuant to the Plan. 3.Definitions For purposes of the Plan and related documents, including the Incentive Agreement, the following definitions shall apply: 3.1.“Affiliate” means any “employing company” within the meaning of Section 102(a) of the Ordinance. 3.2.“Approved 102 Award” means an Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee (as defined in Section7) for the benefit of Grantee. 3.3.“Approved 102 Security” means an Approved 102 Award and/or an Approved 102 Share. 3.4.“Approved 102 Share” means a Share issued pursuant to Section 102(b) of the Ordinance or a Share derived from an Approved 102 Award, andheld in trust by a Trustee (as defined in Section 7) for the benefit of a Grantee. 3.5.“Articles” means the Articles of Association of the Company, and any subsequent amendments or replacements thereto. 3.6.“Award” means an Option, a Performance Stock Unit award or a Restricted Stock Unit award granted under the Plan. 3.7.“Board” means the Board of Directors of the Company. 3.8.“Capital Gain Security (CGS)” as defined in Section 6.4. 3.9.“Cause” means (i) commitment of a serious breach of trust, including, but not limited to, theft, embezzlement, self-dealing; (ii) prohibiteddisclosure to unauthorized persons or entities of confidential or proprietary information of, or relating to, the Company and/or its Affiliates; (iii)the engaging by Grantee in any prohibited business or activities competitive to the business of the Company and/or its Affiliates; or (iv) any otheraction or omission which may be defined as Cause “justifiable cause” or the like in the respective Grantee’s employment, consulting or serviceagreement with the Company or an Affiliate, as applicable, or under applicable law. 2 3.10.“Chairman” means the chairman of the Committee. 3.11.“Committee” means a share award / share incentive compensation committee appointed by the Board, as may be fixed from time to time by theBoard. 3.12.“Companies Law” means the Israeli Companies Law 5759-1999, as now in effect or as hereafter amended. 3.13.“Company” means BioLineRx Ltd. 3.14.“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance. 3.15.“Date of Grant” means, the date of grant of a Security, as determined by the Board and set forth in Grantee’s Incentive Agreement. 3.16.“Employee” means a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an officeholder, but excluding Controlling Shareholder(s). 3.17.“Exercise Price” means the price for each Share subject to an Award. 3.18.“Expiration Date” means the date upon which an Option shall expire, as set forth in Section 10.2. 3.19.“Fair Market Value” means as of any date, the value of a Share determined as follows: (i)If the Shares are listed on any established stock exchange or a national market system, including without limitation the NASDAQ NationalMarket system, or the NASDAQ SmallCap Market of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price forsuch Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system for the last market trading day prior to timeof determination, as reported in the Wall Street Journal, or such other source as the Board or the Committee deems reliable. Withoutderogating from the above, to the extent the rules of the security exchange on which the Shares are registered require so, the Fair MarketValue shall be determined in accordance with the average value of the Shares during the thirty (30) trading days preceding the date ofdetermination, as reported on such securities exchange records, or any other source the Board deems reliable. (ii)Otherwise, the Fair Market Value shall be determined in good faith by the Board of Directors. (iii)In addition, for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant theCompany’s shares are listed on any established stock exchange or a national market system, the Fair Market Value of a Share at the Date ofGrant shall be determined in accordance with the average value of the Company’s shares on the thirty (30) trading days preceding the Dateof Grant. (iv)If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be themean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination, or; (v)In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board or theCommittee. 3.20.“Grantee” means a person who receives or holds a Security under the Plan. 3.21.“Issuance Price” means the price for each share issued to a Grantee. 3.22.“Non-Employee” means a consultant, adviser or service provider to the Company, who is not an Employee, or a Controlling Shareholder of theCompany. 3 3.23.“Ordinary Income Security (OIS)” as defined in Section 6.5. 3.24.“Option” means an option to purchase one or more Shares of the Company pursuant to the Plan. 3.25.“102 Award” means any Award granted pursuant to Section 102 of the Ordinance to any person who is an Employee. 3.26.“102 Security” means a 102 Award and/or a 102 Share. 3.27.“102 Share” means a Share issued pursuant to Section 102 of the Ordinance or a Share issued upon the exercise or vesting of a 102 Award, asapplicable, to any person who is an Employee. 3.28.“3(i) Award” means an Award granted pursuant to Section 3(i) of the Ordinance to any person who is a Non- Employee. 3.29.“3(i) Security” means a 3(i) Award and/or a 3(i) Share. 3.30.“3(i) Share” means a Share issued pursuant to Section 3(i) of the Ordinance or a Share derived from a 3(i) Award, to any person who is a Non-Employee. 3.31.“Incentive Agreement” means the share award agreement or share incentive agreement between the Company and a Grantee that sets out the termsand conditions of a Security. 3.32.“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961, as now in effect or as hereafter amended. 3.33.“Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals fora Performance Period. The Committee shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use forsuch Performance Period for such Employee or Non-Employee. 3.34.“Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based uponthe Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may beexpressed in terms of overall Company performance or the performance of a division, business unit or an individual. The Committee, in itsdiscretion, may adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargementof an entitlement (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (b) inrecognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company,or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. 3.35.“Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select,over which the attainment of one or more Performance Goals will be measured for the purpose of determining the right to, and the vesting of, aStock Unit. 3.36.“Performance Stock Unit” means a right granted pursuant to Section 13.2, to receive Shares, the entitlement to which is contingent uponachieving certain Performance Goals established by the Committee. 3.37.“Plan” means this BioLineRx Ltd. Amended and Restated 2003 Share Incentive Plan. 3.38.“Restricted Stock Unit” means a right granted pursuant to Section 13.1 to receive Shares subject to vesting conditions as shall be set forth in theIncentive Agreement, such that upon vesting, a Share of the Company shall be automatically issued to the Participant. 3.39.“Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended. 4 3.40.“Security” means an Award or a Share. 3.41.“Share” means an Ordinary Share of the Company, nominal value NIS 0.01 per share, of the Company. 3.42.“TASE” means the Tel-Aviv Stock Exchange. 3.43.“TASE Directives” means the directives, rules and regulations published by the TASE, as established from time to time. 3.44.“Transaction” means (i) a merger, consolidation or reorganization of the Company with or into any other corporation resulting in such othercorporation being the surviving entity or the direct or indirect parent of the Company or resulting in the Company being the surviving entity anda change in the ownership of shares of the Company, such that another person or entity owning fifty percent (50%) or more of the outstandingvoting power of the Company’s securities by virtue of the transaction, or (ii) the sale or transfer of all or substantially all of the outstanding sharesof the Company, (iii) or the sale or transfer of all or substantially all of the assets of the Company. 3.45.“Unapproved 102 Award” means an Award granted pursuant to Section 102(c) of the Ordinance. 3.46.“Unapproved 102 Security” means an Unapproved 102 Award and/or an Unapproved 102 Share. 3.47.“Unapproved 102 Share” means a Share issued pursuant to Section 102(c) of the Ordinance or a Share issued upon the exercise of an Unapproved102 Award. 3.48.“Vesting Dates” means, as determined by the Board or by the Committee, the date as of which Grantee shall be entitled to exercise the Options orpart of the Options or be issued Shares derived from Awards. 4.Administration 4.1.The Plan will be administered by the Board or by a Committee. If a Committee is not appointed, the term Committee, whenever used herein, shallmean the Board. The Board shall appoint the members of the Committee and may, from time to time, remove members from, or add members to,the Committee and shall fill vacancies in the Committee however caused. 4.2.The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as it shall determine. Actionstaken by a majority of the members of the Committee, at a meeting at which a majority of its members is present, or acts reduced to or approved inwriting by all members of the Committee, shall be the valid acts of the Committee. The Committee may appoint a Secretary, who shall keeprecords of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 4.3.Subject to the general terms and conditions of the Plan, the Committee shall have the full authority in its discretion, from time to time and at anytime to: (i) designate Grantees to whom Securities shall be granted; (ii) determine the number of Shares to be covered by each Award; (iii)determine the time or times at which the same shall be granted; (iv) determine the Exercise Price of the Awards and the Vesting Dates; (v)determine the Fair Market Value of the Shares; (vi) make an election as to the type of Approved 102 Securities; (vii) designate the type ofSecurities; (viii) determine any conditions on which the Awards may be exercised, the Awards may be granted and on which such Shares shall bepaid for; and (ix) make all other determinations necessary or desirable for, or incidental to, the administration of the Plan. 4.4.Notwithstanding the above, the Committee shall not be entitled to grant Awards or issue Shares that are not underlying Awards to Grantees,however, it will be authorized to issue Shares underlying Awards which have been granted by the Board and duly exercised pursuant to theprovisions herein in accordance with section 112(a)(5) of the Companies Law. 5 4.5.The Committee may, from time to time, adopt such rules and regulations for carrying out the Plan as it may deem necessary. Without limiting thegenerality of the foregoing, the Committee may adopt special appendices and/or guidelines and provisions for persons who are residing in oremployed in, or subject to, the taxes of, any domestic or foreign jurisdictions, to comply with applicable laws, regulations, or accounting, listingor other rules with respect to such domestic or foreign jurisdictions. 4.6.No member of the Board or of the Committee shall be liable for any act or determination made in good faith with respect to the Plan or anySecurity granted thereunder. Subject to the Company’s decision and to all approvals legally required, each member of the Board or the Committeeshall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him or her, orany liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act inconnection with the Plan unless arising out of such member’s own willful misconduct or bad faith, to the fullest extent permitted by applicablelaw. Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under theCompany’s Articles, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise. 4.7.The interpretation and construction by the Committee of any provision of the Plan or of any Security thereunder shall be final and conclusiveunless otherwise determined by the Board. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Planor in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. 4.8.As long as the Company’s securities are traded on the TASE, the Plan or any Securities granted or issued thereunder, shall be subject to the TASEDirectives, as amended from time to time. If, as a result of any amendments or changes to the TASE Directives, any provision of the Plan or anygrant document thereunder is incompliant with the TASE Directives, such provision shall be deemed amended as required in order to comply withthe applicable TASE Directives, as shall be determined by the Board or Committee. 4.9.It is expressly intended that the Plan shall be administered in accordance with, and subject to the Company’s Executive Compensation Policy forexecutive officers and directors, as shall be in effect from time to time. The Committee shall ensure that actions taken under the Plan, includingwithout limitation, the grant of awards and administration and interpretation of the Plan, shall be made in accordance with such ExecutiveCompensation Policy, as in effect from time to time. 5.Eligible Grantees 5.1.The persons eligible for participation in the Plan as Grantees shall include any Employees and/or Non-Employees of the Company or of anyAffiliate; provided, however, that (i) Employees may only be granted 102 Securities; (ii) Non-Employees may only be granted 3(i) Securities; and(iii) Controlling Shareholders may only be granted 3(i) Securities. Notwithstanding the foregoing, employees and service providers of non-Israeliaffiliates of the Company shall be entitled to participate in the Plan and receive grants of Securities hereunder in accordance with the terms of anIncentive Agreement and/or country-specific appendixes governing the grant of such Securities in a form approved by the Committee. 5.2.The grant of a Security to a Grantee hereunder, shall neither entitle such Grantee to participate, nor disqualify her/him from participating, in anyother grant of Securities pursuant to the Plan or any other Share incentive plan of the Company. 6 6.Designation of Securities Pursuant to Section 102 6.1.The Company may designate Securities granted to Employees pursuant to Section 102 as Unapproved 102 Securities or as Approved 102Securities. 6.2.The grant of Approved 102 Securities may be made under the Plan only following its adoption by the Board as described in Section 19, and shallbe conditioned upon the filing of the Plan with the Israeli Tax Authorities. 6.3.Approved 102 Securities may either be classified as Capital Gain Securities (“CGS”) or Ordinary Income Securities (“OIS”). 6.4.Approved 102 Securities elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisionsof Section 102(b)(2) shall be referred to herein as CGS. 6.5.Approved 102 Securities elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with theprovisions of Section 102(b)(1) shall be referred to herein as OIS. 6.6.The Company’s election of the type of Approved 102 Securities as CGS or OIS granted to Employees (the “Election”), shall be appropriately filedwith the Israeli Tax Authorities before the Date of Grant of any Approved 102 Securities. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Security under the Plan and shall remain in effect untilat least the end of the year following the year during which the Company first granted Approved 102 Securities. The Election shall obligate theCompany to grant only the type of Approved 102 Security it has elected, and shall apply to all Approved 102 Security granted during the periodindicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall notprevent the Company from granting Unapproved 102 Securities simultaneously. 6.7.All Approved 102 Securities must be held in trust by a Trustee, as described in Section 7. 6.8.For the avoidance of doubt, the designation of Unapproved 102 Securities and Approved 102 Securities shall be subject to the terms andconditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder. 6.9.With regards to Approved 102 Securities, the provisions of the Plan and/or the Incentive Agreement shall be subject to the provisions of Section102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the IncentiveAgreement. Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant toSection 102, which is not expressly specified in the Plan or the Incentive Agreement, shall be considered binding upon the Company and theGrantees. 6.10.Approved 102 Securities will be deemed granted on the date approved by the Board and stated in a written or electronic notice by the Company,provided that effective as of such date or within the requisite period thereafter, the Approved 102 Securities have been deposited with a Trustee inaccordance with the requirements of Section 102. Securities will only qualify as Approved 102 Securities if deposited with the Trustee within theterm and in compliance with all conditions required by the Israeli Tax Authorities, as amended and updated from time to time. 7 7.Trustee 7.1.Anything herein to the contrary notwithstanding, Approved 102 Securities granted under the Plan and/or other shares received subsequentlyfollowing any realization of rights with respect to such Securities, including without limitation bonus shares, shall be granted by the Company toa trustee designated by the Board and approved by the Israeli Tax Authorities in accordance with the provisions of Section 102(a) of theOrdinance (the “Trustee”), and held for the benefit of the Grantees for such period of time as required by Section 102 or any regulations, rules(including the Income Tax Rules (Tax Benefits in Stock Issuance to Employees), 2003) or orders or procedures promulgated thereunder (the“Holding Period”). In the event that the requirements for Approved 102 Securities are not met, then the Approved 102 Securities may be treatedas Unapproved 102 Securities, all in accordance with the provisions of Section 102 and regulations promulgated thereunder. 7.2.Notwithstanding anything to the contrary, the Trustee shall not release any Approved 102 Shares prior to the full payment of Grantee’s taxliabilities arising from Approved 102 Securities which were granted to Grantee. 7.3.With respect to any Approved 102 Securities, subject to the provisions of Section 102 and any rules or regulation or orders or procedurespromulgated thereunder, a Grantee shall not sell or release from trust any Approved 102 Share and/or any share received subsequently followingany realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of theOrdinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of theOrdinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Grantee. 7.4.Upon receipt of Approved 102 Securities, Grantee will sign an undertaking to release the Trustee from any liability in respect of any action ordecision duly taken and bona fide executed in relation with the Plan, or any Approved 102 Security granted to Grantee thereunder. 7.5.For the avoidance of doubt, nothing contained herein shall prevent the Company from granting Unapproved 102 Securities and/or 3(i) Securitiesto a trustee designated by the Board, to be held for the benefit of Grantees, all in accordance with the terms and conditions specified by the Board. 8.Reserved Shares The Company has reserved sufficient authorized but unissued Shares for purposes of the Plan and any other present or future share incentive plans of theCompany, subject to adjustments as provided in Section 15. All Shares under the Plan or under any other present or future share incentive plans, inrespect of which the right of a Grantee hereunder or thereunder to hold or purchase the same shall, for any reason, terminate, expire or otherwise cease toexist, shall again be available for issuance and/or grant through Securities under the Plan and such other share incentive plans. 9.Grant of Securities Each Security granted pursuant to the Plan shall be evidenced by a written Incentive Agreement between the Company and Grantee, in such form as theBoard or the Committee shall from time to time approve. Each Incentive Agreement shall state, inter alia, the number of Shares covered thereby, the typeof Security granted thereunder (whether a CGS, OIS, Unapproved 102 Security, 3(i) Security, or other designation), the dates when the Award may beexercised (if applicable) or Award granted, the Exercise Price (if applicable), and such other terms and conditions as the Committee at its discretion mayprescribe, such as, without limitation, vesting or reverse vesting dates, provided that they are consistent with the Plan. 8 10.Term and Vesting of Options 10.1.Subject to the provisions of this Plan, Options granted to a Grantee under the Plan shall vest and become exercisable following the vesting datesand for such number of Shares as set forth in such Grantee’s Incentive Agreement, as determined by the Committee. As well, subject to the Plan,Shares issued to a Grantee shall be released from reverse vesting as set forth in the Grantee’s Incentive Agreement, as determined by theCommittee. A Security may be subject to such other terms and conditions on the time or times when it may be exercised or released from reversevesting, as applicable, as the Committee may deem appropriate. The vesting or reverse vesting provisions of individual Securities may vary. 10.2.Options, to the extent not previously exercised, shall terminate forthwith upon the earlier of: (i) ten (10) years from the Date of Grant (unlessotherwise specified in the Option Agreement); (ii) the expiration in accordance with Section 16; and (ii) the expiration of any extended period inany of the events set forth in Section 14. 11.Issuance Price and Exercise Price of Options The Issuance Price or Exercise Price per Share issued or covered by each Option, as applicable, shall be determined by the Committee in its sole andabsolute discretion; provided, however, that such Issuance Price or Exercise Price shall not be less than the nominal value of the Shares issued or of theShares into which such Option is exercisable, as applicable. Each Incentive Agreement will contain the Issuance Price or Exercise Price determined foreach Grantee. 12.Exercise of Options 12.1.Options shall be exercisable pursuant to the terms under which they were awarded and subject to the terms and conditions of the Plan. 12.2.The exercise of an Option shall be made by a written notice of exercise (the “Notice of Exercise”) delivered by Grantee to the Company at itsprincipal executive office, specifying the number of Shares to be purchased and accompanied by the payment of the Exercise Price, andcontaining such other terms and conditions as the Committee shall prescribe from time to time. 12.3.Anything herein to the contrary notwithstanding, but without derogating from the provisions of Section 14, if any Option has not been exercisedand the Shares covered thereby not paid for until the Expiration Date, the Grantee’s right to such Option and his/her right to acquire theunderlying Shares of such Option shall terminate, all interests and rights of the Grantee in and to the same shall ipso facto expire, and, in the eventthat in connection therewith any Approved 102 Options are still held by the Trustee as aforesaid, the trust with respect thereto shall ipso factoexpire and all of such Approved 102 Options shall again be subject for grant as provided in Section 8. 12.4.Each payment for Shares shall be in respect of a whole number of Shares, and shall be effected in cash or by a cashier’s check payable to the orderof the Company, or such other method of payment acceptable to the Company. 12.5.For the avoidance of doubt, Grantees shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares, norshall they be deemed to be a class of shareholders or creditors of the Company for purpose of the operation of sections 350 and 351 of theCompanies Law or any successor to such section, until registration of Grantee as holder of such Shares in the Company’s register of shareholdersin accordance with the provisions of the Plan, but in case of Options and Shares held by the Trustee, subject to the provisions of Section 7. 12.6.In accordance with the applicable TASE Directives, and as long as the Company’s Shares are traded on TASE, no exercise of Options will bepermitted on the record date for the following events: (a) distribution of bonus shares; (b) rights offering; (c) the distribution of dividends; (d)unification of capital; (e) stock split; or (f) reduction in capital (any of the foregoing “Company Event”). In addition, if the “X Date” (as such termis defined in the TASE Directive) occurs prior to the record date of such Company Event, no exercise of Options will be permitted on such X Date. 9 13.Restricted Stock Units; Performance Stock Units 13.1.Restricted Stock Units. Restricted Stock Units may be granted in such amounts and subject to such terms and conditions as determined by theCommittee. At the time of grant, the Committee shall specify the date or dates on which the Restricted Stock Units shall become fully vested andnon-forfeitable, and may specify such conditions to vesting as it deems appropriate. At the time of grant, the Committee may specify whether anypayment or no payment is due with respect to the issuance of Shares upon vesting of Restricted Stock Units. The Company shall issue oneunrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on a vesting date and not previously forfeited. 13.2.Performance Stock Units. Restricted Stock Units that are linked to any one or more of the Performance Goals (in addition to or in lieu of time-based vesting terms) determined appropriate by the Committee, in each case on a specified date or dates or over any period or periods determinedby the Committee, shall be designated as Performance Stock Units. In making such determinations, the Committee shall consider (among suchother factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the Grantee. 13.3.Term. Except as otherwise provided herein, the term of any Award of Performance Stock Units or Restricted Stock Units shall be set by theCommittee in its discretion. 14.Termination of Engagement 14.1.Subject to the provisions of Section 14.2, unless otherwise provided in the Grantee’s Incentive Agreement, in the event that a Grantee ceases, forany reason, to be employed by or to provide services to the Company or an Affiliate, all Awards granted to such Grantee will immediately expireupon such cessation. For the avoidance of doubt, unless expressly stated otherwise in the Grantee’s Incentive Agreement, in case of such cessationof employment or service, the unvested portion of the Grantee’s Award shall not continue to vest and shall immediately expire. 14.2.Notwithstanding anything to the contrary hereinabove and unless otherwise determined in the Grantee’s Incentive Agreement, an Option may beexercised after the date of cessation of Grantee’s employment or service with the Company or any Affiliates during an additional period of timebeyond the date of such cessation, but only with respect to its vested portion at the time of such termination, as follows: 14.2.1If the Grantee’s termination of employment or service is due to such Grantee’s death or “Disability” (as hereinafter defined), then anyof such Grantee’s vested Options (to the extent exercisable at the time of the Grantee’s termination of employment or service) shall beexercisable by the Grantee’s legal representative, estate of other person to whom the Grantee’s rights are transferred by will or by lawsof descent of distribution for a period of twelve (12) months following such death or termination of employment or service due to“Disability” (but in no event after the Expiration Date), and shall thereafter terminate. For purposes hereof, “Disability” shall mean the inability, due to illness or injury, to engage in any gainful occupation for which theindividual is suited by education, training or experience, which condition continues for at least six (6) consecutive months or anaggregate of six (6) months in any twelve (12)-month period. 10 14.2.2If the Grantee’s termination of employment or service is for any reason other than for Cause, then any of such Grantee’s vested Options(to the extent exercisable at the time of the Grantee’s termination of employment or service) shall be exercisable for a period of ninety(90) days following such termination of employment or service (but in no event after the Expiration Date), and shall thereafterterminate; provided, however, that if the Grantee dies within such ninety-day period, such Options shall be exercisable by theGrantee’s legal representative, estate or other person to whom the Grantee’s rights are transferred by will or by laws of descent ofdistribution for a period of twelve (12) months following the Grantee’s death (but in no event after the Expiration Date), and shallthereafter terminate. 14.2.3In the event of termination for Cause, any Option held by such Grantee (whether or not vested) shall terminate immediately and theGrantee shall have no further rights to purchase Shares pursuant to such Option. 14.3.With respect to Unapproved 102 Securities, if the Grantee ceases to be employed by the Company or any Affiliate, the Grantee shall extend to theCompany and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisionsof Section 102 and the rules, regulation or orders promulgated thereunder. 15.Adjustment Upon Changes in Capitalization Subject to any required action by the shareholders of the Company, the number and type of Shares covered by each outstanding Award, and the numberof Shares which have been authorized for issuance under the Plan but which have not been issued or as to which no Awards have yet been granted orwhich have been returned to the Plan upon cancellation or expiration of an Award or otherwise, as well as the Exercise Price, shall be proportionatelyadjusted for any increase or decrease in the number of issued Shares resulting from a stock split, stock dividend, combination, exchange of shares orreclassification of the Shares, all only if such triggering event generally applies to all Shares. The conversion of any convertible securities of theCompany shall not be deemed to have been “effected without receipt of consideration.” Notwithstanding the above, if the Company distributes bonusshares, the exercise price of the Awards shall not be adjusted, however, the number of Shares covered by each outstanding Award and the number ofShares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Planupon cancellation or expiration of an Award, shall be proportionately adjusted to the increase. Any adjustment shall be made by the Committee, whosedetermination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stockof any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, thenumber or price of Shares subject to the Plan. 16.Consequences of a Transaction, Dissolution, Right Issue or Distribution of Dividend. 16.1.Dissolution; Transaction. Upon the occurrence of any kind of Transaction or voluntarily liquidation or dissolution of the Company(“Dissolution”), any unexercised vested Awards and any unvested Awards existing at that time shall be automatically terminated. 16.2.Notwithstanding the aforesaid, in case of a Transaction that involves sale, transfer or disposal of the securities of the Company (including by wayof a merger in which the Company is the surviving entity), the Grantee’s Awards then outstanding may be assumed or substituted for anappropriate number of shares of each class of shares or other securities and/or assets of the successor company in such Transaction (or a parent orsubsidiary or another affiliate of such successor company) (the “Successor Company”) as were distributed to the shareholders of the Company inrespect of the Transaction. Furthermore, if the consideration received by the shareholders of the Company in respect of the Transaction was notsolely common stock (or its equivalent) of the Successor Company, then the Committee may stipulate that the consideration to be received uponthe exercise of Awards shall be solely common stock (or its equivalent) of the Successor Company. As well, the Committee may stipulate that inlieu of any assumption of Awards for shares or other securities of the Successor Company, such Awards will be substituted for any other type ofasset of the Successor Company as may be fair under the circumstances, including, but not limited to, cash amounts. In the case of suchassumption and/or substitution of shares, appropriate adjustments shall be made to the Exercise Price of the Awards to reflect such action, and allother terms and conditions of the Awards, such as the vesting periods, shall remain in force. 11 16.3.The Company may notify all holders of vested but unexercised Awards, at least 10 (ten) business days before the estimated day of closing of aTransaction or of Dissolution (as shall be determined by the Committee) of such expected event, and such holders shall be required to advise theCompany within 7 (seven) days of such notice, whether they wish to exercise their vested Awards, in accordance with the procedures set forth inthis Plan (regardless of whether or not actual closing of the Transaction or the Dissolution occurs after more than such 7-day period). Such exercisemay be contingent on actual closing of the Transaction or actual occurrence of the Dissolution. Upon the expiration of such 7-day period, noexercise of the Awards shall be allowed unless specifically authorized by the Committee. With respect to a Transaction, the provisions of thisSection 16.3 shall not apply in the event of an assumption or substitution under Section 16.2, including in the event the Awards are substituted forcash consideration. 16.4.If the Board determines in good faith that, in the context of a Transaction, certain Securities have no monetary value and thus do not entitle theholders of such Securities to any consideration under the terms of the Transaction, the Board may determine that such Securities shall terminateeffective as of the effective date of the Transaction. Without limiting the generality of the foregoing, the Board may provide for the termination ofany Award, effective as of the effective date of the Transaction, that has an exercise price that is greater than the per share Fair Market Value at thetime of such Transaction, without any consideration to the holder thereof. 16.5.It is the intention that the Committee’s authority to make determinations, adjustments and clarifications in connection with the treatment ofSecurities shall be interpreted as widely as possible, to allow the Committee maximal power and flexibility to interpret and implement theprovisions of the Plan in the event of a Transaction or Dissolution, provided that the Committee shall determine in good faith that a Grantee’srights are not thereby adversely affected without the Grantee’s express written consent. Without derogating from the generality of the foregoing,the Committee shall have the authority, at its sole discretion, to determine that the treatment of Securities, whether vested or unvested, in aTransaction or Dissolution may differ among individual Grantees or groups of Grantees, provided that the overall economic impact of the differentapproaches determined by the Committee shall be substantively equivalent as of the date of the closing of the Transaction or determination ofDissolution. 16.6.Rights Issue. In the event that the Company offers all the shareholders of the Company securities of the Company by way of a rights issue, theexercise price of the Awards shall not be adjusted, however, the number of Shares resulting from the exercise of the Awards which have yet to beexercised on the date determining the right to acquire the aforesaid securities shall be adjusted to the benefit component of the rights issue assuch is expressed by the ratio between the closing price of the Company’s shares on the TASE on the last trading day prior to the X Date to theshare’s base price prior to the grant of such rights (“X-rights”). 16.7.Distribution of Dividends. In the event of distribution of dividends, in cash of in kind, to all shareholders of the Company (including by way ofcourt approved distribution pursuant to Section 303 of the Companies Law, or other applicable law), the exercise price of outstanding Awards notyet exercised on the date determining the right to receive such dividend shall be adjusted and reduced by the gross dividend amount distributedby the Company per share (or its value in the event of dividend in kind). Other than the adjustments in the exercise price detailed herein, thedistribution of dividend by the Company, in cash of in kind, will not affect the number of Shares covered by each outstanding Award and/or willnot require the Company to make any other adjustments with respect to Awards and or the Shares covered by each Award. 12 17.Transferability; Restrictions 17.1.No Award shall be assignable or transferable by the Grantee to whom granted otherwise than by will or the laws of descent and distribution, and anAward may be exercised during the lifetime of the Grantee only by such Grantee or by such Grantee’s guardian or legal representative. The termsof such Award shall be binding upon the beneficiaries, executors, administrators, heirs and successors of such Grantee. The provisions of thisSection 17.1 applying to Awards shall apply to any Shares subject to reverse vesting, mutatis mutandis. 17.2.Anything herein to the contrary notwithstanding, if, upon a Transaction, all or substantially all of the shares of the Company are to be exchangedfor securities of another company, then Grantee shall be obliged to exchange all Shares such Grantee was issued or purchased under the Plan, inaccordance with the instructions then issued by the Board, whose determination shall be final. 17.3.Grantee acknowledges that, Grantee’s right to sell the Shares may be subject to certain limitations (including a lock-up period), in connection withany registration of the offering of any securities of the Company under the securities laws of any jurisdiction, as will be required by the Companyor its underwriters; and Grantee unconditionally agrees and accepts any such limitations. 17.4.By exercising an Award and/or by being issued a Share hereunder, Grantee agrees not to sell, transfer or otherwise dispose any of the Shares sopurchased by Grantee except in compliance with the United States Securities Act of 1933, as amended, and the rules and regulations thereunder orany other applicable law, and Grantee further agrees that all certificates evidencing any of such shares shall be appropriately legended to reflectsuch restriction. Nothing herein shall be deemed to require the Company to register the Shares under the securities laws of any jurisdiction. TheCompany shall not register any transfer of Shares not made in accordance with the provisions of the Plan, the Company’s Articles and anyapplicable law. 18.Shareholders Rights 18.1.The Grantee shall have no rights of a shareholder with respect to the Shares subject to the Plan until the Grantee shall have exercised the Award (ifapplicable), paid the Exercise Price thereof (if applicable) and become the record holder of the Shares. 18.2.With respect to all exercised Awards or Shares issued under the Plan, the Grantee shall be entitled to receive dividends in accordance with thenumber of such Shares, and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions ofSection 102 and the rules, regulations or orders promulgated thereunder. 13 19.Term and Amendment of the Plan 19.1.The Plan shall be effective as of the day it was adopted by the Board, and shall expire on such date that is twenty (20) years following the Boardadoption of the Plan. 19.2.Subject to applicable laws, the Board may, at any time and from time to time, but when applicable, after consultation with the Trustee, terminate oramend the Plan in any respect. In no event, unless allowed under this Plan, may any action of the Company alter or impair the rights of a Grantee,without his consent, under any Security previously granted to him. Termination of the Plan shall not affect the Committee’s ability to exercise thepowers granted to it hereunder with respect to Securities granted under the Plan prior to the date of such termination. 20.Tax Consequences 20.1.All tax consequences and/or obligations regarding other compulsory payments arising from the issuance of Shares, the grant or exercise of anyAward, from the payment for, or the subsequent disposition of, Shares covered thereby or from any other event or act (of the Company, itsAffiliates, the Trustee or the Grantee) hereunder, shall be borne solely by the Grantee, and the Company and/or its Affiliates, and/or the Trusteeshall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. TheGrantee shall indemnify the Company and/or its Affiliates and/or the Trustee, as applicable, and hold them harmless against and from any and allliability for any such tax (and compulsory payment, if any) or interest or penalty thereon, including without limitation, in respect of Approved102 Securities, liabilities relating to the necessity to withhold, or to have withheld, any such tax (and compulsory payment, if any) from anypayment made to the Grantee. 20.2.The Company or any of its Affiliates and the Trustee may make such provisions and take such steps as it/they may deem necessary or appropriatefor the withholding of all taxes required by law to be withheld with respect to Securities granted under the Plan and the exercise, sale, transfer orother disposition thereof, including, but not limited, to (i) deducting the amount so required to be withheld from any other amount then orthereafter payable to a Grantee, including by deducting any such amount from a Grantee’s salary or other amounts payable to the Grantee, to themaximum extent permitted under law and/or (ii) requiring a Grantee to pay to the Company or any of its Affiliates the amount so required to bewithheld as a condition of the issuance, delivery, distribution or release of any Shares and/or (iii) by causing the exercise of Awards and/or sale ofShares held by or on behalf of the Grantee to cover such liability. In addition, the Grantee will be required to pay any amount, including penalties,that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules. 20.3.The Company and/or, when applicable, the Trustee, shall not be required to release any Share certificate to a Grantee until all required paymentshave been fully made. 20.4.With respect to Unapproved 102 Securities, if the Grantee ceases to be employed by the Company or any Affiliate, the Grantee shall extend to theCompany and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares to the satisfaction of the Company, allin accordance with the provisions of Section 102 and the Income Tax Rules (Tax Benefits in Stock Issuance to Employees), 2003. 14 21.Miscellaneous 21.1.Continuance of Employment or Hired Services: Neither the Plan nor the grant of a Security hereunder shall impose any obligation on theCompany or any Affiliate thereof to continue the employment or service of any Grantee, and nothing in the Plan or in any Security grantedpursuant hereto shall confer upon any Grantee any right to continue in the employ or service of the Company or an Affiliate thereof, or restrict theright of the Company or an Affiliate to terminate such employment or service at any time. 21.2.Lock up: The Grantee will be subject to a lock-up period of up to ninety (90) days beginning on the effective date of any underwritten registrationof the Company’s securities (except to the extent that the relevant shares of the Grantee are part of such underwritten registration), or any longerperiod of time which may be required by the underwriters of such subsequent underwritten registration, or as shall be binding on all othershareholders of the Company. 21.3.Governing Law and Jurisdiction: The Plan and all instruments issued hereunder or in connection herewith, shall be governed by, and interpretedin accordance with, the laws of the State of Israel. The competent courts in Tel Aviv shall have sole and exclusive jurisdiction over any matterspertaining to the Plan. 21.4.Multiple Agreements: The terms of each Security may differ from other Securities granted under the Plan at the same time, or at any other time.The Committee may also grant more than one Security to a given Grantee during the term of the Plan, either in addition to, or in substitution for,one or more Securities previously granted to that Grantee. The grant of multiple Securities may be evidenced by a single Incentive Agreement ormultiple Incentive Agreements, as determined by the Committee. 21.5.Non-Exclusivity of the Plan: The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previouslyapproved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it maydeem desirable, including, without limitation, the granting of stock awards otherwise than under the Plan, and such arrangements may be eitherapplicable generally or only in specific cases. 15Exhibit 4.40 [*] Represents material that has been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request forconfidential treatment under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended. CLINICAL TRIAL COLLABORATION AND SUPPLY AGREEMENT(FOR PANCREATIC CANCER STUDY)(as amended) This CLINICAL TRIAL COLLABORATION AND SUPPLY AGREEMENT (this “Agreement”), made as of January 11, 2016 (the “Effective Date”), is by andbetween Merck Sharp & Dohme B.V., having a place of business at Waarderweg 39, 2031 BN Haarlem, Netherlands (“Merck”) and BioLineRx Ltd., having aplace of business at Modi’in Technology Park, 2 HaMa’ayan Street, Modi’in 7177871, Israel (“BioLineRx”). Merck and BioLineRx are each referred toherein individually as a “Party” and collectively as the “Parties”. RECITALS A. BioLineRx is developing the BioLineRx Compound (as defined below) for the treatment of certain tumor types. B. Merck is developing the Merck Compound (as defined below) for the treatment of certain tumor types. C. BioLineRx desires to sponsor a clinical trial in which the BioLineRx Compound and the Merck Compound would be dosed concurrently or incombination. D. Merck and BioLineRx, consistent with the terms of this Agreement, desire to collaborate as more fully described herein, including by providingthe Merck Compound and the BioLineRx Compound for the Study (as defined below). NOW, THEREFORE, in consideration of the premises and of the following mutual promises, covenants and conditions, the Parties, intending to be legallybound, mutually agree as follows: 1. Definitions. For all purposes of this Agreement, the capitalized terms defined in this Article 1 and throughout this Agreement shall have the meanings herein specified. 1.1 “Affiliate” means, with respect to either Party, a firm, corporation or other entity which directly or indirectly owns or controls said Party, oris owned or controlled by said Party, or is under common ownership or control with said Party. As used in this Section 1.1, the word “control” means (i) thedirect or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, or (ii) possession, directly or indirectly, ofthe power to direct the management or policies of a legal entity, whether through the ownership of voting securities, contract rights, voting rights, corporategovernance or otherwise. 1.2 “Agreement” means this agreement, as amended by the Parties from time to time, and as set forth in the preamble.  1.3 “Alliance Manager” has the meaning set forth in Section 3.10. 1.4 “Applicable Law” means all federal, state, local, national and regional statutes, laws, rules, regulations and directives applicable to aparticular activity hereunder, including performance of clinical trials, medical treatment and the processing and protection of personal and medical data, thatmay be in effect from time to time, including those promulgated by the United States Food and Drug Administration (“FDA”), national regulatory authorities,the European Medicines Agency (“EMA”) and any successor agency to the FDA or EMA or any agency or authority performing some or all of the functionsof the FDA or EMA in any jurisdiction outside the United States or the European Union (each a “Regulatory Authority” and collectively, “RegulatoryAuthorities”), and including cGMP and GCP (each as defined below); all data protection requirements such as those specified in the EU Data ProtectionDirective and the regulations issued under the United States Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); export control andeconomic sanctions regulations which prohibit the shipment of United States-origin products and technology to certain restricted countries, entities andindividuals; anti-bribery and anti-corruption laws pertaining to interactions with government agents, officials and representatives; laws and regulationsgoverning payments to healthcare providers; and any United States or other country’s or jurisdiction’s successor or replacement statutes, laws, rules,regulations and directives relating to the foregoing. 1.5 “BioLineRx” has the meaning set forth in the preamble. 1.6 [Deleted] 1.7 “BioLineRx Class Compound” means any small or large molecule that [*] 1.8 “BioLineRx Compound” means BioLineRx’s BL-8040, a short synthetic peptide, which is a CXCR4 inhibitor. 1.9 “BioLineRx Inventions” is defined in Section 10.2. 1.10 “Business Day” means any day other than a Friday (in the case of BioLineRx), Saturday, Sunday, or a day on which commercial bankslocated in the country where the applicable obligations are to be performed are authorized or required by law to be closed. 1.11 “cGMP” means the current Good Manufacturing Practices officially published and interpreted by EMA, FDA and other applicableRegulatory Authorities that may be in effect from time to time and are applicable to the Manufacture of the Compounds. 1.12 “Clinical Data” means all data (including raw data) and results generated by or on behalf of either Party or at either Party’s direction, or byor on behalf of the Parties together or at their direction, in the course of each such Party’s performance of the Study; excluding, however, Sample TestingResults. 1.13 “Clinical Quality Agreement” has the meaning set forth in Section 8.2. 1.14 “CMC” means “Chemistry Manufacturing and Controls” as such term of art is used in the pharmaceutical industry. 2 1.15 “Compounds” means the BioLineRx Compound and the Merck Compound. A “Compound” means either the BioLineRx Compound orthe Merck Compound, as applicable. 1.16 “Combination” means the use or method of using the BioLineRx Compound and the Merck Compound in concomitant or sequentialadministration. 1.17 “Confidential Information” means any information, Know-How or other proprietary information or materials furnished to one Party(“Receiving Party”) by or on behalf of the other Party (“Disclosing Party”) pursuant to this Agreement, except to the extent that such information ormaterials: (a) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party, asdemonstrated by competent evidence; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to theReceiving Party; (c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act oromission of the Receiving Party in breach of this Agreement; (d) was disclosed to the Receiving Party by a Third Party who had no obligation to theDisclosing Party not to disclose such information to others; or (e) was subsequently developed by the Receiving Party without use of the Disclosing PartyConfidential Information, as demonstrated by competent evidence. 1.18 “Continuing Party” has the meaning set forth in Section 10.1.3. 1.19 “Control” or “Controlled” means, with respect to particular information or intellectual property, that the applicable Party owns or has alicense to such information or intellectual property and has the ability to grant a right, license or sublicense to the other Party as provided for herein withoutviolating the terms of any agreement or other arrangement with any Third Party. 1.20 “CTA” means an application to a Regulatory Authority for purposes of requesting the ability to start or continue a clinical trial. 1.21 “Data Sharing and Sample Testing Schedule” means the schedule attached hereto as Schedule I. 1.22 “Defending Party” has the meaning set forth in Section 14.2.3. 1.23 “Delivery” has the meaning set forth in Section 8.4.1. 1.24 “Direct Manufacturing Costs” has the meaning set forth in Section 6.12. 1.25 “Disposition Package” has the meaning set forth in Section 8.8.1. 1.26 “Dispute” has the meaning set forth in Section 22.1. 1.27 “Effective Date” has the meaning set forth in the preamble. 1.28 “EMA” has the meaning set forth in the definition of Applicable Law. 1.29 “Exclusion List” has the meaning set forth in the definition of Violation. 1.30 “FDA” has the meaning set forth in the definition of Applicable Law. 1.31 “Filing Party” has the meaning set forth in Section 10.1.3. 3 1.32 “Force Majeure” has the meaning set forth Section 16. 1.33 “GAAP” has the meaning set forth in Section 6.12. 1.34 “GCP” means the Good Clinical Practices officially published by EMA, FDA and the International Conference on Harmonisation ofTechnical Requirements for Registration of Pharmaceuticals for Human Use (ICH) that may be in effect from time to time and are applicable to the testing ofthe Compounds. 1.35 “Government Official” means: (a) any officer or employee of a government or any department, agency or instrument of a government; (b)any Person acting in an official capacity for or on behalf of a government or any department, agency, or instrument of a government; (c) any officer oremployee of a company or business owned in whole or part by a government; (d) any officer or employee of a public international organization such as theWorld Bank or United Nations; (e) any officer or employee of a political party or any Person acting in an official capacity on behalf of a political party;and/or (f) any candidate for political office; who, when such Government Official is acting in an official capacity, or in an official decision-making role, hasresponsibility for performing regulatory inspections, government authorizations or licenses, or otherwise has the capacity to make decisions with thepotential to affect the business of either of the Parties. 1.36 “HIPAA” has the meaning set forth in the definition of Applicable Law. 1.37 “IND” means any Investigational New Drug Application filed or to be filed with the FDA as described in Title 21 of the U.S. Code ofFederal Regulations, Part 312, and/or the equivalent application in the jurisdictions outside the United States, including an “Investigational MedicinalProduct Dossier” filed or to be filed with Regulatory Authorities in the European Union. 1.38 “Indirect Manufacturing Costs” has the meaning set forth in Section 6.12. 1.39 “Inventions” means all inventions and discoveries, whether or not patentable, that are made, conceived, or first actually reduced to practiceby or on behalf of a Party, or by or on behalf of the Parties together, (i) in the design or performance of the Study, or in the design or performance of any PhaseIII registration study for the Combination performed pursuant to Section 3.14, or (ii) through use of any unpublished Clinical Data or Sample Testing Results. 1.40 “Joint Development Committee” or “JDC” has the meaning set forth in Section 3.10. 1.41 “Joint Patent Application” has the meaning set forth in Section 10.1.3. 1.42 “Joint Patent” means a patent that issues from a Joint Patent Application. 1.43 “Jointly Owned Invention” has the meaning set forth in Section 10.1.1. 1.44 “Know-How” means any proprietary invention, innovation, improvement, development, discovery, computer program, device, trade secret,method, know-how, process, technique or the like, including manufacturing, use, process, structural, operational and other data and information, whether ornot written or otherwise fixed in any form or medium, regardless of the media on which contained and whether or not patentable or copyrightable, that is notgenerally known or otherwise in the public domain. 4 1.45 “Liability” has the meaning set forth in Section 14.2.1. 1.46 “Manufacture,” “Manufactured,” or “Manufacturing” means all activities related to the manufacture of a Compound, including planning,purchasing, manufacture, processing, compounding, storage, filling, packaging, waste disposal, labeling, leafleting, testing, quality assurance, sampleretention, stability testing, release, dispatch and supply, as applicable. 1.47 “Manufacturer’s Release” or “Release” has the meaning ascribed to such term in the Clinical Quality Agreement. 1.48 “Manufacturing Costs” has the meaning set forth in Section 6.12. 1.49 “Manufacturing Site” means the facilities where a Compound is Manufactured by or on behalf of a Party, as such Manufacturing Site maychange from time to time in accordance with Section 8.7. 1.50 “Merck” has the meaning set forth in the preamble. 1.51 [Deleted] 1.52 “Merck Compound” means pembrolizumab, a humanized anti-human PD-1 monoclonal antibody [*] 1.53 “Merck Inventions” is defined in Section 10.3. 1.54 “NDA” means a New Drug Application, Biologics License Application, Worldwide Marketing Application, Marketing AuthorizationApplication, filing pursuant to Section 510(k) of the United States Federal Food, Drug and Cosmetic Act, or similar application or submission for a marketingauthorization of a product filed with a Regulatory Authority to obtain marketing approval for a biological, pharmaceutical or diagnostic product in thatcountry or in that group of countries. 1.55 “Non-Conformance” means, with respect to a given unit of Compound, (i) a deviation from an approved cGMP requirement with respect tothe applicable Compound, such as a procedure, Specification, or operating parameter, or a circumstance that requires an investigation to assess impact to thequality of the applicable Compound or (ii) that such Compound failed to meet the applicable representations and warranties set forth in Section2.3. Classification of the Non-Conformance is detailed in the Clinical Quality Agreement. 1.56 “Non-Filing Party” has the meaning set forth in Section 10.1.3. 1.57 “Opting-out Party” has the meaning set forth in Section 10.1.3. 1.58 “Other Party” has the meaning set forth in Section 14.2.3. 1.59 “Party/Parties” has the meaning set forth in the preamble. 1.60 “PD-1 Antagonist” means any small or large molecule that [*]. 1.61 “Permitted Use” has the meaning set forth in Section 3.7. 1.62 “Person” means any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporatedorganization, association, limited liability company, institution, public benefit corporation, joint venture, entity or governmental entity. 5 1.63 “Pharmacovigilance Agreement” has the meaning set forth in Section 5.1. 1.64 “Project Manager” has the meaning set forth in Section 3.10. 1.65 “Protocol” means the written documentation that describes the Study and sets forth specific activities to be performed as part of the Studyconduct, to be finalized and agreed upon within sixty (60) calendar days after the Effective Date pursuant to Section 4.1. 1.66 “Regulatory Approvals” means, with respect to a Compound, any and all permissions (other than the Manufacturing approvals) required tobe obtained from Regulatory Authorities and any other competent authority for the development, registration, importation, sale and distribution of suchCompound in the United States, Europe or other applicable jurisdictions for use in the Study. 1.67 “Regulatory Documentation” means, with respect to the Compounds, all submissions to Regulatory Authorities in connection with thedevelopment of such Compounds, including all INDs and amendments thereto, NDAs and amendments thereto, drug master files, correspondence withregulatory agencies, periodic safety update reports, adverse event files, complaint files, inspection reports and manufacturing records, in each case togetherwith all supporting documents (including documents that include Clinical Data). 1.68 “Regulatory Authorities” has the meaning set forth in the definition of Applicable Law. 1.69 “Related Agreements” means the Pharmacovigilance Agreement and the Clinical Quality Agreement. 1.70 “Right of Reference” means the “right of reference” defined in 21 CFR 314.3(b), including with regard to a Party, allowing the applicableRegulatory Authority in a country to have access to relevant information (by cross-reference, incorporation by reference or otherwise) contained inRegulatory Documentation (and any data contained therein) filed with such Regulatory Authority with respect to a Party’s Compound, only to the extentnecessary for the conduct of the Study in such country or as otherwise expressly permitted or required under this Agreement to enable a Party to exercise itsrights or perform its obligations hereunder. 1.71 “SAEs” has the meaning set forth in Section 5.1. 1.72 “SADRs” has the meaning set forth in Section 5.1. 1.73 “Samples” means biological specimens collected from subjects participating in the Study, including urine, blood and tissue samples. 1.74 “Sample Testing” means the analyses to be performed by each Party using the applicable Samples, as described in the Data Sharing andSample Testing Schedule (Schedule I). 6 1.75 “Sample Testing Results” means those results arising from the Sample Testing which are shared between Merck and BioLineRx, as set forthin the Data Sharing and Sample Testing Schedule. 1.76 “Specifications” means, with respect to a given Compound, the set of requirements for such Compound as set forth in the Clinical QualityAgreement. 1.77 “Study” means a Phase IIa clinical trial carried out in accordance with the Protocol to evaluate the safety, pharmacokinetics,pharmacodynamics, and preliminary efficacy of the concomitant and/or sequenced administration of the Merck Compound and the BioLineRx Compound insubjects with pancreatic cancer. 1.78 “Study Completion” has the meaning set forth in Section 3.11. 1.79 “Subcontractors” has the meaning set forth in Section 2.4. 1.80 “Term” has the meaning set forth in Section 6.1. 1.81 “Territory” means anywhere in the world. 1.82 “Third Party” means any Person or entity other than BioLineRx, Merck or their respective Affiliates. 1.83 “VAT” has the meaning set forth in Section 8.16. 1.84 “Violation” means that a Party or any of its officers or directors or any other personnel (or other permitted agents of a Party performingactivities hereunder) has been: (1) convicted of any of the felonies identified among the exclusion authorities listed on the U.S. Department of Health andHuman Services, Office of Inspector General (OIG) website, including 42 U.S.C. 1320a-7(a) (http://oig.hhs.gov/exclusions/authorities.asp); (2) identified inthe OIG List of Excluded Individuals/Entities (LEIE) database (http://exclusions.oig.hhs.gov/) or listed as having an active exclusion in the System forAward Management (http://www.sam.gov); or (3) listed by any US Federal agency as being suspended, proposed for debarment, debarred, excluded orotherwise ineligible to participate in Federal procurement or non-procurement programs, including under 21 U.S.C. 335a(http://www.fda.gov/ora/compliance_ref/debar/) (each of (1), (2) and (3) collectively the “Exclusions Lists”). 2Scope of the Agreement. 2.1 Generally. Each Party shall contribute to the Study such resources as are necessary to fulfill its obligations set forth in this Agreement andmore specifically described in Article 7. 2.2 Obligations. Each Party shall act in good faith in performing its obligations under this Agreement and each Related Agreement, and shallnotify the other Party as promptly as possible in the event of any Manufacturing delay that is likely to adversely affect supply of its Compound ascontemplated by this Agreement. 2.3 Compound Commitments. BioLineRx shall Manufacture and supply the BioLineRx Compound for purposes of the Study in accordancewith Article 8, and BioLineRx hereby represents and warrants to Merck that, at the time of Delivery of the BioLineRx Compound, such BioLineRxCompound shall have been Manufactured and supplied in compliance with: (i) the Specifications for the BioLineRx Compound; (ii) the Clinical QualityAgreement; and (iii) all Applicable Law, including cGMP and health, safety and environmental protections. Merck shall Manufacture and supply the MerckCompound for purposes of the Study in accordance with Article 8, and Merck hereby represents and warrants to BioLineRx that, at the time of Delivery of theMerck Compound, such Merck Compound shall have been Manufactured and supplied in compliance with: (a) the Specifications for the Merck Compound;(b) the Clinical Quality Agreement; and (c) all Applicable Law, including cGMP and health, safety and environmental protections. Without limiting theforegoing, each Party is responsible for obtaining all regulatory approvals (including facility licenses) that are required to Manufacture its Compound inaccordance with Applicable Law (provided that for clarity, BioLineRx shall be responsible for obtaining Regulatory Approvals for the Study as set forth inSection 3.4). 7 2.4 Subcontracting. Each Party shall have the right to subcontract any portion of its obligations hereunder: (i) to its own Affiliates, withoutthe other Party’s written consent; or (ii) to Third Parties; provided that the JDC has approved (in a written document) the use of such Third Parties in theperformance of such activities prior to such Third Parties performing such activities; [*] (such Third Parties described above, “Subcontractors”). In anyevent, each Party shall remain solely and fully liable for the performance of its Affiliates and Subcontractors to which such Party delegates the performance ofits obligations under this Agreement. Each Party shall ensure that each of its Affiliates and Subcontractors performs such Party’s obligations pursuant to theterms of this Agreement, including the Appendices attached hereto. For clarity, to the extent that a Party has an obligation under this Agreement to performan action or to meet a standard, and such Party subcontracts such obligation, such Party shall be responsible for any failure by such Party’s Affiliates orSubcontractor to perform the action or meet the standard. Each Party shall use reasonable efforts to obtain and maintain copies of documents relating to theobligations performed by such Affiliates and Subcontractors that are required to be provided to the other Party under this Agreement. 2.5 Compounds. This Agreement does not create any obligation on the part of Merck to provide the Merck Compound for any activities otherthan the Study, nor does it create any obligation on the part of BioLineRx to provide the BioLineRx Compound for any activities other than the Study,except as expressly set forth in Section 3.14. 2.6 Relationship. Other than as expressly set forth in this Agreement, including Sections [*] and [*], or this Section 2.6, nothing in thisAgreement shall (i) prohibit either Party from performing clinical studies other than the Study relating to its own Compound, either individually or incombination with any other compound or product, in any therapeutic area, or (ii) create an exclusive relationship between the Parties with respect to anyCompound. 3Conduct of the Study. 3.1 Sponsor. BioLineRx shall act as the sponsor of the Study under a new solid tumors IND for the BioLineRx Compound with a Right ofReference to the IND of the Merck Compound as further described in Section 3.4; provided, however, that in no event shall BioLineRx file an additional INDfor the Study unless required by Regulatory Authorities to do so. If a Regulatory Authority requests an additional IND for the Study the Parties shall meetand mutually agree on an approach to address such requirement. 3.2 Performance. BioLineRx shall ensure that the Study is performed in accordance with this Agreement, the Protocol and all Applicable Law,including GCP. BioLineRx shall follow all applicable directions from applicable Regulatory Authorities, ethics committees and institutional review boardswith jurisdiction over the Study, and shall obtain all applicable Regulatory Approvals required by applicable Regulatory Authorities, ethics committees andinstitutional review boards with jurisdiction over the Study prior to initiating performance of the Study. 8 3.3 Debarred Personnel; Exclusion Lists. A Party shall not employ or subcontract with any Person or Third Party that is excluded, debarred,suspended, proposed for suspension or debarment, in Violation or otherwise ineligible for government programs for the performance of the Study or any otheractivities under this Agreement or the Related Agreements. Each Party hereby certifies that it has not employed or otherwise used in any capacity and willnot employ or otherwise use in any capacity, the services of any Person suspended, proposed for debarment, or debarred under United States law, including 21 USC 335a, or any foreign equivalent thereof, in performing any portion of the Study or other activities under this Agreement or the Related Agreementsand that such Party has, as of the Effective Date, screened itself, and its officers and directors, against the Exclusions Lists and that it has informed the otherParty in writing whether it or any of its officers or directors has been in Violation. A Party shall notify the other Party in writing immediately if any suchsuspension, proposed debarment, debarment or Violation occurs or comes to its attention, and shall, with respect to any Person so suspended, proposed fordebarment, debarred or in Violation, promptly remove such Person from performing activities, function or capacity related to the Study or otherwise related toactivities under this Agreement or the Related Agreements. 3.4 Regulatory Matters. BioLineRx shall ensure that all Regulatory Approvals from any Regulatory Authority, ethics committees and/orinstitutional review boards with jurisdiction over the Study are obtained prior to initiating performance of the Study. Merck shall have the right (but noobligation) to participate in any discussions with a Regulatory Authority regarding matters related to the Merck Compound. Each Party shall provide to theother, as necessary, a cross-reference letter or similar communication to the applicable Regulatory Authority to effectuate the Right ofReference. Notwithstanding anything to the contrary in this Agreement, neither Party shall have any right to access the other Party’s CMC data with respectto its Compound. Merck shall authorize FDA and other applicable Regulatory Authorities to cross-reference the appropriate Merck Compound INDs andCTAs to provide data access to BioLineRx sufficient to support conduct of the Study. If Merck’s CTA is not available in a given country, Merck will file itsCMC data with the Regulatory Authority for such country, referencing BioLineRx’s CTA as appropriate (however, BioLineRx shall have no right to directlyaccess the CMC data). 3.5 Documentation. Each Party shall maintain reports and all related documentation in good scientific manner and in compliance withApplicable Law. Each Party shall provide to the other Party Study information and documentation reasonably requested by the other Party to enable theother Party to (i) comply with any of its legal, regulatory and/or contractual obligations, or any request by any Regulatory Authority, related to the such otherParty’s Compound, and (ii) in the case of Merck, to determine whether the Study has been performed in accordance with this Agreement. 3.6 Copies. BioLineRx shall provide to Merck copies of all Clinical Data, in electronic form or other mutually agreeable alternate form and onthe timelines specified in the Data Sharing and Sample Testing Schedule (if applicable) or upon mutually agreeable timelines [*]. BioLineRx shall ensurethat all patient authorizations and consents required under HIPAA, the EU Data Protection Directive or any other similar Applicable Law in connection withthe Study permit such sharing of Clinical Data with Merck. 9 3.7 Samples. BioLineRx shall provide Samples to Merck as specified in the Protocol or as agreed to by the Joint DevelopmentCommittee. Each Party shall use the Samples only for the Sample Testing and each Party shall conduct the Sample Testing solely in accordance with theData Sharing and Sample Testing Schedule (Schedule I) and the Protocol. Merck shall own all data arising from the Sample Testing conducted in accordancewith this Section 3.7 by or on behalf of Merck, and such data shall be Merck’s Confidential Information. Merck shall provide to BioLineRx the SampleTesting Results for such Sample Testing conducted by or on behalf of Merck, in electronic form or other mutually agreeable alternate form, and on thetimelines specified in the Data Sharing and Sample Testing Schedule or other mutually agreed timelines. Likewise, BioLineRx shall own all data arisingfrom the Sample Testing conducted in accordance with this Section 3.7 by or on behalf of BioLineRx, and such data shall be BioLineRx’s ConfidentialInformation. BioLineRx shall provide to Merck the Sample Testing Results for such Sample Testing conducted by or on behalf of BioLineRx, in electronicform or other mutually agreeable alternate form, and on the timelines specified in the Data Sharing and Sample Testing Schedule or other mutually agreedtimelines. Except to the extent otherwise agreed in a writing signed by authorized representatives of each Party, each Party shall use the other Party’sunpublished Sample Testing Results only for [*] (collectively, the “Permitted Use”). Any Sample Testing Results obtained by a Party which may havesafety implications with respect to the Combination or a Compound will be immediately shared with the other Party. [*] If either Party chooses not toconduct or determines that it is unable to conduct one or more of the Sample tests set forth in Schedule I, the Parties shall consult with each other, and if thereis no legal or Third Party contractual restriction on the other Party conducting such tests, the other Party shall have the right to conduct such tests, in whichcase the data from such Sample Testing shall be owned by such other Party and shall be deemed to be such Party’s Confidential Information. 3.8 Ownership and Use of Clinical Data. All Clinical Data, including raw data and results, generated under this Agreement shall be jointlyowned by BioLineRx and Merck. Merck hereby assigns to BioLineRx an undivided one-half interest in, to and under the Clinical Data. BioLineRx herebyassigns to Merck an undivided one-half interest in, to and under the Clinical Data. If such assignment cannot or does not occur, including in circumstanceswhere such assignment is precluded by law, the Party with the obligation to assign hereby grants the other Party a non-exclusive license, with the right togrant sublicenses and to assign its license rights to the Clinical Data to any Person, in each case without the consent of the granting Party and without anyaccounting to such Party; provided that each such sublicensee and assignee is bound in writing to comply with the terms of this Agreement that are relevantto use and exploitation of such Clinical Data. BioLineRx shall maintain the Clinical Data in its internal database; provided, however, that at all times duringthe Term BioLineRx shall grant Merck access to all Clinical Data and any portions of BioLineRx’s database that include Clinical Data. Notwithstanding theforegoing, and subject to the remaining provisions of this Section 3.8, [*] provided, however, that the foregoing shall not limit or restrict either Party’s abilityto use the Clinical Data as may be necessary to comply with Applicable Law or as may be necessary to comply with its internal policies and procedures withrespect to pharmacovigilance and adverse event reporting. For the avoidance of doubt, BioLineRx shall be free to use/share (including publish) data andresults from the Study, including Clinical Data, which are solely related to the single-agent use of the BioLineRx Compound and are not related to theCombination, and which have been generated during the treatment period in which the BioLineRx Compound is used in monotherapy. Neither Party shalldisclose the Clinical Data to a Third Party except to the extent that such Clinical Data has been published as provided in Section 12.2 [*]. 10 3.9 Regulatory Submission. It is understood and acknowledged by the Parties that positive Clinical Data could be used to obtain label changesfor the Compounds. In such event, the Parties will enter into good faith negotiations to determine a regulatory submission strategy for the Compounds [*]. 3.10 Joint Development Committee. The Parties shall form a joint development committee (the “Joint Development Committee” or “JDC”),made up of an equal number of representatives of Merck and BioLineRx, which shall have responsibility of coordinating all regulatory and other activitiesunder, and pursuant to, this Agreement. Each Party shall designate a project manager (the “Project Manager”) who shall be responsible for implementingand coordinating activities, and facilitating the exchange of information between the Parties, with respect to the Study. Other JDC members will be agreed byboth Parties. The JDC shall meet as soon as practicable after the Effective Date and then no less than twice yearly, and more often as reasonably considerednecessary at the request of either Party, to provide an update on the progress of the Study. The JDC may meet in person or by means of teleconference,Internet conference, videoconference or other similar communications equipment. Prior to any such meeting, the BioLineRx Project Manager shall providean update in writing to the Merck Project Manager, which update shall contain information about the overall progress of the Study, recruitment status,interim analysis (if results available), final analysis and other information relevant to the conduct of the Study. In addition to a Project Manager, each Partyshall designate an alliance manager (the “Alliance Manager”), who shall endeavor to ensure clear and responsive communication between the Parties andthe effective exchange of information, and shall serve as the primary point of contact for any issues arising under this Agreement. The Alliance Managersshall have the right to attend all JDC meetings and may bring to the attention of the JDC any matters or issues either of them reasonably believes should bediscussed, and shall have such other responsibilities as the Parties may mutually agree in writing. In the event that an issue arises and the Alliance Managerscannot or do not, after good faith efforts, reach agreement on such issue, the issue shall be elevated to the Head of Clinical Oncology for Merck and the VicePresident of Medical Affairs or Business Development for BioLineRx. 3.11 Final Study Report. BioLineRx shall provide Merck with (i) an electronic draft of the final Study report, for Merck to provide comments toBioLineRx within [*] days of receipt of the draft of the final Study report and (ii) a final version of the final Study report (the “Final Study Report”) promptlyfollowing Study Completion. BioLineRx shall consider in good faith any comments provided by Merck on the draft of the final Study report and shall notinclude any statements relating to the Merck Compound [*]. “Study Completion” shall occur upon database lock of the Study results. 3.12 [*] 3.13 [*] 3.14 Amendment to Agreement; Study Option. Upon Study Completion (or at any earlier point agreed upon by the Parties), either Party shallhave the option to propose amending this Agreement and the Related Agreements for the purpose of including a Phase III registration study for theCombination [*] 11 4Protocol and Related Documents. 4.1 Protocol. A summary of the initial Protocol will be finalized and agreed upon by the Parties within [*] days after the Effective Date, usingthe most recent draft discussed between the Parties attached hereto as Appendix A. BioLineRx shall provide a draft of the Protocol (and any subsequentrevisions thereof) to Merck for Merck’s review and comment, consistent with the remaining provisions of this Section 4.1. 4.1.1 Notwithstanding the provisions of Section 4.1, each Party shall have the following decision rights: a) BioLineRx shall have the final decision-making authority with respect to the contents of the Protocol, provided that anymaterial changes to any draft of the Protocol (other than relating solely to the BioLineRx Compound) from the draft of the Protocol previously provided toMerck, any material changes (other than relating solely to the BioLineRx Compound) to the approved final Protocol, and [*], shall require Merck’s priorwritten consent. Any such proposed changes will be sent in writing to Merck’s Project Manager and Merck’s Alliance Manager. Merck will provide suchconsent, or a written explanation for why such consent is being withheld, within [*] Business Days of receiving a copy of BioLineRx’s requested changes. b) [*] c) [*] 4.2 Informed Consent. BioLineRx shall prepare the patient informed consent form for the Study (which shall include provisions regarding theuse of Samples in Sample Testing) in consultation with Merck (it being understood and agreed that the portion of the informed consent form relating to theSample Testing of the Merck Compound shall be provided to BioLineRx by Merck). Any proposed changes to such form that relate to the MerckCompound, including Sample Testing of the Merck Compound, shall be subject to Merck’s review and written consent. Any such proposed changes will besent in writing to Merck’s Project Manager and Merck’s Alliance Manager. Merck will provide such consent, or a written explanation for why such consent isbeing withheld, within [*] Business Days of receiving a copy of BioLineRx’s requested changes. 5Adverse Event Reporting. 5.1 BioLineRx will be solely responsible for compliance with all Applicable Law pertaining to safety reporting for the Study and relatedactivities. The Parties will use their reasonable efforts to execute a pharmacovigilance agreement (“Pharmacovigilance Agreement”) within [*] days of theEffective Date, and in any event prior to the initiation of clinical activities under the Study to ensure the exchange of relevant safety data within appropriatetimeframes and in an appropriate format to enable the Parties to fulfill local and international regulatory reporting obligations and to facilitate appropriatesafety reviews. The Pharmacovigilance Agreement will include safety data exchange procedures governing the coordination of collection, investigation,reporting, and exchange of information concerning any adverse experiences, pregnancy reports, and any other safety information arising from or related tothe use of the Merck Compound and BioLineRx Compound in the Study, consistent with Applicable Law. Such guidelines and procedures shall be inaccordance with, and enable the Parties and their Affiliates to fulfill, local and international regulatory reporting obligations to GovernmentAuthorities. BioLineRx will transmit to Merck serious adverse drug reactions (“SADRs”) and serious adverse events (“SAEs”) as follows: 5.1.1 For fatal and life-threatening SADRs, BioLineRx will send an early case notification to Merck within [*], followed by acompletely processed case (on a CIOMS-1 form) within [*]. 5.1.2 For all other SAEs, BioLineRx will send an early case notification to Merck within [*] followed by a completely processed case(on a CIOMS-1 form) within [*]. 12 The early case notification will be marked as “Notification” and will contain the minimum criteria including an identifiable reporter, an identifiable patient,event term, and suspect therapy. 6Term and Termination. 6.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue in full force and effect until the earlier of (i)delivery of the Final Study Report and (ii) Study Completion plus [*], or until terminated by either Party pursuant to this Article 6 (the “Term”). 6.2 Merck Termination Right for Safety [*] Additionally, in the event that Merck in good faith believes that the Merck Compound is beingused in the Study in an unsafe manner and notifies BioLineRx in writing of the grounds for such belief, and if after receipt of such written notice, BioLineRxfails to promptly incorporate changes into the Protocol that are requested by Merck in writing to address such notified issue or to otherwise reasonably and ingood faith address such notified issue, then Merck may immediately terminate this Agreement and the supply of the Merck Compound upon [*] BusinessDays’ prior written notice to BioLineRx. During such [*] Business Days period, BioLineRx shall have the right and opportunity to demonstrate thatresponsive Protocol changes have been incorporated. 6.3 Material Breach. Either Party may terminate this Agreement if the other Party commits a material breach of this Agreement, and suchmaterial breach continues for [*] after receipt of written notice thereof from the non-breaching Party describing such breach and demanding its cure; providedthat if such material breach cannot reasonably be cured within [*], the breaching Party shall be given a reasonable period of time to cure such breach;provided further, that if such material breach is incapable of cure, then [*] the non-breaching Party may terminate this Agreement effective after the expirationof such [*] period. 6.4 Mutual Termination Right for Patient Safety. If either Party determines in good faith, based on a review of the Clinical Data, SampleTesting Results or other Study-related Know-How or other information, that the Study may unreasonably affect patient safety, such Party shall promptlynotify the other Party of such determination in writing. The Party receiving such notice may propose modifications to the Study to address the safety issueidentified by the other Party and, if the notifying Party agrees, shall act to immediately implement such modifications; provided, however, that if thenotifying Party, in its sole discretion, believes that there is imminent danger to patients, such Party need not wait for the other Party to propose modificationsand may instead suspend the Study immediately upon written notice to such other Party. Furthermore, if the notifying Party, in its sole discretion, believesthat any modifications proposed by the other Party will not resolve the patient safety issue, such Party may terminate this Agreement effective upon writtennotice to such other Party. 13 6.5 Mutual Termination Right Due to Regulatory Action; Other Reasons. Either Party may terminate this Agreement upon [*] Business Days’prior written notice to the other Party in the event that any Regulatory Authority takes any action, or raises any objection, that prevents the terminating Partyfrom any further supply of its Compound for purposes of the Study. Additionally, either Party shall have the right to terminate this Agreement upon [*]Business Days’ prior written notice to the other Party in the event that it determines in its sole discretion to withdraw any applicable Regulatory Approval forits Compound or to discontinue development of its Compound, for medical, scientific or legal reasons. 6.6 [Deleted] 6.7 Return of Merck Compound. In the event that this Agreement is terminated, or in the event BioLineRx remains in possession (includingthrough any Affiliate or Subcontractor) of Merck Compound at the time this Agreement expires, BioLineRx shall, at Merck’s sole discretion, promptly eitherreturn or destroy all unused Merck Compound pursuant to Merck’s instructions. If Merck requests that BioLineRx destroy the unused Merck Compound,BioLineRx shall provide written certification of such destruction. [*]. 6.8 Anti-Corruption. Either Party shall have the right to terminate this Agreement immediately upon written notice to the other Party, if suchother Party fails to perform any of its obligations under Section 13.4 or breaches any representation or warranty contained in Section 13.4. The non-terminating Party shall have no claim against the terminating Party for compensation for any loss of whatever nature by virtue of the termination of thisAgreement in accordance with this Section 6.8. 6.9 Survival. The provisions of this Section 6.9 and Sections 3.4 through 3.9 (inclusive), 5.1, 6.6, 8.11, 12.2, 14.2, 14.3, and Articles 1, 9, 10,11, 20, 21, 23, 24, 25 and 26 shall survive the expiration or termination of this Agreement. 6.10 No Prejudice. Termination of this Agreement shall be without prejudice to any claim or right of action of either Party against the otherParty for any prior breach of this Agreement. 6.11 Confidential Information. Upon termination of this Agreement, each Party and its Affiliates shall promptly return to the Disclosing Party ordestroy any Confidential Information of the Disclosing Party (other than Clinical Data, Sample Testing Results and Inventions, which may be used inaccordance with this Agreement) furnished to the Receiving Party by the Disclosing Party, except that the Receiving Party shall have the right to retain onecopy for record-keeping purposes. For clarity, any data or information (including Clinical Data) disclosed to a Receiving Party that relates to the single-agent use of the other Party’s Compound shall be promptly returned to the other Party or destroyed in accordance with this Section 6.11. 6.12 Merck’s Manufacturing Costs. Provided the Parties do not otherwise dispute the circumstances of termination, in the event of terminationby Merck pursuant to [*], Merck shall be entitled to reimbursement by BioLineRx for [*] incurred by Merck for its Compound Delivered for the Study. [*] 6.13 [*] 14 7Costs of Study. The Parties agree that (i) Merck shall provide the Merck Compound for use in the Study, as described in Article 8 below; (ii) each Party will beresponsible for its own internal costs and expenses to support the Study and the costs of any Sample Testing conducted by such Party in connection with theStudy, and (iii) BioLineRx shall bear all other costs associated with the conduct of the Study, including that BioLineRx shall provide the BioLineRxCompound for use in the Study, as described in Article 8 below. For the avoidance of doubt, BioLineRx will not be required to reimburse Merck for anycosts or expenses incurred by Merck or its Affiliates in connection with the Study and Merck will not be required to reimburse BioLineRx for any costs orexpenses incurred by BioLineRx or its Affiliates in connection with the Study. 8Supply and Use of the Compounds. 8.1 Supply of the Compounds. Subject to the terms and conditions of this Agreement, BioLineRx and Merck will each use commerciallyreasonable efforts to supply, or cause to be supplied, such quantities of its Compound in accordance with the delivery schedule to be agreed-upon in writingwithin [*] calendar days after the Effective Date, which delivery schedule upon such written agreement shall be incorporated herein as Appendix B. In theevent that BioLineRx determines that the quantities of Compounds as set forth on the delivery schedule determined in accordance with this Section 8.1 arenot sufficient to complete the Study, BioLineRx shall so notify Merck in writing, and the Parties shall discuss in good faith regarding whether additionalquantities of Compounds may be provided and the schedule on which such additional quantities may be provided. Each Party shall also provide to the otherParty a contact person for the supply of its Compound under this Agreement. [*] 8.2 Clinical Quality Agreement. Within [*] days from the Effective Date of this Agreement, the Parties shall enter into a quality agreement thatshall address and govern issues related to the quality of clinical Compounds to be supplied by the Parties for use in the Study (“Clinical QualityAgreement”). The Clinical Quality Agreement shall, among other things: (i) detail classification of any Compound found to have a Non-Conformance; (ii)include criteria for Manufacturer’s Release and related certificates and documentation; (iii) include criteria and timeframes for acceptance of MerckCompound; (iv) include procedures for the resolution of disputes regarding any Compounds found to have a Non-Conformance; and (v) include provisionsgoverning the recall of Compounds. 8.3 Minimum Shelf Life Requirements. Each Party shall use diligent and commercially reasonable efforts to supply its Compound hereunderwith an adequate remaining shelf life at the time of Delivery to meet the Study requirements. 8.4 Provision of Compounds. 8.4.1 Subject to Section 10.1.1, Merck will deliver the Merck Compound [*] to BioLineRx’s, or its designee’s, location as specified byBioLineRx (“Delivery” with respect to such Merck Compound). Title and risk of loss for the Merck Compound shall transfer from Merck to BioLineRx atDelivery. All costs associated with the subsequent transportation, warehousing and distribution of Merck Compound shall be borne by [*]. BioLineRx will,or will cause its designee to: (i) take delivery of the Merck Compound supplied hereunder; (ii) perform the acceptance procedures allocated to it under theClinical Quality Agreement; (iii) subsequently label and pack the Merck Compound (in accordance with Section 8.5), and promptly ship the MerckCompound to the Study sites for use in the Study, in compliance with cGMP, GCP and other Applicable Law and the Clinical Quality Agreement; and (iv)provide, from time to time at the reasonable request of Merck, the following information: any applicable chain of custody forms, in-transport temperaturerecorder(s), records and receipt verification documentation, such other transport or storage documentation as may be reasonably requested by Merck, andusage and inventory reconciliation documentation related to the Merck Compound. 15 8.4.2 BioLineRx is solely responsible, at its own cost, for supplying (including all Manufacturing, acceptance and release testing) theBioLineRx Compound for the Study, and the subsequent handling, storage, transportation, warehousing and distribution of the BioLineRx Compoundsupplied hereunder for the Study. BioLineRx shall ensure that all such activities are conducted in compliance with cGMP, GCP and other Applicable Lawand the Clinical Quality Agreement. For purposes of this Agreement, the “Delivery” of a given quantity of the BioLineRx Compound shall be deemed tooccur when such quantity is packaged for shipment to a Study site. 8.5 Labeling and Packaging; Use, Handling and Storage. 8.5.1 The Parties’ obligations with respect to the labeling and packaging of the Compounds are as set forth in the Clinical QualityAgreement. Notwithstanding the foregoing or anything to the contrary contained herein, Merck shall provide the Merck Compound to BioLineRx in theform of unlabeled vials, and BioLineRx shall be responsible for labeling, packaging and leafleting such Merck Compound in accordance with the terms andconditions of the Clinical Quality Agreement and otherwise in accordance with all Applicable Law, including cGMP, GCP, and health, safety andenvironmental protections. 8.5.2 BioLineRx shall (i) use the Merck Compound solely for purposes of performing the Study; (ii) not use the Merck Compound inany manner that is inconsistent with this Agreement or for any commercial purpose; and (iii) label, use, store, transport, handle and dispose of the MerckCompound in compliance with Applicable Law and the Clinical Quality Agreement, as well as all written instructions of Merck. BioLineRx shall not reverseengineer, reverse compile, disassemble or otherwise attempt to derive the composition or underlying information, structure or ideas of the Merck Compound,and in particular shall not analyze the Merck Compound by physical, chemical or biochemical means, except as necessary to perform its obligations underthe Clinical Quality Agreement. 8.6 Product Specifications. A certificate of analysis prepared and delivered in accordance with the Clinical Quality Agreement shallaccompany each shipment of the Merck Compound to BioLineRx. Upon request, BioLineRx shall provide Merck with a certificate of analysis covering eachshipment of BioLineRx Compound used in the Study. 8.7 Changes to Manufacturing. Each Party may make changes from time to time to its Compound or the Manufacturing Site; provided thatsuch changes shall be in accordance with the Clinical Quality Agreement. 8.8 Product Testing; Noncompliance. 8.8.1 After Manufacturer’s Release. After Manufacturer’s Release of the Merck Compound and concurrently with Delivery of theCompound to BioLineRx, Merck shall provide BioLineRx with such certificates and documentation as are described in the Clinical Quality Agreement(“Disposition Package”). BioLineRx shall, within the time defined in the Clinical Quality Agreement, perform (i) with respect to the Merck Compound, theacceptance (including testing) procedures allocated to it under the Clinical Quality Agreement, and (ii) with respect to the BioLineRx Compound, the testingand release procedures allocated to it under the Clinical Quality Agreement. BioLineRx shall be solely responsible for taking all steps necessary todetermine that Merck Compound or BioLineRx Compound, as applicable, is suitable for release before making such Merck Compound or BioLineRxCompound, as applicable, available for human use, and Merck shall provide cooperation or assistance as reasonably requested by BioLineRx in connectionwith such determination with respect to the Merck Compound. BioLineRx shall be responsible for storage and maintenance of the Merck Compound until itis tested and/or released, which storage and maintenance shall be in compliance with (a) the Specifications for the Merck Compound, the Clinical QualityAgreement and Applicable Law, and (b) any specific storage and maintenance requirements as may be provided by Merck from time to time. BioLineRxshall be responsible for any failure of the Merck Compound to meet the Specifications to the extent caused by shipping, storage or handling conditions afterDelivery to BioLineRx hereunder. 16 8.8.2 Non-Conformance. a) In the event that either Party becomes aware that any Compound may have a Non-Conformance, despite testing and qualityassurance activities (including any activities conducted by the Parties under Section 8.8.1), such Party shall immediately notify the other Party inaccordance with the procedures of the Clinical Quality Agreement. The Parties shall investigate any Non-Conformance in accordance with Section8.9 (Investigations) and any discrepancy between them shall be resolved in accordance with Section 8.8.3. b) In the event that any proposed or actual shipment of the Merck Compound (or portion thereof) shall be agreed to have a Non-Conformance at the time of Delivery to BioLineRx, then unless otherwise agreed to by the Parties in writing, Merck shall replace such MerckCompound as is found to have a Non-Conformance (with respect to Merck Compound that has not yet been administered in the course of performingthe Study) within [*] calendar days, at Merck’s sole expense. [*] c) BioLineRx shall be responsible for, and Merck shall have no obligations or liability with respect to, any BioLineRx Compoundsupplied hereunder that is found to have a Non-Conformance. BioLineRx shall replace any BioLineRx Compound for use in the Study as is foundto have a Non-Conformance (with respect to BioLineRx Compound that has not yet been administered in the course of performing the Study). 8.8.3 Resolution of Discrepancies. Disagreements regarding any determination of Non-Conformance by BioLineRx shall be resolvedin accordance with the provisions of the Clinical Quality Agreement. 8.9 Investigations. The process for investigations of any Non-Conformance shall be handled in accordance with the Clinical QualityAgreement. 8.10 Shortage; Allocation. In the event that a Party’s Compound is in short supply as a result of a manufacturing disruption, manufacturingdifficulties or other similar event such that a Party reasonably believes in good faith that it will not be able to fulfill its entire supply obligations hereunderwith respect to its Compound, such Party will provide prompt written notice to the other Party thereof (including the shipments of Compound hereunderexpected to be impacted and the quantity of its Compound that such Party reasonably determines it will be able to supply) and the Parties will promptlydiscuss such situation (including how the quantity of Compound that such Party is able to supply hereunder will be allocated within the Study). In suchevent, the Party experiencing such shortage shall (i) use its diligent and commercially reasonable efforts to remedy the situation giving rise to such shortageand to take action to minimize the impact of the shortage on the Study, and (ii) allocate to the other Party [*] 17 8.11 Records; Audit Rights. During the Term of this Agreement and [*] years after the end of the Term, BioLineRx shall keep complete andaccurate records pertaining to its use and disposition of Merck Compound (including its storage, shipping (cold chain) and chain of custody activities) and,upon written request of Merck, shall make such records open to review by Merck solely for the purpose of conducting investigations for the determination ofMerck Compound safety and/or efficacy and BioLineRx’s compliance with this Agreement with respect to the Merck Compound. 8.12 Quality. Quality matters related to the Manufacture of the Compounds shall be governed by the terms of the Clinical Quality Agreement inaddition to the relevant quality provisions of this Agreement. 8.13 Quality Control. Each Party shall implement and perform operating procedures and controls for sampling, stability and other testing of itsCompound, and for validation, documentation and release of its Compound and such other quality assurance and quality control procedures as are requiredby the Specifications, cGMPs and the Clinical Quality Agreement. 8.14 Audits and Inspections. The Parties’ audit and inspection rights related to this Agreement shall be governed by the terms of the ClinicalQuality Agreement. 8.15 Recalls. Recalls of the Compounds shall be governed by the terms of the Clinical Quality Agreement. 8.16 VAT. It is understood and agreed between the Parties that any payments made under this Agreement are exclusive of any value added orsimilar tax (“VAT”), which shall be added thereon as applicable. Where VAT is properly charged by the supplying Party and added to a payment made underthis Agreement, the Party making the payment will pay the amount of VAT only on receipt of a valid tax invoice from the supplying Party issued inaccordance with the laws and regulations of the country in which the VAT is chargeable. 9Confidentiality. 9.1 Confidential Information. Subject to Section 13.4.8, BioLineRx and Merck agree to hold in confidence any Confidential Informationprovided by the other Party, and neither Party shall use Confidential Information of the other Party except for the performance of the Study and for thePermitted Use. The Receiving Party shall not, without the prior written permission of the Disclosing Party, disclose any Confidential Information of theDisclosing Party to any Third Party except to the extent disclosure (i) is required by Applicable Law; (ii) is pursuant to and in accordance with the terms ofthis Agreement; or (iii) is necessary for the conduct of the Study, and in each case ((i) through (iii)) provided that the Receiving Party shall providereasonable advance written notice to the Disclosing Party before making such disclosure. For the avoidance of doubt, BioLineRx may, without Merck’sconsent, disclose Merck’s Confidential Information to clinical trial sites and clinical trial investigators performing the Study, the data safety monitoring andadvisory board relating to the Study, and Regulatory Authorities working with BioLineRx on the Study, in each case to the extent necessary for theperformance of the Study and provided that such Persons (other than governmental entities) are bound by an obligation of confidentiality at least as stringentas the obligations contained herein. 18 9.2 Inventions. Notwithstanding the foregoing, (i) Inventions that constitute Confidential Information and are jointly owned by the Parties,shall constitute the Confidential Information of both Parties and each Party shall have the right to use and disclose such Confidential Information consistentwith Articles 10, 11 and 12 and (ii) Inventions that constitute Confidential Information and are solely owned by one Party shall constitute the ConfidentialInformation of that Party and each Party shall have the right to use and disclose such Confidential Information consistent with Articles 10, 11 and 12. 9.3 Personal Identifiable Data. All Confidential Information containing personal identifiable data shall be handled in accordance with alldata protection and privacy laws, rules and regulations applicable to such data. 10Intellectual Property. 10.1 Joint Ownership and Prosecution. 10.1.1 Subject to Section 10.2 and Section 10.3, all rights to all Inventions relating to, or covering, [*] (each a “Jointly OwnedInvention”) shall be negotiated in good faith in an additional agreement setting forth the rights of the Parties with respect to such Jointly Owned Invention(the “Joint Rights Agreement”), which Joint Rights Agreement shall be executed within [*] days after the Effective Date, and shall contain the provisions setforth in Sections 10.1.2 and 10.1.3 of this Agreement. The Parties acknowledge that the Office of the Chief Scientist of the Ministry of Economy of the Stateof Israel (the “OCS”) must consent to the Joint Rights Agreement before such Agreement becomes effective. Promptly after the Effective Date, BioLineRxshall use its best efforts to obtain the consent of the OCS to the Joint Rights Agreement, having the terms set forth in Sections 10.1.2 and 10.1.3 below, andshall use its best efforts to seek to obtain such consent no later than [*] after the Effective Date. BioLineRx shall be solely responsible for all costs and fees,or other compensation to the OCS or any other Third Party, required to secure such rights. The parties acknowledge that there is a possibility that the OCSmay request changes in this Agreement and the Joint Rights Agreement as a result of its review of the Joint Rights Agreement. In such event, the Parties shallnegotiate in good faith to agree on amendments to either or both of such agreements in accordance with the OCS request. [*] 10.1.2 Subject to any changes that may be required in order to obtain the consent of the OCS to the Joint Rights Agreement as set forth inSection 10.1.1, such agreement will contain the following terms: a. For Jointly Owned Inventions that are invented or created jointly by Merck or by Persons having an obligation to assignsuch rights to Merck, and by BioLineRx or by Persons having an obligation to assign such rights to BioLineRx, each Party shall have an undivided one-halfinterest in, to and under any such Jointly Owned Inventions. [*] b. [*] c. [*] d. If one Party brings any prosecution or enforcement action or proceeding against a Third Party with respect to any JointPatent, the second Party agrees to be joined as a party plaintiff where necessary and to give the first Party reasonable assistance and authority to file andprosecute the suit. The costs and expenses of the (first) Party bringing suit under this subsection (d) shall be borne by such Party, and any damages or othermonetary awards recovered shall be shared as follows: [*]A settlement or consent judgment or other voluntary final disposition of a suit under this subsection(d) may not be entered into without the consent of the Party not bringing or controlling the suit. 19 10.1.3 Promptly following the receipt of the consent of OCS to the Joint Rights Agreement, patent representatives of each of the Partiesshall meet (in person or by telephone) to discuss the patenting strategy for any Jointly Owned Inventions which may arise. In particular, the Parties shalldiscuss which Party will file a patent application (including any provisional, substitution, divisional, continuation, continuation in part, reissue, renewal,reexamination, extension, supplementary protection certificate and the like) in respect of any Jointly Owned Invention (each, a “Joint Patent Application”)and whether the Parties wish to appoint joint patent counsel. In any event, the Parties shall consult and reasonably cooperate with one another in thepreparation, filing, prosecution (including prosecution strategy) and maintenance of such each Joint Patent Application and shall [*]. In the event that oneParty (the “Filing Party”) wishes to file a patent application for a Jointly Owned Invention and the other Party (the “Non-Filing Party”) does not want to filea patent application for such Jointly Owned Invention or does not want to file in a particular country, the Non-Filing Party shall execute such documents andperform such acts at the Filing Party’s reasonable expense as may be reasonably necessary to effect an assignment of such Jointly Owned Invention to theFiling Party (in such country or all countries, as applicable) in a timely manner to allow the Filing Party to file and prosecute such patentapplication. Likewise, if a Party (the “Opting-out Party”) wishes to discontinue the prosecution and maintenance (or sharing in the costs with respectthereto) of a Joint Patent Application (in one or more countries), the other Party, at its sole option (the “Continuing Party”), may continue such prosecutionand maintenance. In such event, the Opting-out Party shall execute such documents and perform such acts at the Continuing Party’s [*] to effect anassignment of such Joint Patent Application to the Continuing Party (in such country or all countries, as applicable) in a timely manner to allow theContinuing Party to prosecute and maintain such patent application. [*] 10.1.4 Except as expressly provided in Section 10.1.3 and in furtherance and not in limitation of Section 9.1, each Party shall not file apatent application based on the other Party’s Confidential Information, and shall give no assistance to any Third Party for such application, without the otherParty’s prior written authorization. 10.2 Inventions Owned by BioLineRx. Notwithstanding Section 10.1, the Parties agree that all rights to Inventions relating [*], are the exclusiveproperty of BioLineRx (“BioLineRx Inventions”). BioLineRx shall be entitled to file in its own name relevant patent applications and to own resultantpatent rights for any BioLineRx Invention. [*] 10.3 Inventions Owned by Merck. Notwithstanding Section 10.1, the Parties agree that all rights to Inventions relating [*], are the exclusiveproperty of Merck (“Merck Inventions”). Merck shall be entitled to file in its own name relevant patent applications and to own resultant patent rights forany Merck Invention. [*] 10.4 [deleted] 20 11 Reprints; Rights of Cross-Reference. Consistent with applicable copyright and other laws, each Party may use, refer to, and disseminate reprints of scientific, medical and other publishedarticles and materials from journals, conferences and/or symposia relating to the Study which disclose the name of a Party, provided such use does notconstitute an endorsement of any commercial product or service by the other Party. 12 Publications; Press Releases. 12.1 Clinical Trial Registry. BioLineRx shall register the Study with the Clinical Trials Registry located at www.clinicaltrials.gov and iscommitted to timely publication of the results following Study Completion, after taking appropriate action to secure intellectual property rights (if any)arising from the Study. The publication of the results of the Study will be in accordance with the Protocol. 12.2 Publication. BioLineRx, as sponsor of the Study, shall have the first right to publish the results of the Study. Upon Study completion ortermination (as applicable), or earlier if mutually agreed by the Parties, and after BioLineRx has an opportunity for first publication of the Study results, eachParty shall use reasonable efforts to publish or present scientific papers dealing with the Study in accordance with accepted scientific practice. The Partiesagree that prior to submission of the results of the Study for publication or presentation or any other dissemination of results including oral dissemination, thepublishing Party shall invite the other Party to comment on the content to be published or presented according to the following procedure: 12.2.1 At least [*] days prior to submission for publication of any paper, letter or any other publication, or [*] days prior to submission forpresentation of any abstract, poster, talk or any other public presentation, the publishing Party shall provide to the other Party the full details of the proposedpublication or presentation in an electronic version (cd-rom or email attachment). Upon written request from the other Party, the publishing Party will notsubmit data for publication/presentation for an additional [*] days in order to allow for actions to be taken to preserve rights for patent protection. 12.2.2 The publishing Party shall give reasonable consideration to any request by the other Party made within the periods mentioned inSection 12.2.1 to modify the publication and the Parties shall work in good faith and in a timely manner to resolve any issue regarding the content forpublication. 12.2.3 The publishing Party shall remove all Confidential Information of the other Party before finalizing the publication. 12.2.4 For clarity, nothing in this Section 12.2 restricts in any way the right of a Party to publish data or results relating to single agentuse of its Compound. 12.3 Press Releases. On or immediately following the Effective Date, the Parties will issue a press release in the form attached hereto asAppendix C. [*] Each Party agrees to identify the other Party and acknowledge such other Party’s support of the Study in any press release and any otherpublication or presentation concerning the Study. [*] For clarity, nothing in this Section 12.3 restricts in any way the right of a Party to publish data orresults relating to single agent use of its Compound. 13 Representations and Warranties; Disclaimers. 13.1 [*] 21 13.2 Compounds. 13.2.1 BioLineRx Compound. BioLineRx hereby represents and warrants to Merck that (i) BioLineRx has the full right, power andauthority to grant all of the licenses granted to Merck under this Agreement, and (ii) BioLineRx Controls the BioLineRx Compound. 13.2.2 Merck Compound. Merck hereby represents and warrants to BioLineRx that (i) Merck has the full right, power and authority togrant all of the licenses granted to BioLineRx under this Agreement, and (ii) Merck Controls the Merck Compound. 13.3 Results. BioLineRx does not undertake that the Study shall lead to any particular result, nor is the success of the Study guaranteed. Merckdoes not undertake that the Study shall lead to any particular result, nor is the success of the Study guaranteed. Neither Party shall be liable for any use thatthe other Party may make of the Clinical Data nor for advice or information given in connection therewith. 13.4 Anti-Corruption 13.4.1 In performing their respective obligations hereunder, the Parties acknowledge that the corporate policies of BioLineRx and Merckand their respective Affiliates require that each Party’s business be conducted within the letter and spirit of the law. By signing this Agreement, each Partyagrees to conduct the business contemplated herein in a manner which is consistent with all Applicable Law, including the Stark Act, Anti-Kickback Statute,Sunshine Act, and the U.S. Foreign Corrupt Practices Act, good business ethics, and its ethics and other corporate policies and agrees to abide by the spirit ofthe other Party’s guidelines for performance in accordance with its corporate policies, which may be provided by such other Party from time to time. 13.4.2 Specifically, each Party represents and warrants that it has not, and covenants that it, its Affiliates, and its and its Affiliates’directors, employees, officers, and anyone acting on its behalf, will not, in connection with the performance of this Agreement, directly or indirectly, make,promise, authorize, ratify or offer to make, or take any action in furtherance of, any payment or transfer of anything of value for the purpose of influencing,inducing or rewarding any act, omission or decision to secure an improper advantage; or improperly assisting it in obtaining or retaining business for it or theother Party, or in any way with the purpose or effect of public or commercial bribery. 13.4.3 Each Party shall not contact, or otherwise knowingly meet with, any Government Official for the purpose of discussing activitiesarising out of or in connection with this Agreement, without the prior written approval of the other Party, except where such meeting is consistent with thepurpose and terms of this Agreement and in compliance with Applicable Law. 13.4.4 Each Party represents and warrants that it (i) is not excluded, debarred, suspended, proposed for suspension or debarment, inViolation or otherwise ineligible for government programs; and (ii) has not employed or subcontracted with any Person or Third Party for the performance ofthe Study who is excluded, debarred, suspended, proposed for suspension or debarment, or is in Violation or otherwise ineligible for government programs. 13.4.5 Each Party represents and warrants that except as disclosed to the other Party in writing prior to the Effective Date: (1) it does nothave any interest which directly or indirectly conflicts with its proper and ethical performance of this Agreement; (2) it shall maintain arm’s length relationswith all Third Parties with which it deals for or on behalf of the other Party in performance of this Agreement; and (3) it has provided complete and accurateinformation and documentation to the other Party, the other Party’s Affiliates and its and their personnel in the course of due diligence conducted by theother Party for this Agreement, including disclosure of any officers, employees, owners or Persons directly or indirectly retained by such Party in relation tothe performance of this Agreement who are Government Officials or relatives of Government Officials. Each Party shall make all further disclosures asnecessary to the other Party to ensure the information provided remains complete and accurate throughout the Term. Subject to the foregoing, each Partyagrees that it shall not hire or retain any Government Official to assist in its performance of this Agreement, with the sole exception of conduct of orparticipation in clinical trials under this Agreement, provided that such hiring or retention shall be subject to the completion by the hiring or retaining Partyof a satisfactory anti-corruption and bribery (e.g., FCPA) due diligence review of such Government Official. Each Party further covenants that any futureinformation and documentation submitted to the other Party as part of further due diligence or a certification shall be complete and accurate. 22 13.4.6 Each Party shall have the right during the Term, and for a period of two (2) years following termination of this Agreement, toconduct an investigation and audit of the other Party’s activities, books and records, to the extent they relate to that other Party’s performance under thisAgreement, solely to verify compliance with the terms of this Section 13.4. Such other Party shall cooperate fully with such investigation or audit, the scope,method, nature and duration of which shall be at the sole reasonable discretion of the Party requesting such audit, but also reasonably acceptable to theaudited Party. 13.4.7 Each Party shall use commercially reasonable efforts to ensure that all transactions under this Agreement are properly andaccurately recorded in all material respects on its books and records and that each document upon which entries in such books and records are based iscomplete and accurate in all material respects. Each Party further represents, warrants and covenants that all books, records, invoices and other documentsrelating to payments and expenses under this Agreement are and shall be complete and accurate and reflect in reasonable detail the character and amount oftransactions and expenditures. Each Party shall maintain a system of internal accounting controls reasonably designed to ensure that no off-the-books orsimilar funds or accounts will be maintained or used in connection with this Agreement. 13.4.8 Each Party agrees that in the event that the other Party believes in good faith that there has been a possible violation of anyprovision of Section 13.4, such other Party may make full disclosure of such belief and related information needed to support such belief at any time and forany reason to any competent government bodies and its agencies, and to whoever such Party determines in good faith has a legitimate need to know;provided, however, that the Party wishing to make the disclosure shall give the other Party at least five (5) days’ written notice of such intention. 13.4.9 Each Party shall comply with its own ethical business practices policy and any corporate integrity agreement (if applicable) towhich it is subject, and shall conduct its Study-related activities in accordance with Applicable Law. Each Party shall ensure that all of its employeesinvolved in performing its obligations under this Agreement are made specifically aware of the compliance requirements under this Section 13.4. In addition,each Party shall ensure that all such employees participate in and complete mandatory compliance training to be conducted by each Party, including specifictraining on anti-bribery and corruption, prior to his/her performance of any obligations or activities under this Agreement. Each Party further shall certify itscontinuing compliance with the requirements under this Section 13.4 on a periodic basis during the Term in such form as may be reasonably specified by theother Party. 23 13.4.10 Each Party shall have the right to terminate this Agreement immediately upon the other Party’s violation of this Section 13.4 inaccordance with Section 6.8, provided that the other Party has been provided with written notice of the reasons for termination and has had an opportunity topromptly respond to such reasons. 13.5 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED HEREIN, MERCK MAKES NO WARRANTIES, EXPRESS OR IMPLIED,INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE MERCKCOMPOUND, AND BIOLINERX MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY ORFITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE BIOLINERX COMPOUND. 14 Insurance; Indemnification; Limitation of Liability. 14.1 Insurance. Each Party warrants that it maintains a policy or program of insurance or self-insurance at levels sufficient to support theindemnification obligations assumed herein. Upon written request, a Party shall provide evidence of such insurance. 14.2 Indemnification. 14.2.1 Indemnification by BioLineRx. BioLineRx agrees to defend, indemnify and hold harmless Merck, its Affiliates, and its and theiremployees, directors, subcontractors and agents from and against any loss, damage, reasonable costs and expenses (including reasonable attorneys’ fees andexpenses) incurred in connection with any claim, proceeding, or investigation by a Third Party arising out [*] (a “Liability”), to the extent such Liability [*]. 14.2.2 Indemnification by Merck. Merck agrees to defend, indemnify and hold harmless BioLineRx, its Affiliates, and its and theiremployees, directors, subcontractors and agents from and against any Liability to the extent such Liability [*]. 14.2.3 Procedure. The obligations of Merck and BioLineRx under this Section 14.2 are conditioned upon the delivery of written noticeto Merck or BioLineRx, as the case might be, of any potential Liability within the other Party’s indemnification obligation, within a reasonable time aftersuch Party becomes aware of such potential Liability. The indemnifying Party will have the right to assume the defense of any suit or claim related to theLiability (using counsel reasonably satisfactory to the indemnified Party) if it has assumed responsibility for the suit or claim in writing; provided that theindemnified Party may assume the responsibility for such defense to the extent the indemnifying Party does not do so in a timely manner. The indemnifiedParty may participate in (but not control) the defense thereof at its sole cost and expense. The Party controlling such defense (the “Defending Party”) shallkeep the other Party (the “Other Party”) advised of the status of such action, suit, proceeding or claim and the defense thereof and shall considerrecommendations made by the Other Party with respect thereto. The Defending Party shall not agree to any settlement of such action, suit, proceeding orclaim without the prior written consent of the Other Party, which shall not be unreasonably withheld, conditioned or delayed. The Defending Party, butsolely to the extent the Defending Party is also the indemnifying Party, shall not agree to any settlement of such action, suit, proceeding or claim or consentto any judgment in respect thereof that does not include a complete and unconditional release of the Other Party from all liability with respect thereto or thatimposes any liability or obligation on the Other Party without the prior written consent of the Other Party. 24 14.2.4 Study Subjects. BioLineRx shall not offer compensation on behalf of Merck to any Study subject or bind Merck to anyindemnification obligations in favor of any Study subject. Likewise, Merck shall not offer compensation on behalf of BioLineRx to any Study subject orbind BioLineRx to any indemnification obligations in favor of any Study subject. 14.3 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY (OR ANY OF ITS AFFILIATES OR SUBCONTRACTORS) BELIABLE TO THE OTHER PARTY FOR, NOR SHALL ANY INDEMNIFIED PARTY HAVE THE RIGHT TO RECOVER, ANY SPECIAL, INDIRECT,INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR DAMAGES FOR LOST OPPORTUNITIES), WHETHER INCONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF (X) THE MANUFACTURE OR USE OF ANYCOMPOUND SUPPLIED HEREUNDER OR (Y) ANY BREACH OF OR FAILURE TO PERFORM ANY OF THE PROVISIONS OF THIS AGREEMENT ORANY REPRESENTATION, WARRANTY OR COVENANT CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT, EXCEPT THAT SUCHLIMITATION SHALL NOT APPLY TO DAMAGES PAID OR PAYABLE TO A THIRD PARTY BY AN INDEMNIFYING PARTY FOR WHICH THEINDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION HEREUNDER OR WITH RESPECT TO DAMAGES ARISING OUT OF OR RELATED TO APARTY’S BREACH OF ITS OBLIGATIONS UNDER THIS AGREEMENT TO USE, DISCLOSE, LICENSE, ASSIGN OR OTHERWISE TRANSFERCLINICAL DATA, CONFIDENTIAL INFORMATION, JOINTLY-OWNED INVENTIONS AND SAMPLE TESTING RESULTS ONLY FOR THE PERMITTEDUSE. 15 Use of Name. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the otherParty or any other trade name, trademark or logo of the other Party for any purpose in connection with the performance of this Agreement without the otherParty’s prior written consent. 16 Force Majeure. If, in the performance of this Agreement, one of the Parties is prevented, hindered or delayed by reason of any cause beyond such Party’s reasonable control(e.g., war, riots, fire, strike, governmental laws), such Party shall be excused from performance to the extent that it is necessarily prevented, hindered ordelayed (“Force Majeure”). The non-performing Party shall notify the other Party of such Force Majeure within [*] after such occurrence by giving writtennotice to the other Party stating the nature of the event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspensionof performance of the affected Party will be of no greater scope and no longer duration than is necessary and the non-performing Party shall use diligent andcommercially reasonable efforts to remedy its inability to perform. 17 Entire Agreement; Modification. The Parties agree to the full and complete performance of the mutual covenants contained in this Agreement. This Agreement, together with the RelatedAgreements, constitutes the sole, full and complete agreement by and between the Parties with respect to the subject matter of this Agreement, and all prioragreements, understandings, promises and representations, whether written or oral, with respect thereto are superseded by this Agreement. No amendments,changes, additions, deletions or modifications to or of this Agreement shall be valid unless reduced to writing and signed by an authorized representative ofeach of the Parties hereto. 25 18 [*] 19 Invalid Provision. If any provision of this Agreement is held to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect and will not beaffected by the illegal, invalid or unenforceable provision. In lieu of the illegal, invalid or unenforceable provision, the Parties shall negotiate in good faithto agree upon a reasonable provision that is legal, valid and enforceable to carry out as nearly as practicable the original intention of the entire Agreement. 20 No Additional Obligations. BioLineRx and Merck have no obligation to renew this Agreement or apply this Agreement to any clinical trial other than the Study. Neither Partyis under any obligation to enter into another type of agreement at this time or in the future. 21 Governing Law This Agreement and any dispute arising from the performance or breach hereof shall be governed by and construed and enforced in accordance withthe internal laws of the State of New York, without reference to its conflicts of laws principles. The U.N. Convention on the Sale of Goods shall not apply tothis Agreement. 22 Dispute Resolution. 22.1 Negotiation. The Parties shall attempt in good faith to settle all disputes arising out of or in connection with this Agreement in an amicablemanner. Any dispute that is not an Excluded Dispute arising between the Parties relating to, arising out of, or in any way connected with this Agreement, orany term or condition hereof, or the performance by either Party of its obligations hereunder (a “Dispute”), whether before or after expiration or termination ofthis Agreement, which is not resolved by the Parties within [*] days after written notice of such Dispute is first given by one Party to the other Party inwriting, will be referred to a senior executive (at Vice President level or above) designated by BioLineRx and a senior executive (at Vice President level orabove) designated by Merck who are authorized to resolve such Dispute on behalf of their respective companies (“Senior Executives”). The SeniorExecutives will meet (or confer by telephone or video conference) within [*] days after the end of the initial [*] period referred to above, at a time and placeacceptable to both Senior Executives. [*] [*] 26 23 Notices. All notices or other communications that are required or permitted hereunder shall be in writing and delivered personally, sent by facsimile (and promptlyconfirmed by personal delivery or overnight courier), or sent by internationally-recognized overnight courier addressed as follows: If to BioLineRx, to: BioLineRx Ltd.Modi’in Technology Park2 HaMa’ayan StreetModi’in 7177871, IsraelAttention: Chief Financial and Operating OfficerWith a copy to:General CounselBioLineRx Ltd.Same address as aboveIf to Merck, to: Merck Sharp & Dohme B.V.Waarderweg 392031 BN HaarlemNetherlandsAttention: DirectorFacsimile: [*]With a copy to:Merck Sharp & Dohme Corp.One Merck DriveP.O Box 100Whitehouse Station, NJ 08889-0100Attention: Office of SecretaryFacsimile No.: [*] 24 Relationship of the Parties. The relationship between the Parties is and shall be that of independent contractors, and does not and shall not constitute a partnership, joint venture, agencyor fiduciary relationship. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or take any actions,which are binding on the other Party, except with the prior written consent of the other Party to do so. All Persons employed by a Party will be the employeesof such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of suchParty. 25 Counterparts and Due Execution. This Agreement and any amendment may be executed in two (2) or more counterparts (including by way of facsimile or electronic transmission), each ofwhich shall be deemed an original, but all of which together shall constitute one and the same instrument, notwithstanding any electronic transmission,storage and printing of copies of this Agreement from computers or printers. When executed by the Parties, this Agreement shall constitute an originalinstrument, notwithstanding any electronic transmission, storage and printing of copies of this Agreement from computers or printers. For clarity, facsimilesignatures and signatures transmitted via PDF shall be treated as original signatures. 27 26 Construction. Except where the context otherwise requires, wherever used, the singular will include the plural, the plural the singular, the use of any gender will beapplicable to all genders, and the word “or” is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwisespecified, such number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extendor limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including” as used herein shall bedeemed to be followed by the phrase “without limitation” or like expression. The term “will” as used herein means shall. References to “Article,” “Section”or “Appendix” are references to the numbered sections of this Agreement and the appendices attached to this Agreement, unless expressly statedotherwise. Except where the context otherwise requires, references to this “Agreement” shall include the appendices attached to this Agreement. Thelanguage of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction will be applied against eitherParty hereto. [Remainder of page intentionally left blank.] 28 IN WITNESS WHEREOF, the respective authorized representatives of the Parties have executed this Agreement as of the Effective Date. BioLineRx Ltd. By: _______________________________ ___________________________________Name___________________________________Title Merck Sharp & Dohme B.V. By: _______________________________ ___________________________________Name___________________________________Title    Appendix APROTOCOL SUMMARY [Merck draft dated December 27][*]  Appendix BDELIVERY SCHEDULE[*]  Appendix CINITIAL PRESS RELEASE For Immediate ReleaseDRAFT: January 8, 2016BioLineRx Announces Collaboration with MSD toinvestigate the combination of KEYTRUDA® (pembrolizumab) and BL-8040 in Pancreatic Cancer BioLineRx management to hold conference call this morningat 10:00 am EST to further discuss this immunotherapy collaboration Tel Aviv, Israel - January xx, 2016 - BioLineRx Ltd. (NASDAQ/TASE: BLRX) today announced a collaboration with MSD, known as Merck in the US andCanada, to support a Phase 2 study investigating BioLineRx’s BL-8040 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy, inpatients with metastatic pancreatic cancer. The study is an open-label, multicenter, single-arm trial designed to evaluate the safety and efficacy of thiscombination in patients with metastatic pancreatic adenocarcinoma.BL-8040, BioLineRx’s lead oncology platform, is a CXCR4 antagonist that has been shown in several clinical trials to be a robust mobilizer of immunecells and to be effective at inducing direct tumor cell death. Additional findings in the field of immuno-oncology suggest that CXCR4 antagonists may beeffective in inducing the migration of anti-tumor T cells into the tumor micro-environment. KEYTRUDA is a humanized monoclonal antibody that worksby increasing the ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA blocks the interaction between PD-1 and itsligands, PD-L1 and PD-L2, thereby activating T- lymphocytes, which may affect both tumor cells and healthy cells. The Phase 2 study will evaluate theclinical response, safety and tolerability of the combination of these therapies as well as multiple pharmacodynamic parameters, including the ability toimprove infiltration of T cells into the tumor and their reactivity.“We are extremely happy to collaborate with MSD, a pioneer and world leader in cancer immunotherapy. This marks the entrance of BL-8040 into thisexciting field, which is already transforming the lives of many cancer patients,” stated Dr. Kinneret Savitsky, Chief Executive Officer of BioLineRx.“Because certain tumors exhibit only a modest response to existing immunotherapies, we are increasingly seeing clinical studies involving combinations ofimmuno-oncology agents with other classes of drugs. We are initiating this study with the hope that it will show that the combination of BL-8040 withKEYTRUDA has the potential to expand the benefit of immunotherapy to cancer types currently resistant to immuno-oncology treatments, such as pancreaticcancer, which represents a significant unmet medical need. If this potential can be realized, it will be an extremely important advance in the fight againstcancer, as well as a seminal milestone for BioLineRx.”  “Today, there is a great opportunity and need to bring forward new scientific breakthroughs for the treatment of pancreatic cancer,” said Dr. Eric Rubin, vicepresident and therapeutic area head, oncology early-stage development, MSD Research Laboratories. “Evaluating the potential of combination therapiesthrough strategic collaborations in difficult-to-treat tumor types continues to be an important part of our immuno-oncology clinical development program forKEYTRUDA.”The agreement is between BioLineRx and MSD, through a subsidiary. Per the terms of the agreement, the trial will be sponsored and performed byBioLineRx. The study is planned to commence by mid-2016. Upon completion of the study, or at any earlier point, both parties will have the option toexpand the collaboration to include a pivotal registration study. Additional details of the collaboration were not disclosed.BioLineRx will hold a conference call to discuss the collaboration today, January xx, 2016, at 10:00 am EST. To access the conference call, please dial 1-888-281-1167 from the U.S. or +972-3-918-0610 internationally. The call will also be available via live webcast through BioLineRx’s website. A replay ofthe conference call will be available approximately two hours after completion of the live conference call. To access the replay, please dial 1-888-326-9310from the U.S. or +972-3-925-5904 internationally. The replay will be available through January xx, 2016. About Pancreatic CancerThere are a number of types of pancreatic cancer. Based on available worldwide numbers, in 2012, pancreatic cancers of all types were the seventh mostcommon cause of cancer deaths. According to the American Cancer Society, in 2015 nearly 50,000 were diagnosed with pancreatic cancer and an estimated40,000 will die from the disease. The most common type of pancreatic cancer is pancreatic adenocarcinoma, which accounts for about 85 percent of cases.These adenocarcinomas start within the part of the pancreas that makes digestive enzymes. There are usually no symptoms in the early stages of the diseaseand symptoms that are specific enough to suggest the onset of pancreatic cancer typically do not develop until the disease has reached an advanced stage.The five-year survival rate of pancreatic adenocarcinoma is around 7 percent.  About BL-8040BL-8040 is a short peptide for the treatment of acute myeloid leukemia, solid tumors, and certain hematological indications. It functions as a high-affinityantagonist for CXCR4, a chemokine receptor that is directly involved in tumor progression, angiogenesis, metastasis and cell survival. CXCR4 is over-expressed in more than 70% of human cancers and its expression often correlates with disease severity. In a number of clinical and pre-clinical studies, BL-8040 has shown robust mobilization of cancer cells from the bone marrow, thereby sensitizing these cells to chemo- and bio-based anti-cancer therapy, aswell as a direct anti-cancer effect by inducing apoptosis. In addition, BL-8040 has also demonstrated robust stem-cell mobilization, including themobilization of colony-forming cells, and T, B and NK cells. BL-8040 was licensed by BioLineRx from Biokine Therapeutics and was previously developedunder the name BKT-140.About BioLineRxBioLineRx is a clinical-stage biopharmaceutical company dedicated to identifying, in-licensing and developing promising therapeutic candidates. TheCompany in-licenses novel compounds primarily from academic institutions and biotech companies based in Israel, develops them through pre-clinicaland/or clinical stages, and then partners with pharmaceutical companies for advanced clinical development and/or commercialization. BioLineRx’s leading therapeutic candidates are: BL-8040, a cancer therapy platform, which is in the midst of a Phase 2 study for relapsed/refractory AML,has recently initiated a Phase 2b study as an AML consolidation treatment, has recently initiated a Phase 1/2 study in hMDS and AA, and has successfullycompleted a Phase 1 study in stem cell mobilization; and BL-7010 for celiac disease, which has successfully completed a Phase 1/2 study. In addition,BioLineRx has a strategic collaboration with Novartis for the co-development of selected Israeli-sourced novel drug candidates.For more information on BioLineRx, please visit www.biolinerx.com or download the investor relations mobile device app, which allows users access to theCompany’s SEC documents, press releases, and events. BioLineRx’s IR app is available on the iTunes App Store as well as the Google Play Store.  Various statements in this release concerning future expectations constitute “forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995. These statements include words such as “may,” “expects,” “anticipates,” “believes,” and “intends,” and describe opinionsabout future events. These forward-looking statements involve known and unknown risks and uncertainties that may cause actual results, performance orachievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.Some of these risks are: changes in relationships with collaborators; the impact of competitive products and technological changes; risks relating to thedevelopment of new products; and the ability to implement technological improvements. These and other factors are more fully discussed in the “RiskFactors” sections of recent annual reports filed by the parties to this release. In addition, any forward-looking statements represent the parties’ views onlyas of the date of this release and should not be relied upon as representing their views as of any subsequent date. The parties do not assume any obligationto update any forward-looking statements unless required by law.Contact:PCG AdvisoryVivian CervantesInvestor Relations212-554-5482vivian@pcgadvisory.comorTsipi HaitovskyPublic Relations+972-3-624-0871tsipihai5@gmail.com  Schedule IDATA SHARING AND SAMPLE TESTING SCHEDULE[*]  SCHEDULE 2.4Potential BioLineRx Subcontractors(in accordance with Section 2.4)[*] Exhibit 4.41 Employment AgreementThis Employment Agreement (this “Agreement”) is entered into on this 1st day of March, 2016 by and between BioLineRx Ltd., a company organized underthe laws of the State of Israel, with its offices at Modi’in Technology Park, 2 HaMa’ayan Street, Modi’in 7177871 (“BioLine”), and Dr. Merril Gersten,whose address is 13472 Calle Colina, Poway, California 92064 (“Executive”). WHEREAS, BioLine desires to employ Executive and Executive desires to enter into such employment, on the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, the parties agree as follows: 1.Employment. 1.1.Executive shall serve in the position described in Exhibit A commencing on the date indicated in that exhibit (the “Commencement Date”).Executive shall be under the direct supervision of the Chief Executive Officer of BioLine or any individual designated by BioLine at its solediscretion (the “Supervisor”). Executive shall perform the duties, undertake the responsibilities and exercise the authority as determined fromtime to time by the Supervisor diligently, conscientiously and in furtherance of BioLine’s best interests. Executive’s duties and responsibilitieshereunder may also include other services performed for affiliates of BioLine. 1.2.During the Employment Period (as defined in Section 5), Executive shall honestly, diligently, skillfully and faithfully serve BioLine, andundertakes to devote all of Executive’s efforts and the best of her qualifications and skills to promoting the business and affairs of BioLine, andshall at all times act in a manner suitable of her position and status in BioLine. 1.3.Executive agrees and undertakes to inform BioLine, immediately after becoming aware of any matter that may in any way raise a conflict ofinterest between Executive and BioLine. Executive shall not receive any payment, compensation or benefit from any third party in connection,directly or indirectly, with the execution of Executive’s position in BioLine. 1.4.Executive will be employed on a full time basis. Executive shall not undertake or accept any other paid or unpaid employment or occupation orengage in any other business activity except with the prior written consent of BioLine, which shall not be unreasonably withheld. 1.5.Executive hereby confirms and declares that her position is one that requires a special measure of personal trust and loyalty. Accordingly, theprovisions of the Hours of Work and Rest Law, 1951 shall not apply to Executive, and Executive shall not be entitled to any compensation forworking more than the maximum number of hours per week set forth in said law or any other applicable law. 1.6.Executive may also work outside of regular working hours and outside of regular working days, as may be required by BioLine from time to time. 1.7.The parties hereby confirm that this is an agreement for personal services and that the relationship between the parties shall not be subject to anygeneral or special collective employment agreement or any custom or practice of BioLine with respect to any of its other employees or contractors. 2.Place of Performance. Executive shall be based at BioLine’s facilities in Modi’in. In addition, Executive may be required to perform work at such otherplaces as are appropriate to the functions being performed by BioLine. Executive acknowledges and agrees that her position may involve significantdomestic and international travel.  3.Executive’s Representations and Warranties. Executive represents and warrants that the execution and delivery of this Agreement and the fulfillmentof all its terms: (i) will not constitute a default under or conflict with any agreement or other instrument to which Executive is a party or by whichExecutive is bound; and (ii) do not require the consent of any person or entity. Further, with respect to any past engagement Executive may have hadwith third parties and with respect to any allowed engagement Executive may have with any third party during the term of her engagement with BioLine(for purposes hereof, such third parties shall be referred to as “Other Employers”), Executive represents, warrants and undertakes that: (a) Executive’sengagement with BioLine is and will not be in breach of Executive’s undertakings towards Other Employers, and (b) Executive will not disclose toBioLine, or use, in provision of any services to BioLine, any proprietary or confidential information belonging to any Other Employers. Executivefurther represents and warrants that: (y) she does not suffer from any medical condition that may prevent from complying with duties and obligationsunder this Agreement; and (z) to Executive’s best knowledge, the employment by BioLine will not cause any hazard to Executive’s health. 4.Proprietary Information; Confidentiality and Non-Competition. By executing this Agreement, Executive agrees to the provisions of BioLine’sProprietary Information, Confidentiality and Non-Competition Agreement attached as Exhibit B hereto. The terms of Executive’s employment arepersonal and confidential, and Executive undertakes to refrain from disclosing such terms to any third party, other than her consultants, immediatefamily or as otherwise required by Israeli, United States and California law or injunction. 5.Period of Employment. Executive’s employment by BioLine commences on the Commencement Date and shall then continue, unless terminated inaccordance with the provisions of this Agreement. The time during which Executive shall be employed by BioLine shall be referred to as the“Employment Period”. 5.1.Death or Disability. Executive’s employment will terminate upon the death of the Executive, and BioLine may terminate Executive’s employmentafter having established Executive’s disability. For purposes of this Agreement, “disability” means a physical or mental infirmity which impairsExecutive’s ability to substantially perform Executive’s duties under this Agreement which continues for a period of at least ninety (90)consecutive days. Upon termination for disability, Executive shall be entitled to severance pay required by law, in accordance with the terms ofthis Agreement. 5.2.Termination at Will. Either party may terminate the employment relationship hereunder at any time by giving the other party prior written notice,as set forth in Exhibit A (the “Notice Period”). 5.3.Termination for Cause. In the event of a termination for Cause (as defined below), BioLine may immediately terminate the employmentrelationship effective as of the time of notice of the same, and without payment in lieu of prior notice. “Cause” means (i) a material breach of trustincluding but not limited to theft, embezzlement, self-dealing, prohibited disclosure to unauthorized persons or entities of confidential orproprietary information of or relating to BioLine or its affiliates, unless required by law or injunction, and the engaging by Executive in anyprohibited business competitive to the business of BioLine; (ii) any willful failure to perform or failure to perform competently any of Executive’sfundamental functions or duties hereunder, which was not cured within thirty (30) days after receipt by Executive of written notice thereof; (iii)any breach of this Agreement by Executive; and (iv) any other cause justifying termination or dismissal without severance payment underapplicable law. 2 5.4.Notice Period; End of Relations. During the Notice Period, the employment relationship hereunder shall remain in full force and effect and thereshall be no change in Executive’s position with BioLine, the Salary, social benefits or in any other obligations of either party hereunder. At theoption of BioLine, Executive shall during such period either continue with Executive’s duties or remain absent from BioLine’s premises.However, BioLine, at its own discretion, may terminate this Agreement and the employment relationship at any time immediately upon a writtennotice and pay Executive an amount equal to the Salary referred to in Section 6 below including any and all social benefits that would have beenpaid to Executive during the Notice Period in lieu of the prior notice. In any event of the termination of this Agreement, Executive shall (a)immediately return all company property, equipment, materials and documents and (b) cooperate with BioLine and use Executive’s best efforts toassist with the integration into BioLine’s organization of the person or persons who will assume the Executive’s responsibilities. Under nocircumstances will Executive have a lien over any property provided by or belonging to BioLine. 5.5.Without derogating from all of BioLine’s rights according to the provisions of this Agreement and the law, upon the termination of thisAgreement, BioLine shall have the right to deduct from any payment to be paid to Executive any sum owed by Executive to BioLine by a writtendocument. 6.Salary. 6.1.BioLine shall pay or cause to be paid to Executive during the term of this Agreement a gross monthly salary in the amount set forth in Exhibit Aper month (the “Base Salary”). 6.2.The Salary will be paid no later than the ninth day of each calendar month after the month for which the Salary is paid, after deduction of any andall taxes and charges applicable to Executive, as may be in effect or which may hereafter be enacted or required by law. Executive shall notifyBioLine of any change which may affect Executive’s tax liability. 7.Relocation Costs Loan In order to assist in the costs related to Executive’s relocation, BioLine agrees to provide Executive with a loan in the amount of $15,000 under thefollowing terms: 7.1.The loan shall be provided within seven days after the date that this Agreement is signed, and shall bear linkage to the Israeli consumer priceindex and annual interest at the lowest rate allowed in accordance with the rules for employee loans currently in effect as established by the IsraeliIncome Tax Authority. 7.2.After completion of one year of employment, 33% of the loan (including accrued interest) shall be forgiven. 7.3.After completion of two years of employment, 100% of the loan (including accrued interest) shall be forgiven. 7.4.If Executive decides to terminate the employment arrangement prior to completion of two years of employment, the balance amount of loan thenin effect (including linkage and accrued interest) shall become payable within 30 days of termination, and Executive hereby agrees that thebalance amount shall be deducted from Executive’s Salary and/or any other payment due to Executive by BioLine. If BioLine decides toterminate the employment arrangement, other than for Cause as defined herein, the entire loan balance (including linkage and accrued interest)shall be immediately forgiven. Executive will be responsible for all income taxes that may be payable upon forgiveness of the loan and accrued interest. 3 8.Insurance and Social Benefits. Executive shall be entitled to the following benefits: 8.1.Manager’s Insurance/Pension Fund. During the Employment Period, BioLine will insure Executive under a “Manager’s Insurance Scheme” orpension fund as agreed to by the parties (collectively the “Policy”). In the case of a Manager’s Insurance Scheme, BioLine will pay an amountequal to 13⅓% of the Salary towards such Policy, of which 5% shall be for pension payments and 8⅓% shall serve to cover severancecompensation. In addition, BioLine shall deduct from the Salary an amount equal to 5% of the Salary and forward the same to the Policy. In thecase of a pension fund, BioLine will pay an amount equal to 14⅓% of the Salary towards such Policy, of which 6% shall be for pension fundpayments and 8⅓% shall serve to cover severance compensation, and in addition, BioLine shall deduct from the Salary an amount equal to 5.5%of the Salary and forward the same to the Policy. Any tax payable in respect of such contributions to the Policy shall be borne and paid byExecutive. The percentages listed above will be subject to adjustment in accordance with changes in applicable law from time to time. 8.2.Executive hereby agrees and acknowledges that all of the payments that BioLine shall make to the abovementioned Policy shall be instead of anyseverance pay to which Executive or Executive’s successors shall be entitled to receive from BioLine with respect to the salary from which thesepayments were made and the period during which they were made, in accordance with Section 14 of the Severance Pay Law 5723-1963 (the“Law”). The parties hereby adopt the General Approval of the Minister of Labor and Welfare, published in the Official Publications Gazette No.4659 on June 30, 1998, attached hereto as Exhibit C. BioLine hereby waives in advance any claim it has or may have to be refunded any of thepayments made to the manager’s insurance policy, unless (i) Executive’s right to severance pay is invalidated by a court ruling on the basis ofSections 16 or 17 of the Law (and in such case only to the extent it is invalidated), or (ii) Executive withdrew funds from the manager’s insurancepolicy for reasons other than an “Entitling Event”. An “Entitling Event” means death, disability or retirement at the age of sixty (60) or more. 8.3.Disability Insurance. In addition to the foregoing, during the Employment Period BioLine will bear the cost of disability insurance with aninsurance company (Ovdan Kosher Avoda). The amount paid by BioLine for such insurance shall be as generally accepted, but shall not exceed2.5% of the Salary. 8.4.Advanced Study Fund. During the Employment Period, BioLine will maintain for the Executive an advanced study fund (Keren Hishtalmut)recognized by the Israeli Income Tax Authorities, such that BioLine and Executive shall contribute to such fund an amount equal to 7.5% of theSalary and 2.5% of the Salary, respectively. Any tax payable in respect of such contributions to such fund shall be borne and paid by Executive.All payments and contributions of BioLine with respect to these benefits shall be limited to the Salary and up to the highest amount recognized bythe tax authorities. 8.5.Convalescence. During the Employment Period, Executive shall be entitled to receive convalescence allowance (Dmei Havra’a) pursuant toapplicable law. 8.6.Sick Leave. Executive shall be entitled to be absent from work each year due to illness for the number of days allowed pursuant to the Sick PayLaw 5736 - 1976, and shall be entitled to fully paid sick leave upon presentation of appropriate medical documentation regarding said illness.Any amounts paid to Executive on account of the disability insurance indicated in subsection 8.3 will be on account of sick leave payment. 8.7.Vacation. During the Employment Period, Executive shall be entitled to vacation in the number of working days per year as set forth in Exhibit A,as adjusted in accordance with applicable law. A “working day” shall mean Sunday to Thursday inclusive, and the use of said vacation days willbe coordinated with BioLine. Executive shall be entitled to accumulation and redemption of vacation days in accordance with BioLine’s policies,which may be amended from time to time in BioLine’s sole discretion. For the avoidance of any doubt, due to the Company’s request that Executive move to Israel by early May 2016, she may therefore be required toreturn to the US one or more times during the first year of employment to finalize her relocation. Therefore, the Company will not unreasonablywithhold its consent to allow Executive’s request for vacation. 4 8.8.Health Insurance. Beginning on the Commencement Date, the Company will provide Executive with private medical insurance and shall giveExecutive a summary of the insurance policy in English. Such insurance will be provided to Executive until the earlier of: (i) her making aliyahand becoming eligible for health insurance coverage in Israel and (ii) 18 months from the Commencement Date. 8.9.Mobile Phone; Computer. During the Employment Period, Executive shall be entitled to receive a mobile phone and a laptop computer.Executive shall use the mobile phone and computer (together hereinafter: the “Equipment”) in a standard and reasonable manner, and inaccordance with BioLine’s policies. The Executive hereby agrees that any amount due by Executive to BioLine in connection with theEquipment (including, e.g., compensation for loss or damage of the Equipment) shall be deducted from Executive’s Salary. 8.10.Automobile. During the Employment Period, for purposes of performance of Executive’s duties and tasks, BioLine shall make available toExecutive a company vehicle of a type to be chosen by BioLine in accordance with its policy which may be amended from time to time (the“Company Car”). Before delivery of the Company Car, Executive shall sign BioLine’s Vehicle Agreement, the form of which is attached heretoas Exhibit G. Executive shall use the Company Car in accordance with the Vehicle Agreement as well as with BioLine’s car policy then in effect.For the avoidance of doubt, Executive agrees that the cost of the leasing and the cost of the use of the Company Car shall not constitute acomponent of Executive’s Salary, including with regard to social benefits or any other right to which Executive is entitled by virtue of thisAgreement or under law. 9.BioLine Property. Executive acknowledges and agrees that the Equipment, email account and any other device or system providing for transmittal andstorage of information which are placed at Executive’s disposal by BioLine during the Employment Period are and shall remain the property of BioLine.Executive confirms her understanding that BioLine may review email correspondence and other information transmitted and stored by using theequipment stated above, and BioLine reserves the right to copy, store, present to others, and use such information. Executive acknowledges and agreesthat any messages and data sent from, received by, or stored in or upon BioLine’s computers and communications systems are the sole property ofBioLine, regardless of the form or content of these messages and data. Executive should not consider messages and data sent from, received by, or storedin or upon BioLine’s computer and communications systems to be private and should not send, receive, or store sensitive personal or private informationusing these systems. Executive is deemed to have consented, subject to any applicable law, to any reasonable use, transfer and disclosure of all messagesand data contained or sent via the BioLine’s computer and communications systems, including electronic mail. Executive shall fully comply withBioLine’s policies regarding its computers and network, as may be in effect from time to time. 10.Expenses. Executive shall be reimbursed for all direct business expenses borne by Executive, in accordance with BioLine’s policies as determined byBioLine from time to time, provided that such expenses were approved by Executive’s Supervisor in advance. As a condition to reimbursement,Executive shall be required to provide BioLine with all invoices, receipts and other evidence of expenditures as may be reasonably required by BioLinefrom time to time. 11.Equity Compensation. Subject to the approval of the Board of Directors of BioLine and the execution of the requisite agreements, Executive shall begranted (a) options to purchase Ordinary Shares par value NIS 0.10 each of BioLine, in the amount set forth in Exhibit A, and (b) performance stock unitsin the amount set forth in Exhibit A, all to be granted pursuant to, and in accordance with, the terms and conditions of the share incentive plan adoptedby BioLine. 12.Code of Business Conduct and Ethics; Internal Policies. Executive shall at all times comply with the Code of Business Conduct and Ethics attachedhereto as Exhibit D, the Policy regarding Securities Trades by Company Personnel attached hereto as Exhibit E, the Company’s Internal EnforcementPolicy attached hereto as Exhibit F, and all other internal policies and procedures of BioLine, as shall be updated from time to time. Updates to ExhibitsD, E and F, and copies of BioLine’s internal policies and procedures, can be obtained at BioLine’s human resources office. Executive represents that shehas read Exhibits D, E and F, will acquaint herself with BioLine’s other internal policies and procedures and agrees to comply with their terms, includingany amendments and updates thereto. 5 13.General. 13.1.The laws of the State of Israel shall apply to this Agreement and the sole and exclusive place of jurisdiction in any matter arising out of or inconnection with this Agreement shall be the Tel Aviv Regional Labor Court. The provisions of this Agreement are in lieu of the provisions of anycollective bargaining agreement, and therefore, no collective bargaining agreement shall apply with respect to the relationship between the partieshereto (subject to the applicable provisions of law). 13.2.This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof, and supersedesall prior written or oral agreements with respect to the subject matter hereof. This Agreement may not be modified except by written instrumentsigned by a duly authorized representative of each party. No failure, delay of forbearance of either party in exercising any power or right hereundershall in any way restrict or diminish such party’s rights and powers under this Agreement, or operate as a waiver of any breach or nonperformanceby either party of any terms of conditions hereof. If it shall be determined under any applicable law that a certain provision set forth in thisAgreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement. 13.3.This Agreement may be assigned by BioLine. Executive may not assign or delegate her duties under this Agreement without the prior writtenconsent of BioLine. This agreement shall be binding upon the heirs, successors and permitted assignees of Executive. The provisions of thisAgreement shall survive the termination of the Employment Period and the assignment of this Agreement by BioLine to any successor or otherassignee. 13.4.The parties agree that this Agreement constitutes, among other things, notification in accordance with the Notice to Executives (EmploymentTerms) Law, 2002. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. BioLineRx Ltd. By: ______________________________________ Name: ____________________________________ Title: _____________________________________Executive Name: _____________________________________ Signature: __________________________________ 6 Exhibit AParticulars of Employment1.Name of Executive:Merril Gersten2.Address of Executive:13472 Calle ColinaPoway, California 920643.Position in BioLine:Chief Scientific Officer4.Commencement Date:May 10, 20165.Notice Period:60 days6.Base Salary:NIS 52,0007.Equity Compensation100,000 stock options, subject to Board approval50,000 performance stock units (PSUs), subject to Board approval8.Vacation Days Per Year:209.Manager’s Insurance/Pension FundYes10.Disability InsuranceYes11.Advanced Study FundYes12.Mobile PhoneYes13.ComputerYes14.CarYes, senior manager level _______________________________________BioLine_______________________________________Executive 7 Exhibit BProprietary Information, Confidentiality and Non-Competition Agreement1.General. 1.1.All capitalized terms herein shall have the meanings ascribed to them in the Employment Agreement to which this Exhibit B is attached (the“Employment Agreement”). For purposes of any undertaking of Executive toward BioLine, the term BioLine shall include all subsidiaries andaffiliates of BioLine. 1.2.Executive’s obligations and representations and BioLine’s rights under this Exhibit B (this “Agreement”) shall apply as of the CommencementDate of the employment relationship between BioLine and Executive, and as of the first time in which Executive became engaged with BioLine,regardless of the date of execution of the Employment Agreement. 1.3.Executive’s undertakings hereunder shall remain in full force and effect after termination of this Agreement or the Employment Agreement, or anyrenewal thereof. 2.Executive acknowledges that he/she has received or may receive information of a confidential and proprietary nature regarding the activities andbusiness of BioLine, its subsidiaries or affiliates, all whether in oral, written, graphic, or machine-readable form, or in any other form, including, but notlimited to, (i) patents and patent applications and related information, (ii) trade secrets and industrial secrets, and (iii) drugs, compounds, molecules,building blocks, chemical libraries, reaction protocols for chemical libraries, chemical structures, chemical design and model relationship data, chemicaldatabases, assays, samples, media and other biological materials, procedures and formulations for producing any such materials, products, processes,ideas, know-how, trade secrets, drawings, inventions, improvements, formulas, equations, methods, developmental or experimental work, research orclinical data, discoveries, developments, designs, techniques, instruments, devices, computer software and hardware related to the current, future orproposed products and services, and including, without limitation, information regarding research, development, new service offerings or products,marketing and selling, business plans, forecasts, business methods, budgets, finances, licensing, collaboration and development arrangements, prices andcosts, buying habits and practices, contact and mailing lists and databases, vendors, customers and clients, and potential business opportunities, andpersonnel (collectively, “Confidential Information”). Confidential Information may also include information furnished to BioLine by third parties,which, for purposes of this Agreement, shall all be deemed Confidential Information of BioLine. Notwithstanding the aforesaid, information that is in thepublic domain, through no act or omission of Executive shall not be deemed Confidential Information. The Confidential Information and all right, titleand interest therein will remain at all times the exclusive property of BioLine (or any third party entrusting its own Confidential Information to BioLine). 3.At all times during the Employment Period and thereafter, Executive will hold all Confidential Information in strictest confidence and will not disclose,use, or make any copies thereof, unless required to by law or injunction. Executive hereby assigns to BioLine any rights that Executive may have oracquire in such Confidential Information and recognize that all Confidential Information shall be the sole property of BioLine and its assigns orlicensors, as applicable. 8 4.Executive represents that he/she has assigned to BioLine all inventions, original works of authorship, developments, improvements, and trade secretswhich were conceived, developed, made or reduced to practice by Executive prior to the date of the this Agreement or the Commencement Date,whichever is earlier (collectively referred to as “Prior Inventions”), in which Executive has or purports to have any ownership interest in or a license touse, and which relate to BioLine’s current or proposed business, products or research and development. Notwithstanding the foregoing, this Agreementwill not be deemed to require assignment of any invention which was developed entirely on Executive’s own time without using BioLine’s equipment,supplies, facilities, or Proprietary Information and which is not related to the BioLine’s actual business, research or development. In addition, theAgreement will not apply with respect to inventions, if any, that were reduced to practice, made or conceived by Executive not in connection withExecutive’s relationship with BioLine and have been fully disclosed to BioLine prior to Executive’s engagement with BioLine (“ExcludedInventions”). All Excluded Inventions existing as of the date hereof are listed in Schedule 1 hereto. If, in the course of Executive’s employment,Executive incorporates an Excluded Invention into a product, process or machine of BioLine, BioLine is hereby granted and shall have a nonexclusive,royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicenses) to make, have made, modify, useand sell such Excluded Invention. Notwithstanding the foregoing, Executive agrees that: (i) Executive will not incorporate, or permit to be incorporated,Excluded Inventions in any Inventions of BioLine without the BioLine’s prior written consent, (ii) Executive’s failure to obtain such prior consent shallnot affect the grant of the license relating to the Excluded Inventions as specified in this Section 4. 5.Executive will promptly disclose and describe to BioLine all inventions, improvements, designs, concepts, techniques, methods, processes, know how,and trade secrets, whether or not patentable, copyrightable or protectable as trade secrets that are made, developed, conceived or first reduced to practiceor created by Executive, whether alone or jointly with others, during Executive’s employment with BioLine (i) which relate to BioLine’s business oractual or demonstrably anticipated research or development, (ii) which are developed in whole or in part on BioLine’s time or with the use of any ofBioLine’s Confidential Information or other information, equipment, supplies, facilities or trade secret information, or (iii) which result directly orindirectly from any work performed by Executive for BioLine (the “Inventions,” and each an “Invention”). 6.Executive hereby assigns and agrees to assign in the future (when any such Inventions or Proprietary Rights (defined below) are first reduced to practiceor first fixed in a tangible medium, as applicable) to BioLine or its designee(s) all of Executive’s right, title and interest in and to any and all Inventions(and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes. Executive further specificallyassigns to BioLine all original works of authorship, including any related moral rights, which are made by Executive (solely or jointly with others)during the Employment Period which are protectable by copyright pursuant to applicable copyright law. Executive also agrees to assign all of her right,title and interest in and to any particular Invention to any third party, including without limitation government agency, as directed by BioLine.Executive hereby waives and irrevocably quitclaims to BioLine any and all claims, of any nature whatsoever, that Executive now has or may hereafterhave for infringement of any and all rights in Inventions and Proprietary Rights. To the extent any moral rights cannot be assigned under applicable lawand to the extent the following is allowed by the laws in the various countries where moral rights exist, Executive hereby waives such moral rights andconsent to any action of BioLine that would violate such moral rights in the absence of such consent. The term “Proprietary Rights” shall mean: (i) patents, whether in the form of utility patents or design patents and all pending applications for suchpatents; (ii) trademarks, trade names, service marks, designs, logos, trade dress, and trade styles, whether or not registered, and all pending applicationsfor registration of the same; (iii) copyrights or copyrightable material, including moral rights, including but not limited to books, articles andpublications, whether or not registered, and all pending applications for registration of the same; and (iv) all other intellectual property rights throughoutthe world. 9 7.Executive specifically acknowledges and agrees that Executive’s duties with BioLine will entail the invention and development of new ideas,technologies, products and other confidential and proprietary information, and that the creation of any such intellectual property is an inherent part ofExecutive’s duties with BioLine. Executive expressly agrees that the consideration paid to Executive pursuant to her Employment Agreementconstitutes the sole consideration to which Executive may be entitled to for the assignment of any and all Inventions or Proprietary Rights made,developed, conceived or first reduced to practice or created by Executive (or with her assistance or contribution) including, without limitation, inaccordance with Section 134 of the Patent Law, 5727-1967 (the “Patent Law”), and Executive shall not be entitled to receive any additionalconsideration in this respect whatsoever. Without derogating from the aforesaid, it is hereby clarified that the level of Executive’s compensation andconsideration has been established based upon the aforementioned waiver of rights to receive any such additional royalties, consideration or otherpayments. The above will apply to any “Service Inventions” as defined in the Patent Law. It being clarified that under no circumstances will Executivebe deemed to have any Proprietary Right in any Service Invention, notwithstanding the provision or non-provision of any notice of an invention orBioLine’s response to any such notice, under Section 132(b) of the Patent Law. This Agreement is expressly intended to be an agreement with regard tothe terms and conditions of consideration for Service Inventions in accordance with Section 134 of the Patent Law. 8.Executive will assist BioLine in every proper way to obtain, and from time to time enforce, any Proprietary Rights relating to any Inventions in any andall countries. To that end Executive will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) asBioLine may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and theassignment thereof. In addition, Executive will execute, verify and deliver assignments of such Proprietary Rights to BioLine or itsdesignee. Executive’s obligation to assist BioLine with respect to Proprietary Rights relating to any such Inventions in any and all countries shallcontinue indefinitely beyond termination of the Employment Period for any reason (the “Termination Date”), but BioLine shall compensate Executiveat the rate of $350 per hour after the Termination Date for the time actually spent by Executive at BioLine’s request on such assistance. 9.If BioLine is unable for any reason, after reasonable effort, to secure Executive’s signature on any document needed in connection with the actionsspecified in the preceding paragraph, Executive hereby irrevocably designates and appoints BioLine and its duly authorized officers and agents asExecutive’s agent and attorney in fact, which appointment is coupled with an interest, to act for and in Executive’s behalf to execute, verify and file anysuch documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as ifexecuted by Executive. Executive hereby waives and holds BioLine harmless from any and all claims, of any nature whatsoever, which Executive now ormay hereafter have for infringement of any Proprietary Rights assigned hereunder to BioLine. 10.Executive agrees to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be requiredby BioLine) of all Confidential Information developed by Executive and all Inventions made by Executive during the Employment Period to BioLine,which records shall be available to and remain the sole property of BioLine at all times. 11.During the Employment Period, Executive will not improperly use or disclose any confidential information or trade secrets, if any, of any formeremployer or any other person to whom Executive has an obligation of confidentiality, and Executive will not bring onto the premises of BioLine anyunpublished documents or any property belonging to any former employer or any other person to whom Executive has an obligation of confidentialityunless consented to in writing by that former employer or person. 12.Upon the earlier of (i) a written request by BioLine; or (ii) the expiration or termination of the employment, Executive shall promptly return to BioLineall Confidential Information, together with any and all copies or excerpts thereof and any and all other information directly or indirectly derivedtherefrom. Return or destruction of the Confidential Information as required hereunder shall not affect Executive’s remaining obligations pursuant to thisAgreement. 10 13.Non-Competition; Non-Solicitation. 13.1.In consideration of Executive’s terms of employment, which include special compensation for Executive’s undertakings under this Section 12,and in order to enable BioLine to effectively protect its Proprietary Information, Executive undertakes that during the Employment Period and fora period of twelve (12) months from the Termination Date, Executive will not directly or indirectly: (i) carry on or hold an interest in anycompany, venture, entity or other business (including, without limitation, as a shareholder other than a minority interest in a publicly tradedcompany) which directly competes with the products or services of BioLine (a “Competing Business”) ; (ii) act as a consultant, employee orofficer or in any managerial capacity in a Competing Business, or supply in direct competition with BioLine services to any person who, toExecutive’s knowledge, was provided with services by BioLine any time during the twelve (12) months immediately prior to the TerminationDate; (iii) solicit, canvass or approach or endeavor to solicit, canvass or approach any person who, to Executive’s knowledge, was provided withservices by BioLine at any time during the twelve (12) months immediately prior to the Termination Date, for the purpose of offering services orproducts which directly compete with the services or products supplied by BioLine at the Termination Date; or (iv) employ, solicit or entice awayor endeavor to solicit or entice away from BioLine any person employed by BioLine any time during the twelve (12) months immediately priorthe Termination Date with a view to inducing that person to leave such employment and to act for another employer in the same or a similarcapacity. 13.2.Insofar as the protective covenants set forth in this Agreement are concerned, Executive specifically acknowledges, stipulates and agrees asfollows: (i) the protective covenants are reasonable and necessary to protect the goodwill, property and Proprietary Information of BioLine, andthe operations and business of BioLine; and (ii) the time duration of the protective covenants is reasonable and necessary to protect the goodwilland the operations and business of BioLine, and does not impose a greater restraint than is necessary to protect the goodwill or other businessinterests of BioLine. Nevertheless, if any of the restrictions set forth in this Agreement is found by a court having jurisdiction to be unreasonableor overly-broad as to geographic area, scope or time or to be otherwise unenforceable, the parties intend for the restrictions set forth in thisAgreement to be reformed, modified and redefined by such court so as to be reasonable and enforceable and, as so modified by such court, to befully enforced. 14.Executive represents that Executive’s performance of all the terms of the Employment Agreement and this Agreement does not and will not breach anyagreement to keep in confidence information acquired by Executive in confidence or in trust prior to Executive’s relationship with BioLine. Executivehas not entered into, and agrees that he/she will not enter into, any agreement either written or oral in conflict herewith. 15.Executive hereby consents that if Executive leaves the employ of BioLine, BioLine may notify any new employer of Executive’s rights and obligationsunder this Agreement. 16.Executive acknowledges that any violation or threatened violation of this Agreement may cause irreparable injury to BioLine, entitling BioLine to seekinjunctive relief in addition to all other legal remedies. 17.Executive recognizes and agrees that: (i) this Agreement is necessary and essential to protect the business of BioLine and to realize and derive all thebenefits, rights and expectations of conducting BioLine’s business; (ii) the area and duration of the protective covenants contained herein are in allthings reasonable; and (iii) good and valuable consideration exists under the Employment Agreement, for Executive’s agreement to be bound by theprovisions of this Agreement. 11 18.The terms of paragraphs 13.1 through 13.3 of the Employment Agreement shall apply to this Agreement. 19.EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS READ THIS AGREEMENT CAREFULLY, UNDERSTANDS ITS TERMS AND HAS BEENGIVEN THE OPPORTUNITY TO DISCUSS IT WITH INDEPENDENT LEGAL COUNSEL. Schedule 1 to Exhibit BLIST OF PRIOR INVENTIONSAND EXCLUDED INVENTIONS(SECTION 4) Modeling of the IL2 receptorModeling of the myeloid-T cell switchAnalysis of data relating to neuronal differentiation Analysis of data relating to Alzheimer's Disease 12 Exhibit CGeneral Approval Regarding Payments by Employers to a Pension Fund and Insurance Fundin lieu of Severance Pay under the Severance Pay Law 5723-1963By virtue of my power under Section 14 of the Severance Pay Law, 5723-1963 (hereinafter: the “Law”), I certify that payments made by an employercommencing from the date of the publication of this approval for the sake of his employee to a comprehensive pension provident fund that is not aninsurance fund within the meaning set forth in the Income Tax Regulations (Rules for the Approval and Conduct of Provident Funds), 5724-1964(hereinafter: the “Pension Fund”) or to managers’ insurance which includes the possibility to receive annuity payments under an insurance fund as aforesaid,(hereinafter: the “Insurance Fund”), including payments made by the employer by a combination of payments to a Pension Fund and an Insurance Fund(hereinafter: “Employer’s Payments”), shall be made in lieu of severance pay due to said employee with respect to the salary from which said payments weremade and for the period they were paid (hereinafter: the “Exempt Salary”), provided that all the following conditions are fulfilled: (1) The Employer’s Payments – (a) to the Pension Fund are not less than 14⅓% of the Exempt Salary or 12% of the Exempt Salary if the employer pays, for the sake of his employee, inaddition thereto, payments to supplement severance pay to a severance pay provident fund or to an Insurance Fund in the employee’s name, in the amount of2⅓% of the Exempt Salary. In the event that the employer has not paid the above mentioned 2⅓% in addition to said 12%, his payments shall come in lieuof only 72% of the employee’s severance pay; (b) to the Insurance Fund are not less than one of the following: (i) 13⅓% of the Exempt Salary, provided that, in addition thereto, the employer pays, for the sake of his employee, payments to secure monthly income inthe event of disability, in a plan approved by the Commissioner of the Capital Market, Insurance and Savings Department of the Ministry of Finance, in anamount equivalent to the lower of either an amount required to secure at least 75% of the Exempt Salary or in an amount of 2½% of the Exempt Salary(hereinafter: “Disability Insurance Payment”); (ii) 11% of the Exempt Salary, if the employer paid, in addition, the Disability Insurance Payment; and in such case, the Employer’s Payments shall come inlieu of only 72% of the employee’s severance pay. In the event that the employer has made payments in the employee’s name, in addition to the foregoingpayments, to a severance pay provident fund or to an Insurance Fund in the employee’s name, to supplement severance pay in an amount of 2⅓% of theExempt Salary, the Employer’s Payments shall come in lieu of 100% of the employee’s severance pay. (2) No later than three months from the commencement of the Employer’s Payment, a written agreement was executed between the employer and theemployee, which includes: (a) the employee’s consent to an arrangement pursuant to this approval, in an agreement specifying the Employer’s Payments, the Pension Fund and theInsurance Fund, as the case may be; said agreement shall also incorporate the text of this approval; (b) an advance waiver by the employer of any right which he may have to a refund of monies from his payments, except in cases in which the employee’sright to severance pay was denied by a final judgment pursuant to Section 17 of the Law, and in such a case or in cases in which the employee withdrewmonies from the Pension Fund or Insurance Fund, other than by reason of an entitling event; for these purposes an “Entitling Event” means death, disabilityor retirement at or after the age of 60. (3) This approval shall not derogate from the employee’s right to severance pay pursuant to any law, collective agreement, extension order or employmentagreement with respect to compensation in excess of the Exempt Salary. 15th Sivan 5758 (June 9th, 1998). 13 Exhibit DBioLineRx Ltd. Code of Business Conduct and EthicsEffective as of January 1, 2011 POLICY STATEMENT It is the policy of BioLineRx Ltd. (the “Company”) to conduct its affairs in accordance with all applicable laws, rules and regulations of the jurisdictionsin which it does business. This Code of Business Conduct and Ethics (this “Code”) applies to the Company’s employees, officers and directors. This Codeis designed to promote: ·honest and ethical conduct by all of the Company’s employees, officers and directors, including the ethical handling by such persons of actual orapparent conflicts of interest between personal and professional relationships; ·full, fair, accurate, timely and understandable disclosure in the reports and documents the Company files with, or submits to, the U.S. Securities andExchange Commission (“SEC”) or the Israeli Securities Authority (“ISA”), and in other public communications made by the Company; ·compliance with applicable governmental laws, rules and regulations; ·the prompt internal reporting to the appropriate person of violations of this Code; and ·Accountability for adherence to this Code. All directors, officers and employees of the Company are subject to this Code and are expected to adhere to and comply with those principles andprocedures set forth in this Code that apply to them. The Company will take such disciplinary or preventative action as it deems appropriate to addressany existing or potential violation of this Code brought to its attention. APPROVALS AND WAIVERS Certain provisions of this Code require you to act, or to refrain from acting, unless prior approval is received from the appropriate person. Employeesrequesting approval pursuant to this Code should request such approval in writing from the Compliance Officer. Approvals relating to ExecutiveOfficers and Directors must be obtained from the Company’s Board of Directors. All other approvals may be granted by the Compliance Officer, orsuch officer’s designee. Other provisions of this Code require you to act, or to refrain from acting, in a particular manner and do not permit exceptions based on obtaining anapproval. Waiver of those provisions relating to Executive Officers, senior financial officers and Directors may only be granted by the Board ofDirectors. 14 RESPONSIBILITY FOR COMPLIANCE Your responsibility You are obligated to adhere to this policy in the performance of your job responsibilities. When faced with a situation that requires an evaluation of what is,and what is not, proper business conduct, begin by applying the following criteria: • Is the course of conduct legal? •Is the course of conduct in accordance with the guidelines set forth in this Code and with Company policies and procedures? •Would you or the Company be compromised or embarrassed if the situation were known by your co-workers or the public? • Does the intended course of conduct have the appearance of impropriety? If you are unable to answer “yes” to the first two questions and “no” to the second two questions with certainty, seek advice through the channels describedunder the section entitled “To seek advice or report non-compliance.” Remember that failure to report a violation of this Code is itself a violation. To seek advice or report non-compliance If you suspect non-compliance, or have a question as to any aspect of this Code, including its interpretation, application or compliance therewith, regardingyourself or any other employee of BioLineRx, you must seek the advice of the appropriate Company authority, such as your immediate supervisor, humanresources manager or General Counsel. If for any reason you feel uncomfortable discussing your concerns or questions with these individuals, or if you aredissatisfied with their responses, seek advice from the Internal Auditor. If you prefer, you may correspond anonymously with the Internal Auditor through ourconfidential mailbox: biolinerx@deloitte.co.il. The Company Compliance Team: Nurit BenjaminiAudit Committee Chairpersonemail: nurit378@gmail.comTel: 052-644-0745Linur Dloomy, CPA (Deloitte)Internal Auditore-mail: LDloomy@deloitte.co.ilTel: 052-583-9635Disciplinary action The Company intends to prevent the occurrence of conduct not in compliance with the Code, applicable laws or regulations, or other policies, proceduresand guidelines prepared by our Company and its business units and to halt any such conduct that may occur as soon as reasonably possible after itsdiscovery. Allegations of non-compliance with the Code will be investigated whenever necessary and evaluated at the proper level(s). Those found to be inviolation of this Code are subject to appropriate disciplinary action, up to and including termination of employment. Criminal misconduct may be referred tothe appropriate legal authorities for prosecution. 15 When in doubt . . . If you think you are being asked to behave or conduct business in an illegal, unethical or otherwise inappropriate manner, or you suspect others of suchbehavior, immediately report your concerns through the channels described above. You will not be penalized for reporting what you believe, in good faith,to be a breach of the Code; even if it later turns out that a violation has not occurred. THE EMPLOYMENT RELATIONSHIP Terms of employment BioLineRx employees are generally employed by the Company either pursuant to an employment contract or other arrangement. Subject to applicable law,both the employee and the employer are legally allowed to terminate the employment at will. This BioLineRx Code may be revised from time to time at theCompany’s discretion and is not a contract of employment. Anti-discrimination and anti-harassment BioLineRx hires, pays, promotes and makes other employment decisions based upon lawful factors, such as qualifications and performance, and withoutregard to race, sex, color, religion, age, national origin, sexual orientation, disability or any other basis that is protected under applicable law. Drug and alcohol abuse and drug-free workplace BioLineRx prohibits the illegal use, sale, purchase, transfer, possession or presence in one’s system of drugs, other than medically prescribed drugs, while onthe Company’s premises. Workplace violence BioLineRx does not tolerate workplace violence or threats of violence committed by or against employees or property. Conflict of interest and opportunities for personal gain All Directors, officers and employees must avoid relationships, activities or interests that conflict or appear to conflict with the interests of the Company.Directors, officers and all employees have an obligation to promptly disclose to their supervisor or local internal auditor any relationship, activity or interestthat could possibly involve or appear to involve an actual or potential conflict of interest. If you are unsure whether something is a conflict of interest you areobligated to promptly disclose it to your supervisor. 16 Related Party Transactions All Directors, officers and employees should immediately inform a representative of the Finance Department or General Counsel at the outset of negotiationsor contacts regarding a potential transaction between an entity or a person related to a Director, officer or employee of BioLineRx or its subsidiaries andBioLineRx or its subsidiaries and in any event prior to completion of any such transaction (without regard to size or materiality). Acceptance and giving entertainment or gifts You may never accept bribes, kickbacks, or other types of unusual payments from any organization or individual seeking to do business with, doing businesswith, or competing with BioLineRx. You may accept gifts or entertainment of nominal value as part of the normal business process if public knowledge ofyour acceptance would cause the Company no conceivable embarrassment. In accordance with foreign laws, you are prohibited from directly or indirectlyauthorizing, offering, promising or giving anything of value to a foreign governmental official as a means of influencing or inducing the official to obtain orretain business for BioLineRx. Fraud You may not engage in fraudulent conduct. “Fraud” is the deliberate practice of deception in order to receive unfair or unlawful gain. Financial reporting All financial and other records of the Company are required to accurately and fairly reflect the Company’s assets, liabilities, revenues and expenses. Outside employment or consulting Employment as a consultant, officer, or manager of another business organization requires prior written management approval. Outside employment orconsulting must never interfere with your job performance, utilize Company property or facilities, involve the implicit or explicit sponsorship of theCompany, or create the possibility of adverse publicity for the Company. Political activity and contributions Requiring anyone at BioLineRx to make a personal or corporate contribution to any candidate, political party, or holder of any governmental office isprohibited. You are free to participate in lawful political activity. Company records and accounts All Company records and accounts are the property of BioLineRx. Company records and accounts must be maintained at all times in reasonable detail and ina manner that accurately reflects all business and financial transactions, including the disposition of assets. The destruction or falsification of a document inorder to impede a litigation, governmental investigation, audit or examination is prohibited and may lead to prosecution for obstruction of justice. 17 Protection of the Company’s Property All employees should endeavor to protect the Company’s property, plant and other tangible and intangible assets. Company property should not be used fornon-Company business, though incidental personal use may be permitted. Expense accounts The Company recognizes its responsibility to reimburse you for legitimate business expenses. Those expenses should be within reasonable limits andcommensurate with the nature of the business assignment. You are expected to fully and clearly document business expenses and comply with the travelpolicy, which applies to your business unit/locale. Employee privacy Company information about employees is confidential and only those with a legitimate, work-related need may access such information. BioLineRx will notrelease any information about you to entities outside the Company without your written authorization or unless required to do so by applicable law, pursuantto a summons, subpoena or court order, or as deemed appropriate by the Company. Proprietary information and intellectual property Proprietary business, technical, personal information or any trade secret of the Company and its employees, customers and suppliers is consideredconfidential and must be safeguarded. Intellectual property developed by you or by others for the Company, or for which the Company has secured rightsfrom others, should be used only for the benefit of the Company. Accordingly, all intellectual property rights derived from confidential information or othermaterials made, originated or developed by the employees shall belong exclusively to the Company, and the employees who are the inventors or developersof such intellectual property rights shall have no rights or benefits therein or deriving therefrom. You may not disclose proprietary information of theCompany, its employees, customers, former employees, former customers or suppliers. These prohibitions continue even if you cease being employed by theCompany for any reason. Corporate data security Corporate data refers to all information collected, created, processed and/or maintained in the normal course of BioLineRx’s business. The data may be inmanual form (examples include verbal, handwritten, typed onto hard copy, microfilmed, photocopied or computer printouts), electronic form (examplesinclude e-mails, voice-mails, computer memory, magnetic tape, cassette, disk, or diskette), or BioLineRx specific information included in computerapplications programs, personal computing software, or operating system software. All BioLineRx employees and any other person having physical or electronic access to corporate data are responsible for safeguarding corporate data byknowing and keeping such corporate data confidential. 18 Electronic communications You may not access or use BioLineRx’s electronic and wire communications systems without appropriate authority. No individual shall use the passwords orcodes of another individual in order to gain access to that individual’s e-mail, voice mail, or Internet communications on BioLineRx’s systems unless firstauthorized to do so by that individual or the Company. These systems are provided for Company business, and only occasional personal use of the systems ispermissible. Occasional personal use means minimal and infrequent use that does not interfere with BioLineRx business or job performance. BioLineRx’ssystems may not be used to access or transmit material that could embarrass, harass, or offend other persons. External communications Requests for financial or business information, for interviews with any BioLineRx employee including comments or responding to requests relating toBioLineRx or its business, or the issuance of any press releases by any BioLineRx employee must be referred to the Company’s Chief Financial Officer. Public disclosure requirements All reports and submissions (“Reports”) of BioLineRx to the SEC, NASDAQ, the Israel Securities Authority and the Tel Aviv Stock Exchange must complywith applicable legal and exchange requirements and may not contain material misstatements or omit material facts. RELATIONSHIPS WITH BUSINESS ENTITIES AND AUTHORITIES Product quality We are committed to making safe quality products for our sublicensees and future users of our products. We expect each BioLineRx employees to contributeto these standards by providing high quality work, being fully familiar with applicable laws and regulations that are pertinent to their areas of responsibilityand participating in training programs provided by the Company covering broad ranges of activities. Employees are also encouraged to exert diligence inidentifying and preventing practices that could impair product quality, safety or compliance with law. Economic Sanctions BioLineRx employees must comply with the applicable laws and regulations relating to economic and trade sanctions and embargoes against certaincountries or entities. This includes refraining from indirect facilitation of a prohibited transaction. 19 Foreign corrupt practices and anti-boycott laws In accordance with local and/or foreign laws, BioLineRx employees are prohibited from directly or indirectly authorizing, offering, promising or givinganything of value to a foreign governmental official as a means of influencing or inducing the official to obtain or retain business for BioLineRx. BioLineRxemployees also are required to comply with applicable corrupt practices laws and anti-boycott laws that prohibit participation in certain foreign boycotts. Securities laws compliance/insider trading All BioLineRx employees must strictly obey all laws that prohibit the trading of securities based on prior knowledge of “material,” “non-public” informationabout BioLineRx. You may not trade BioLineRx stock, nor recommend to others that they trade BioLineRx stock, until such information has been publiclydisclosed. These restrictions also apply to any trading, including securities of other companies, based on material, non-public information about customers,competitors or business partners of BioLineRx, either when trading BioLineRx securities or the securities of these other companies as well. Unfair trade practices and fair dealing All BioLineRx employees must comply with applicable laws in their place of employment and the laws of other applicable jurisdictions that prohibit unfairor deceptive business acts and practices, as well as unfair competition Environmental protection As a Company we are committed to full compliance with all applicable environmental protection laws and expect your individual cooperation Health and safety Employees must observe safe practices on their jobs, report any injury or accident at work promptly and follow Company security and emergency policiesand procedures. 20 Exhibit E BioLineRx Ltd. STATEMENT OF COMPANY POLICY SECURITIES TRADES BY BIOLINERX LTD. PERSONNEL BioLineRx Ltd. (the “Company”) has adopted the following Policy regarding trading by Company personnel in the Company’s securities. ThePolicy applies to all Company personnel, including directors, officers, employees and consultants of the Company and its subsidiaries. The Need for a Policy This Policy has been developed: ·to educate all Company personnel; ·to set forth guidelines for courses of action; ·to protect the Company and all of its personnel against legal liability; and ·to preserve the reputation of the Company and its personnel for integrity and ethical conduct. Since the Company is a public company with its ordinary shares traded on the Tel Aviv Stock Exchange and its American Depositary Shares on theNasdaq Capital Market, transactions in the Company’s securities are subject to both Israeli and United States federal securities laws and regulations. Theselaws and regulations make it illegal for an individual to buy or sell securities of the Company while aware of “inside information.” The U.S. Securities andExchange Commission (SEC) and the Israel Securities Authority (ISA) take insider trading very seriously and devote significant resources to uncovering theactivity and to prosecuting offenders. Liability may extend not only to the individuals who trade on “inside information,” but also to their “tippers,” peoplewho leak the inside information to the individuals who trade. The Company and “controlling persons” of the Company may also be liable for violations byCompany employees. In addition to responding to the statutes and regulations, we are adopting this Policy to avoid even the appearance of improper conduct on the partof anyone employed by or associated with the Company (not just “insiders”). The Consequences The consequences of insider trading violations can be severe. The following are examples under U.S. law applicable to the Company: For individuals who trade on inside information (or tip information to others): ·a civil penalty of up to three times the profit gained or loss avoided; ·a criminal fine (no matter how small the profit) of up to $5 million; and ·a jail term of up to twenty years. 21 For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading: ·a civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the employee’s violation; and ·a criminal penalty of up to $25 million. Any of the above consequences – or even an SEC or ISA investigation that does not result in prosecution – can tarnish one’s reputation and irreparablydamage a career. In addition, if an employee violates this Policy, Company-imposed sanctions, including dismissal for cause, could result from failing tocomply with the Company’s policy or procedures. Our Policy It is the Company’s policy that no Company personnel nor any related persons may buy or sell securities of the Company while aware of materialnonpublic information or engage in any other action to take advantage of, or pass on to others, that information. This Policy also applies with equal force to information relating to any other company, including our collaborators, partners, suppliers, customersand others, obtained by Company personnel during the course of his or her service to or employment by the Company. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are noexception. Even the appearance of an improper transaction must be avoided to preserve our reputation for adhering to the highest standards of conduct. Policy Administrator. This Policy shall be administered by the “Policy Administrator,” who shall initially be the Chief Financial and OperatingOfficer. The Policy Administrator may, however, change from time to time, and you are encouraged to consult the copy of this Policy that is included on theCompany’s website to obtain current information concerning the Policy Administrator. Material Non-Public Information. Material non-public information (i.e., “inside information”) is any information that: ·is not generally known to the public, and ·which, if publicly known, would likely affect either the market price of the Company’s securities or a person’s decision to buy, sell or hold theCompany’s securities. Information “generally known to the public” is information released to the press or the industry and after public investors and the market have had areasonable period of time to evaluate and react to the information. All other information is regarded as non-public. Examples of Material Information. Common examples of information that will frequently be regarded as material are: ·quarterly or annual earnings results; ·projections of future results or sales; ·earnings or losses; ·news of a pending or proposed merger, acquisition or tender offer; ·an important financing transaction; 22 ·significant clinical or regulatory developments; ·the entry into or termination of a significant collaboration, joint venture or strategic alliance; ·changes in management; ·significant new products or discoveries; ·plans regarding strategy or significant capital investments; ·impending bankruptcy or financial liquidity problems; ·criminal charge or government investigations; ·internal financial information which departs from what the market would expect; and ·the gain or loss of any significant contract or agreement. Either positive or negative information may be material. We emphasize that this list is merely illustrative. Twenty-Twenty Hindsight. Remember, if your securities transactions become the subject of scrutiny, they will be viewed after-the-fact with thebenefit of hindsight. As a result, before engaging in any transaction, you should carefully consider how regulators and others might view your transaction inhindsight. Transactions by Family Members and Others in Your Household. These restrictions also apply to your “immediate family members” – that is, aspouse, parent, child or sibling and any other family member who shares the same address as, or is financially dependent on you. Employees are expected tobe responsible for the compliance of all family members with this Policy. Employees are also expected to be responsible for the compliance of other personswho live in their household, whether or not related, with this Policy. Tipping Information to Others. Whether the information is proprietary information about the Company or information that could have an impact onour stock price, Company personnel must not pass the information on to others. The above penalties apply, whether or not you derive any monetary benefitfrom another person’s actions. Inside information is often inadvertently disclosed or overheard in casual, social conversations. Care must be taken to avoidsuch disclosures. When Information is Public. As you can appreciate, it is also improper for Company personnel to trade the Company’s securities immediately afterthe Company has made a public announcement of material information. Since the Company’s shareholders and the investing public should be afforded timeto receive information and to act upon it, as a general rule you should not engage in any transactions until the beginning of the second business day after theinformation has been released. Thus, if an announcement is made on a Monday, Wednesday generally would be the first day on which you should trade. Ifan announcement is made on a Friday, Tuesday generally would be the first day on which you should trade. However, if the information released is complex,such as a prospective major financing or other transaction, it may be necessary to allow additional time for the information to be absorbed by investors. Insuch circumstances, you will be notified by the Policy Administrator regarding a suitable waiting period before trading. Prevention of Insider Trading by Others. If you become aware of a potential insider trading violation, you must immediately advise the PolicyAdministrator. You should also take steps, where appropriate, to prevent persons under your supervision or control from using inside information for tradingpurposes. 23 Confidentiality. Serious problems could be caused for the Company by the unauthorized disclosure of internal information about the Company,whether or not for the purpose of facilitating improper trading in the securities of the Company. Company employees should not discuss internal companymatters or developments with anyone outside of the Company, except as required in the performance of regular corporate duties. This prohibition applies specifically (but not exclusively) to inquiries about the Company that may be made by the financial press, investmentanalysts or others in the financial community. It is important that all such communications on behalf of the Company be through an appropriatelydesignated officer under carefully controlled circumstances. Unless you are expressly authorized to the contrary, if you receive any inquiries of this nature,you should decline comment and refer the inquirer to the Chief Financial and Operating Officer. Nothing in this Policy is meant to limit or change the obligations of confidentiality and non-use of non-public information that directors, officers,employees and consultants of the Company by virtue of their positions or their agreements with the Company. Such obligations also apply in the context ofany electronic chat room or electronic bulletin board, including participation under a pseudonym. Additional Prohibited Transactions Since we believe it is generally improper and inappropriate for Company personnel to engage in short-term or speculative transactions involving theCompany’s securities, it is our policy that such personnel should not engage in any of the following activities with respect to the Company’s securities: ·Trading in the Company’s securities on a short-term basis. Any ordinary shares of the Company purchased in the open market should be heldfor a minimum of 60 days. ·Short sales of the Company’s securities. ·Use of the Company’s securities to secure a margin or other loan, except in limited cases with the prior approval of the Policy Administrator. ·Transactions in straddles, collars, or other similar risk reduction devices, except in limited cases with the prior approval of the PolicyAdministrator. ·Transactions in publicly-traded options relating to the Company’s securities (i.e., options that are not granted by the Company), except inlimited cases with the prior approval of the Policy Administrator. Trading Blackouts Applicable to all Company Personnel While it is never permissible to trade based on material non-public information, we are implementing procedures to help prevent inadvertentviolations and avoid even the appearance of an improper transaction (which could result, for example, where Company personnel engage in a trade whileunaware of a pending major development). 24 Prohibited Periods for Trading. No person to whom this Policy is applicable may trade in the Company’s securities during the following periods: ·the periods starting on the 15th day after the close of each fiscal quarter and ending at the beginning of the second business day after the releaseof the Company’s financial results for each quarter and, in the case of the fourth quarter, financial results for the year end; and ·any other periods as determined by the Company. You will be notified by e-mail when you may not trade in the Company’s securities duringsuch periods, and you will also be notified when trading restrictions are lifted. There are no restrictions on exercising options without a sale. Selling the shares held as a result of exercising options is subject to the restrictions set forthabove. Pre-Clearance of Trades In order to ensure and maintain compliance with this Policy, all transactions in the Company’s securities (acquisitions, dispositions, transfers, etc.),including the execution of Trading Plans (as defined below), by directors, members of Executive Management, financial team members and designatedemployees must be pre-cleared in advance by the Policy Administrator. If you are a member of one of the groups listed above and you contemplate atransaction in the Company’s securities, you must contact the Policy Administrator or other designated individual prior to executing the transaction. ThePolicy Administrator will use his reasonable best efforts to provide approval or disapproval as soon as practicable. You must wait until receiving pre-clearance to execute the transaction. Neither the Company nor the Policy Administrator shall be liable for any delays that may occur due to the pre-clearanceprocess. If the transaction is pre-cleared by the Policy Administrator, it must be executed by the end of the second business day after receipt of pre-clearance. Notwithstanding receipt of pre-clearance of a transaction, if you become aware of material nonpublic information after receiving the pre-clearancebut prior to the execution of the transaction, you may not execute the transaction. Please note that such pre-clearance does not provide the insider with immunity from investigation or suit; it is the responsibility of theindividual to comply with the applicable securities laws and regulations. Exception for Trading Plans Notwithstanding the restrictions and prohibitions on trading in the Company securities as set forth in this Policy, persons subject to this Policy arepermitted to effect transactions in Company securities pursuant to approved trading plans established under Rule 10b5-1 under the Securities Exchange Actof 1934 (“Trading Plans”), including transactions during the prohibited periods discussed above. Rule 10b5-1 requires that these transactions be madepursuant to a plan that was established while the person was not in possession of material non-public information. In order to comply with this Policy, theCompany must pre-approve any such Trading Plan prior to its effectiveness. Company personnel seeking to establish a Trading Plan should contact thePolicy Administrator. Application of this Policy to Persons Who Cease to be Associated with the Company The laws against insider trading continue to apply to anyone who has material non-public information about the Company. Therefore, even if anindividual ceases to be employed by or associated with the Company, that person is prohibited by law from trading any securities of the Company for so longas he or she possesses material non-public information. 25 Company Assistance Any person who has any questions about specific transactions or this Policy in general may obtain additional guidance from the PolicyAdministrator. Remember, however, the ultimate responsibility for adhering to the Policy and avoiding improper transactions rests with you. In this regard,it is imperative that you use your best judgment. Certifications As a condition to continuing employment, all employees will be required to certify their understanding of and intent to comply with thisPolicy. Members of the Board of Directors, Senior Management and other personnel may be required to certify compliance on an annual basis. Certification The undersigned hereby certifies that he/she has read and understands, and agrees to comply with, the Company’s Statement of Company Policyregarding Securities Trades by Company Personnel, a copy of which was distributed with this Certification. Date: __________________________Signature ________________________ Name: ____________________________ (Please Print) 26 Exhibit FBIOLINERX LTD.Intra-Organizational Enforcement PlanPursuant to and in accordance with the Law for the Improvement of Internal Enforcement Proceedings in the Israel Securities Authority, 5770-2010 This plan was approved by the Board of Directors of the Company on December 22, 2012 and has been updated as of October 2013. 27 1.Contents 2. Senior officer declaration 3. General information on an administrative enforcement plan 4. Organizational structure and division of functions and responsibility 5. Guiding principles/issues addressed 6. Appointment of an internal enforcement officer 7. Contact and reporting 8. Sanctions in events of violations and failure to report 9. Findings of mapping of the existing situation 10. Relevant procedures 11. Assimilation plan 12. Annex A 28 2.Senior officer declaration 2.1CEO’s message The status of BioLineRx as a public company confers on it both advantages and responsibility. The main market for trading the Company’s shares is the TelAviv Stock Exchange. Therefore, we are subject to the Israeli Securities Law and the enforcement thereof by the Israel Securities Authority (“ISA”). When theISA learns of breaches of the law, it has the power to sue companies and individuals in criminal proceedings and (after amendments to the law from 2011) toimpose fines and other sanctions without the need to apply to the courts. The administrative enforcement plan is intended to help us comply with the law, to correctly address violations and to demonstrate to the ISA that we treatseriously anything that is related to the offering of our shares. Understanding the plan and enforcing it in day-to-day life provides a solid basis for theinvestors’ trust in particular and for the Company’s public reputation in general. Similarly to our code of business and ethics, this plan is intended for each and every Company employee, manager and Board member. I request and expect your personal commitment to the enforcement of the procedure and full cooperation in its application. This procedure is a living procedure which may change from time to time pursuant to relevant laws and regulations and according to the lessons learnedduring the assimilation of the plan. I trust each and every one of you to comply with both the written plan and its spirit. Dr. Kinneret SavitskyCEO 29 3.General information on an administrative enforcement plan 3.1Improvement of Internal Enforcement Proceedings in the ISA Law, 5770-2010 The Law for the Improvement of Internal Enforcement Proceedings in the Israel Securities Authority, 5770-2010 (the “Law”), which was approved by theKnesset in January 2011, constitutes a significant change that requires reporting companies to immediately address the requirements of the new Law. Themain parts of the Law regulate the establishment of an administrative committee that will deal with violations in the area of securities. If the committeereaches the conclusion that it was proven at the level of proof which is customary in civil law (a probability of more than 50%) that a violation wascommitted, it will be authorized to institute various means of enforcement against the violating party. The committee will deal with various violations that are related to the Securities Law, 5728-1968 (the “Securities Law”) and other relevant laws. Thecommon feature of such violations is that the mens rea that is set forth therein is at most that of negligence. The means of enforcement that the committee will be authorized to impose will be significant fines, a demand to pay damages to the party injured by theviolation, a payment to the State treasury which derives from profits that were generated as a result of the violation, a demand to institute acts to remedy theviolation and prevent its recurrence, a prohibition on holding office in certain bodies, a suspension or revocation of a license and suspended punishment. As is known, the Law establishes, inter alia, the strict responsibility of the CEO, due to which enforcement measures can be imposed as set forth in the Law. (a)“The CEO of the corporation and a partner other than a limited partner, are obligated to supervise and institute any and all reasonable means underthe circumstances of the case to prevent the commission of a violation by the corporation or partnership, as the case may be, or by any of theiremployees.” (b)If a violation is committed the presumption is that the CEO of the corporation or a partner other than a limited partner in the partnership, as thecase may be, has breached his obligation pursuant to Subsection (a) and may be subject to one or more of the means of enforcement as specifiedbelow…unless he proves that he has fulfilled his obligation pursuant to Subsection (a): (c)If the corporation has established adequate procedures to prevent a violation as provided in Subsection (b), appointed an officer on its behalf tosupervise the compliance therewith, including with regard to providing guidance to the corporation’s employees for the compliance therewith,and instituted reasonable steps to remedy the violation and prevent the recurrence thereof, the presumption is that the CEO or the partner, asthe case may be, has fulfilled his obligation as provided in Subsection (a). According to commentators, all the provisions of Subsection (c) lead to an internal enforcement plan. So, too, thought the Israel Securities Authority (the“ISA”), when in August 2011 it released a Document on criteria for recognition of an internal enforcement plan in the area of securities and investmentmanagement (the “ISA Document”) and set forth that: “The application in practice of an efficient enforcement plan by the corporation may be viewed favorably by the ISA with respect to the corporation orindividuals therein in the context of its discretion in respect of the exercise of its powers of enforcement pursuant to the law.” The ISA’s Document sets forth the standards that will be examined by the ISA when deliberating and deciding whether an efficient enforcement plan exists ata corporation. Based on the requirements of the Law, the ISA’s Document and the understanding of the Company’s management, the relevantinformation and instructions have been incorporated into the enforcement plan document that is set forth below. 3.2What is an enforcement plan This internal enforcement plan document is a document that is unique to the Company which set forth the activities to be undertaken in order to preventthe violations listed in the schedule to the administrative enforcement law. 30 3.3Objectives of an enforcement plan The creation, implementation and assimilation of a correct and suitable enforcement plan can constitute a dual safety mechanism for the Company and theindividuals therein: üMinimization of the possibility of the occurrence of a violation Through the establishment of clear procedures, presentation of standards for conduct and implementation of controls for the application thereof inthe day-to-day activity, ensuring that any and all individuals taking part in the Company’s relevant activity are aware of their obligation and themanner of their compliance therewith. üImmediate effect on the examining entity in the event that a violation occurs As stated in the Law and in the ISA’s Document, an enforcement plan is an indication that the Company (its managers and directors) has doneeverything within its power to try to prevent violations. Such a plan will provide a defense to their benefit whereby they have instituted any and allreasonable measures to prevent the offence for a body which is examining and/or dealing with an occurrence of a violation. The primary objective of the enforcement plan is to ensure the proper activity of the Company in accordance with any and all regulatory obligations anddesired standard of conduct insofar as the same are relevant to the Securities Law and the regulations promulgated thereunder. The plan intends to establish existing proper conduct, to create a compilation of information and procedures that are relevant to the organization and toassimilate the conduct which is desired and required of each and every one of the Company’s employees and officers and to promote an organizationalculture of compliance with and respect for the Law. All employees and/or officers should be able to consult the document if and when they encounter an issue pertaining to the content of the plan and to findanswers with regard to the conduct that is appropriate and expected of them, whether it is a procedure which offers guidance on how to act or a referral toconsultation with a relevant body. 3.4Applicability of the enforcement plan This plan applies to BioLineRx (the “Company”) by virtue of its being a public company whose shares are listed on the Tel Aviv Stock Exchange. The planapplies to all of the Company’s echelons, i.e. the Company’s employees, senior officers, managers and directors. It is important to emphasize that the planalso applies to the employees of any and all subsidiaries of the Company in view of their involvement with the operations of the parent company. 3.5Prohibition on insurance and indemnification The Law explicitly contains a prohibition on insurance and/or indemnification in respect of violations of the Law. The Law establishes that a proceeding to impose a pecuniary sanction, an administrative proceeding or an arrangement proceeding cannot be insured. Apecuniary sanction imposed on a corporation, its controlling shareholder or an employee in a proceeding as aforesaid cannot be indemnified or paid, eitherdirectly or indirectly. However, an employee can be indemnified or insured for payment to the party injured by the violation and additionally for expenses that he shall haveincurred in relation to a proceeding that was conducted in the matter of the employee, irrespective of the results of the proceeding. In November 2011, the Company’s articles of association and letters of insurance and indemnification of the officers were updated accordingly, such that aprovision was set forth that permits the insurance and/or indemnification pursuant to the provisions of the Securities Law. 3.6Documentation and provision of documents for inspection and storing of documents The Law and the schedules include a reference to the issue of providing documents for inspection. As part of the enforcement plan and its procedures, theCompany is obligated to make available for inspection any and all relevant documents (for example, a prospectus that was authorized for publication, aregistration document or any and all reports, opinions, approvals, reports or notices that were filed) at its head office. Relevant procedures shall specify the responsibility for the fulfillment of the right of inspection insofar as will be required. 4.Organizational structure and division of functions and responsibility 4.1Organizational structure for the issue of administrative enforcement (areas of responsibility, reporting chain, decision making, etc.) 31 4.1.1Responsibility of the Board of Directors and its committees 4.1.1.1Formulation and adoption of the Company’s internal enforcement plan As the body responsible for outlining the Company’s policy and supervising its performance and acts, the Board of Directors (including itscommittees) plays a central and decisive role in the formulation and adoption of the Company’s internal enforcement plan and it bears the overallresponsibility for the supervision over the actual performance thereof. Pursuant to the ISA’s requirement that the Board of Directors determine which body is responsible for the supervision over the performance of theenforcement plan (the “Responsible Body”), whether the Board of Directors itself or the Audit Committee or any other committee thereof, the Boardof Directors determined that the Audit Committee shall be the Responsible Body as aforesaid.* Such responsibility of the Audit Committee as the Responsible Body shall be applied through: 1.Special-purpose meetings for the presentation of the subject. 2.Presentation, discussion and approval of the outline of the enforcement plan project. 3.Presentation of the findings of the mapping of the existing situation (compliance survey) and deliberation on the recommendationsderiving therefrom. 4.Presentation, discussion and approval of the procedures comprising the internal enforcement plan. 5.Approval of the final plan. The Audit Committee shall be involved in the implementation of the plan during the usual conduct of business as specified below. The Audit Committee, including all of the members thereof, will take an active part in all stages of the formulation and adoption of the plan: ·Setting the enforcement plan into motion ·Mapping of the existing situation ·Formulation of the plan and its procedures ·Formulation of the assimilation plan ·Ongoing monitoring This Plan was approved by the Audit Committee on March 21, 2012 and by the Board of Directors on March 22, 2012. 4.1.1.2Implementation of the plan The Responsible Body shall oversee the enforcement plan and ensure that it is executed by way of receiving periodic reports from the EnforcementOfficer and management, discussing them same and examining the means of action employed by the Company as arising therefrom. The AuditCommittee shall ensure that the Audit Committee and management review the need to update and refresh the plan once a year. The implementation of the plan shall be performed inter alia through ongoing reporting as specified above and through the assimilation plan as thesame is specified in Chapter 11 of this plan. 4.1.1.3Supervision of the enforcement plan The Responsible Body, i.e. the Audit Committee, shall supervise the plan’s performance. To this end, the internal auditor’s audit plan for 2013,includes follow-up of the implementation of the administrative enforcement plan. 4.1.1.4Handling violations of the enforcement proceedings The Responsible Body shall ensure that the provisions of the enforcement procedures are applied in practice. In addition, the Responsible Bodyshall ensure that violations of the plan will be appropriately handled, the deficiencies corrected, conclusions drawn, and in the appropriate cases,measures taken against the violating parties. (*) Relevant quotations from the minutes of the Board of Directors and Audit Committee are attached hereto, marked as Annex A. 32 The manner of contact and reporting is specified in Chapter 7 of this plan and was approved by the Audit Committee and Board of Directors as partof the plan’s approval. The Company shall approve in each procedure separately, insofar as necessary, the required sanctions and disciplinary action. 4.1.1.5Reporting to the Board of Directors and the Audit Committee The Audit Committee as the Responsible Body or a body authorized thereby shall report as needed and at least annually to the Board of Directors onthe implementation of the enforcement plan and related issues at the Committee’s discretion. A report to the Board of Directors may include but is not limited to supervision of the implementation of the plan through demanding periodicreports on the approval of the enforcement plan, updating the plan and its procedures, appointing relevant bodies, and the results of the supervisionof the implementation and effectiveness of the plan. 4.1.2Responsibility of the CEO/management – steering committee The ISA’s Document provided that the CEO is the officer with supervisory responsibility to ensure the compliance of the Company and itsemployees with the securities laws through the shaping of the internal enforcement mechanisms. Management is responsible for the shaping and formulation of the enforcement plan and its presentation for the Audit Committee’s approval. Inaddition it is responsible for the ongoing implementation of the plan. Management shall act through the Enforcement Officer, Adv. Norman Kotler, as appointed on February 5, 2012, and through the Chief Financial &Operating Officer, Philip Serlin, CPA. As part of the fulfillment of such obligation, the CEO has appointed a steering committee to shape the internal enforcement mechanisms. Thesteering committee includes the following: Chief Financial & Operating Officer Executive Director of Finance and Reporting General Counsel and Internal Enforcement Officer The steering committee is responsible for shaping the enforcement mechanisms, performing the compliance survey, writing the enforcement andassimilation plan and obtaining the suitable approvals from the relevant bodies. 4.1.3Responsibility of the Chief Financial & Operating Officer The Chief Financial & Operating Officer, as management’s representative, is responsible for leading and managing the process of writing theenforcement plan and determining the mechanisms included therein. Such power includes review and approval of the compliance survey, the enforcement plan and the procedures included therein. The Chief Financial & Operating Officer as the direct supervisor of the Enforcement Officer shall supervise his activity as the officer responsible forinternal enforcement. 4.1.4Responsibility of the General Counsel and Internal Enforcement Officer The General Counsel of the Company, as the officer in charge of the compliance culture and proper corporate governance in the Company and as theofficer responsible for the compliance of the Company, its officers, managers and employee with the laws and regulations that apply to them, isinvolved in shaping, implementing and ensuring the compliance with the enforcement plan and examining the suitability of the mechanisms setforth in the enforcement plan and its procedures to the laws that apply to the Company. The General Counsel shall take an active part in the deliberations of the steering committee of which he is a member, and by virtue of hisappointment as the Internal Enforcement Officer (also to be referred to in this plan as the “Officer”) at the Company shall act to fulfill hisobligations. Responsibility The Officer shall in practice lead the implementation of the enforcement plan. Powers shall be conferred on the Officer, enabling him to carry out theprocesses and mechanisms included in the enforcement plan and that are inter alia specified in the standards in the ISA Document and in Chapter 6of this plan, “Appointment of the Enforcement Officer”. 33 The Officer’s responsibilities and the acts for the implementation of the enforcement plan are specified in the assimilation plan in Chapter 11. For any question or query on the issue of the enforcement plan, please contact the Officer: Adv. Norman KotlerE-mail: normank@biolinerx.comTel. 02-5489139 Determination of a work plan for the fulfillment of all of his obligations pursuant to this plan The Officer shall be responsible to add as an annex 4.1.5Internal auditor’s responsibility The Internal Audit Law, 5752-1992, provides that the internal auditor of the Company is, inter alia, the body responsible for the examination ofissues such as: the propriety of the actions of the Company and the officers, the fulfillment of the provisions that are binding on the Company andthe carrying out of decision-making processes according to proper procedures and, consequently, contributes to the Company’s compliance andenforcement mechanisms. In accordance with his or her in-depth familiarity with internal control at the Company, the internal auditor shall take an active part in thedeliberations and shaping of the enforcement plan insofar as will be required. Ongoing supervision: One of the roles of the internal auditor in the context of an enforcement plan is supervising the activity of the Officer and the enforcement plan (asdefined in the ISA Document). In order to perform such role, the auditor shall set include a periodic audit in his or her work plan, which may include: Examining the relevance and effectiveness of the enforcement plan, the effectiveness of the Officer’s actions, examining the compliance with theenforcement plan and its procedures once every four years, handling irregular cases that were identified, completing the acts required in theenforcement plan within the required timelines. 34 5.Guiding principles/issues addressed BioLine is a dual-listed company that is listed on the Tel Aviv Stock Exchange and on NASDAQ in the U.S. The Company’s reporting obligations derive mainly from the requirements of the U.S. Securities and Exchange Commission (“SEC”), and the reportsderiving from its compliance with SEC’s requirements are also published in the ISA’s reporting system. Pursuant to an examination of the violations in the Fifth and Seventh Schedules to the Law, and an examination of the relevance to the Company by theGeneral Counsel and the Officer, the following issues were found to be relevant to the enforcement plan. 5.1Prospectus/annual report process Corporations publish a prospectus as part of the process of offering securities or bonds. In addition, under U.S. law, the Company is required to file an annualreport with the SEC. The process of preparation of the annual report is similar to the one related to the preparation of a prospectus. The purpose of theprospectus and the annual report is to provide to the general public and to the reasonable investor in particular information that is essential to the decision topurchase the Company’s securities. In view of the Company’s dual listing, it is obligated to institute a process with regard to a prospectus or annual report (and which is relevant to the process atthe main stock exchange) upon the completion of which, the Company shall be able to publish a full, reliable and up-to-date prospectus or report that isapproved by any and all relevant bodies and meets all of the regulatory requirements. The process shall be regulated in the context of a procedure or a checklist, specifying the acts that are required and which shall be updated from time to timeand as necessary. 5.2Reports to the SEC and ISA The purpose of the reports to the ISA is to update the investors and supervisory bodies on the Company’s condition and on developments or changes in itsactivity that may be relevant to the investing public. The Company’s reports are based on the reports to the SEC and which are required thereby. All of the reports must include full, reliable and current information and to fulfill any and all relevant regulatory requirements. A reporting obligation exists in various cases which affects the content and manner of reporting. This plan deals with three issues that arise from theobligations that apply as a result of the Fifth and Seventh Schedules 5.2.1 Periodic reports – In addition to an extensive annual report, a public company is required to release financial statements on a quarterlybasis. In the Company’s case, the structure and content of the reports are audited and supervised according to international accounting standards andthe rules of the SEC. Establishing an internal procedure regarding periodic reporting will assist the Company in minimizing the risks related to the deadline for andappropriateness of the periodic reporting, and the fulfillment and enforcement thereof will assist in the prevention of failures on the part ofemployees and officers with regard to the subject, directly or indirectly. 5.2.2 Immediate reports – BioLine, as a dual public company, is required to immediately report (according to SEC’s reporting rules) materialevents which may have an effect on the price of the Company’s securities. The identification of the need to report, the decision on the need to report,the weighing of conflicting interests, the timing and content of the report, requires the Company to have an orderly process, which includes theidentification of information which may have to be reported, the consultation with regard to the need to report, and the actual reporting, all withinthe timeframes prescribed in by applicable regulations. The purpose of establishing a process and determining rules of activity and conduct is to provide current, accurate and full reporting to the SEC, theISA and the public, on issues that are regulated in the securities laws and the regulations thereunder. Establishing an internal procedure regarding immediate reports will assist the Company in minimizing the risks related to the deadline for andappropriateness of the periodic reporting, and the fulfillment and enforcement thereof will assist in the prevention of failures on the part ofemployees and officers with regard to the subject, directly or indirectly. 35 5.3Prohibition on the use of inside information Inside information is “information on developments in the company, changes in its condition, expected developments or changes, or other information aboutthe company, which is unknown to the public and which, were it to become known to the public, would result in a material change in the price of theCompany’s security or the price of another security of which the Company’s security is a basic asset.” It was determined in the legislation that the use ofinside information for the purpose of a securities transaction or its transmission to another, are prohibited by law. Each corporation is required to adopt rules and guidelines in order to fulfill Chapter H1 of the Securities Law including all of its provisions, as well as theU.S. laws which relate to such issue, all in order to prevent the use of inside information by the Company’s employees and other bodies. It is necessary to put in place a process to cover the identification of the sensitive information, clarify the prohibition to use the same and assimilate it amongany and all persons who come into contact with such information. Establishing an internal procedure regarding the use of inside information will assist the Company in minimizing the risks related to the deadline for andappropriateness of the periodic reporting, and the fulfillment and enforcement thereof will assist in the prevention of failures on the part of employees andofficers with regard to the subject, directly or indirectly. 5.4Transactions with interested parties Interested party transactions are transactions entered into between one of the interested parties of the company (or between a company affiliated with thatparty or a person related to it) and the company. Such transactions contain a potential for a conflict of interests that is higher than in ordinary transactions.Therefore, applicable laws and regulations set forth conditions to the approval of such type of transactions, inter alia, the manner of approval thereof byvarious organs of the corporation (including, under circumstances set forth in the law, an approval by a general meeting of a majority of the shareholders ofthe company from among the those shareholders who do not have a personal interest in relation to the transaction), and the disclosure to the public of theterms and conditions of the transaction. In view of the regulatory requirements concerning the identification of such transactions, the manner of approval thereof and reporting thereon, a controlledprocess should be put in place concerning the subject, in order to reduce the related risks and assist in the prevention of failures in the matter. 5.5Procedure for period end closing In accordance with the Companies Law, 5759-1999, the Securities Law and U.S. securities laws, public companies must abide by all disclosure rules andprepare proper financial statements covering all accounting operations. Companies must therefore operate in accordance with orderly and well-defined workprocedures, and generate reports conform to accepted accounting practices, according to the provisions of the law. The procedure for period end closing,which is in the advanced stage of drafting, intended to set in order the preparation of the Company’s financial statements. 36 6.Appointment of an Internal Enforcement Officer 6.1Appointment of an Officer The Officer shall have the skills, knowledge and experience that are appropriate for his position and areas of responsibility and shall be a manager in theCompany who is familiar with the Company’s activity and the business and regulatory environment in which it operates. The Company’s management and the Audit Committee shall ensure that the Officer is given the powers and provided with suitable resources such that theywill enable him to fulfill his duties and exercise his powers (as will be specified below) in an optimal manner. 6.2The appointment and approval (and change) process The candidacy of the Officer shall be presented to the Audit Committee together with management’s recommendation to appoint him as the Officer, after thepresentation of his skills and experience. For the purpose of management and implementation of the internal enforcement plan, on February 5, 2012, theAudit Committee appointed Adv. Norman Kotler for the position of Internal Enforcement Officer.1 As set forth in the ISA Document, it was determined that the appointment of a new officer and/or removal of the Officer from his position require themanagement’s recommendation and the approval of the Audit Committee. 6.3Powers The Officer’s first and foremost authority is to implement the internal enforcement plan and lead the actual acts of enforcement pursuant to the plan,therequirements of the Law and the recommendations of the ISA and/or any other relevant body. The Officer’s powers include but are not limited to the powers listed in the ISA Document: 6.3.1Ongoing supervision: The Company, through the Officer, shall ensure on an ongoing basis that the plan is actually implemented in order to achieve its goals as specifiedabove. Such supervision shall be performed through: Formulation of periodic reports which include the means and actions that were taken in order to ensure the implementation of the plan, suspicionsofviolations that were raised and how they were addressed, examination of relevance, updates and progress of assimilation of the plan, etc. Presentation of the reports to the Company’s management and/or Audit Committee and/or Board of Directors and deliberation on the data reportedby the forum to be determined. Reporting of issues requiring immediate attention to the Company’s management and/or Audit Committee and/or Board of Directors. Documentation of the processes related to formulation of the plan, and the means that were instituted to implement the plan and to handleviolations, as well as documentation, provision of documents for inspection and preservation of documents pursuant to the provisions of the Law. 6.3.2Investigating suspected violations: In any case of a suspected violation brought to his knowledge, the Officer shall act to investigate the facts together with a special-purpose team to beappointed by the Chief Financial & Operating Officer, and if it transpires that there was a failure and a violation has occurred, he shall examine thereasons for the failure. 6.3.3Remedying the violation: The Officer shall act to remedy the discovered violation or failure as soon as possible and in accordance with the guidelines and approvals of therelevant bodies (the committee, managers and officers that are affected by the change, etc.) 6.3.4Reporting the violation: The Officer shall report the failure to the CEO, Chief Financial & Operating Officer, and according to the severity of the case, also to the chairman ofthe Audit Committee/Board of Directors, all according to the reporting requirements in this plan. Insofar as the CEO and/or Chief Financial & Operating Officer are involved in the failure, the Officer shall contact the chairman of the AuditCommittee. Insofar as the members of the Committee are involved in the matter, the Officer shall contact the internal auditor. 1See quote from the minutes of an Audit Committee meeting dated February 5, 2012, which appears in Annex A. 37 6.3.5Preventing the recurrence of the violation The Officer shall introduce new procedures or amendments to existing procedures, as well as controls over them, and approve the same with therelevant bodies. For the sake of clarity, by virtue of his position as the General Counsel of the Company, and for the purpose of performing his roleas the Officer, the Officer shall have direct access at all times to any and all offices and documents of the Company and to any and all records andinformation at the Company, all as required, in his discretion, for his work. Naturally, any and all inquiries and actions performed at the Company as part of the enforcement plan shall be performed in accordance with the lawand without harming or disrupting any investigation or inquiry by law of which the Company is aware. In any case of doubt whether or not an issue is within the Officer’s jurisdiction, the Officer or any other party shall consult with the Audit Committee. 6.4Supervision over the Officer As stated above, and as will be further specified below, the Audit Committee is responsible for the appointment and the termination of the appointment of theOfficer. The Chief Financial & Operating Officer is the direct supervisor of the General Counsel and Officer, and authority is conferred on him accordingly. The supervision over the Officer’s activity and the implementation of the enforcement plan is within the responsibility of the internal auditor in the contextof his or her ongoing work and at the request of the Audit Committee (such supervision shall be performed pursuant to the audit plan to be approved by theAudit Committee). 6.5Officer’s reporting responsibility The Officer shall report a failure to the CEO, Chief Financial & Operating Officer, and according to the severity of the case, also to the chairman of the AuditCommittee/Board of Directors, all according to the reporting requirements in this plan. The report to the Chief Financial & Operating Officer shall be performed after an initial inquiry proceeding by the Officer that shall include an initial factualinquiry. The report to the Chief Financial & Operating Officer shall be performed no later than two working days after having first learned of the suspected violation,and in any event, no later than four days from the date on which the report shall have been made to him. Insofar as the Chief Financial & Operating Officer and/or CEO are involved in the failing, the Officer shall contact the chairman of the Board of Directors orthe Audit Committee. Insofar as members of the Audit Committee are involved in the matter, the Officer shall contact the internal auditor. 7.Contact and reporting 7.1Possibilities of contact and reporting in the event of a suspected violation According to requirements and expectations, the Company has set forth internal mechanisms which enable the officers, directors, employees and serviceproviders of the Company to report and warn about deficiencies and failures in relation to the fulfillment of the provisions of the securities laws or violationsof the plan. The reporting mechanisms for administrative enforcement issues shall be identical to those prevailing at the Company (reporting mechanisms upon a breachof the code of ethics, contacting and reporting to the internal auditor, etc.). 38 a.Employees, officers and directors In any case of a suspected violation or improper conduct, the Company’s employees, officers and directors have the possibility (and sometimes theobligation) to contact their direct supervisor, the internal auditor and/or the chairman of the Audit Committee. Internal Auditor, Linur Dloomy, CPAAudit Committee Chairperson, Nurit Binyamini E-mail: ldloomy@deloitte.co.ilE-mail: Nurit378@gmail.com Tel. 052-5838635052-6440745 b.Service providers The Officer is responsible for adding a method of reporting by external parties. In order that all relevant parties shall be aware of their reporting obligation and of the various possibilities of reporting a possible suspected violation, thisinformation shall be passed on to all relevant parties in the context of this document, the training programs, the Company’s website, engagement agreements,employment documents, etc. All of the relevant parties shall be familiar with the existence of the enforcement plan, the main parts of the plan and where it may be inspected, as well as themethod of reporting and the rights of the reporting party (anonymity/confidentiality/favorable consideration in the event that he is the violating party, etc.). The Officer shall confirm that once a year the aforesaid information is communicated to relevant bodies in an initiated manner (for example a dedicated e-mail) The Officer shall confirm that the manner of approaching him is available at all times. 7.2[intentionally omitted] 7.3External reporting There are situations in which a violation or a suspected violation of the securities laws requires reporting to the competent authorities (the ISA or the IsraeliPolice, as the case may require). Even in those cases in which there is no reporting obligation, voluntary disclosure should be considered, since the ISA Document states that the ISA’senforcement considerations in exercising its powers in respect of corporations and individuals include the factors of voluntary disclosure by the corporationand the corporation’s cooperation with the ISA. Situations where there is a legal obligation to report to the ISA include among others situations in which an item was published which may mislead areasonable investor or trading was done based on inside information. In all situations in which there is no reporting obligation, the Officer shall discuss the need to report with the Chief Financial & Operating Officer and outsidelegal advisors. Their conclusion and the considerations that led thereto shall be brought for deliberation by the Audit Committee which shall be convened forsuch purpose. General Counsel together with the Chief Financial & Operating Officer shall report to the competent authorities in accordance with the Company’s decisionand soon after the date of the decision. 39 8.Sanctions in events of violation and failure to report As mentioned above, one of the functions of an enforcement plan is to encourage an organizational culture of compliance with, and respect for, the law. TheISA Document makes clear that “a culture of compliance means that the corporation is obligated to prevent violations of the law and to handle violations andviolating parties with the appropriate measures.” 8.1Determination of sanctions in events of violation In view of the ISA determination that “the Company shall institute suitable measures against violating parties, including, in appropriate cases, disciplinaryaction in respect of anyone violating the provisions of the securities laws or the provisions of the enforcement plan”, the Company shall set forth in eachprocedure separately, insofar as necessary, the disciplinary action that is required. 9.Findings of a mapping of the existing situation Pursuant to Chapter 7 in the ISA Document: “Adjustment of the plan to the corporation and the unique circumstances thereof, after the performance of acompliance survey in the area of the securities laws”. A summary of the first survey that was performed by Deloitte – Brightman Almagor Zohar, the Company’s consultants for the enforcement plan project, isavailable in the Officer’s files. 10.Relevant procedures Pursuant to the compliance survey, the Company has formulated the internal procedures that are specified below, while considering the Company’s structure,its unique features, and the potential risks and deficiencies in the area of the compliance with the securities laws to which it is exposed. The role of theprocedures is to regulate and determine rules of activity and conduct, the purpose of which is to prevent violations of securities laws as well as to create workprocesses which will address and control such processes. 10.1Statement of Company Policy – Securities Trades by BioLineRx Ltd. personnel The draft procedure was approved by the Board of Directors on May 15, 2012. The procedure in its final form was approved by the Company’s managementon June 6, 2012. The Chief Financial and Operating Officer was appointed as the officer responsible for the procedure. The procedure is relevant to all of the Company’s employees and to those who come into contact with information which may constitute inside information. 10.2Transactions involving interested and related parties The procedure was approved for the first time in December 2010. An amendment to the procedure was approved by the Company’s management on July 3,2012 and by the Audit Committee and Board of Directors in November 2012. The Executive Director of Finance and Reporting and the General Counsel were appointed as the officers responsible for the procedure. The procedure is mainly relevant to directors, other officers, the finance department and the General Counsel. 10.3Procedure for prospectus/annual report/other reports to the SEC and ISA (Disclosure Controls) The procedure was approved by Company management in September 2012 and by the Audit Committee and Board of Directors in November 2012. The Chief Financial and Operating Officer and the General Counsel were appointed as the officers responsible for the procedure. The procedure is relevant primarily to the Finance Department and the General Counsel 10.4Period end closing procedure (in progress) Approved on ____________ Appointed as procedure officer: Manager of Reporting and Control The procedure is relevant to the Chief Financial and Operating Officer and the Finance Department 40 11.Assimilation plan 11.1 Background An enforcement plan is a mechanism to encourage compliance which is binding on all of a company’s employees, managers and officers. This document is not intended just for display and the familiarity with its content and the implementation hereof are material to the Company. Therefore, the Company examined various possible mechanisms for the purpose of assimilation of the enforcement plan and the procedures relatedhereto, and established the selected mechanisms in an assimilation plan that is brought below. The purpose of the assimilation plan is to promote and ensure the commitment of all of the relevant parties to the plan, their knowledge of the mainparts hereof and the actual implementation hereof in all of their activity. 11.2 Presentation of the enforcement plan After the completion of the enforcement plan and its approval by the relevant bodies, the plan shall be presented to all of the employees andmanagers at a Company meeting. At such meeting, the CEO of the Company shall present the main parts of the plan, the importance of complianceherewith, the role of the Enforcement Officer and the manner of publication of the plan. Following the presentation of the plan, the plan and the procedures related hereto shall be posted on the Company’s website (path/link) and be sentvia e-mail to the distribution list of all of the Company’s employees and managers. A printed copy is to be kept at the offices of the Company’s CEO, Enforcement Officer and the Company’s auditor. The Enforcement Officer shall examine the need for updating the general documents of the Company (like, for example, disciplinary code, theemployment agreements, code of conduct, etc., as well as specific related procedures – employee initiation procedure, inside information procedure,etc.) in order that they include a reference to the subject of administrative enforcement. From the ISA Document: Measures shall be taken in order to ensure the commitment of all echelons of the corporation to the aforesaid procedures, for example, through theestablishment of such commitment in the disciplinary code or employment agreements. 11.3 Implementation and assimilation of the enforcement plan Publication of the enforcement plan The enforcement plan shall be published on the Company’s portal/website and distributed via e-mail to all of the Company’s employees. Following any updates of the enforcement plan, an e-mail shall be sent with a summary of the changes to all of the Company’s employees. Team/forum of assimilation of the administrative enforcement plan The steering committee referred to in Section 4.1.2 shall arrange for the implementation of the internal enforcement assimilation plan and theapproval of any updates or modifications that will be performed. New employee Each new employee, upon his or her arrival at the Company and in the context of the employee’s initiation process as conducted by HR, shall begiven access to the enforcement plan, be required to read the main parts hereof and sign that he or she has read the plan. During the first month of his employment, the new employee will be required to participate in training by the Internal Enforcement Officer on thesubject of administrative enforcement. 41 New officer Each new officer shall participate in a talk with the Administrative Enforcement Officer at which the internal enforcement plan will be presented tohim. At the end of the meeting, the officer shall sign a document in which he declares that he has read the plan and undertakes to comply with allprovisions hereof that are relevant to him. The officer shall also receive a copy of the plan via e-mail or a link to its location on the Company’swebsite. Assimilation and periodic communication – Company employees and managers In order to ensure that all employees are aware of the obligations that apply to them by virtue of the Improvement of Internal EnforcementProceedings in the ISA Law and the enforcement plan, a training session procedure shall be assimilated for all of the Company’s employees andmanagers as well as the Company’s officers. Alternatives: a.Frontal training sessions shall be held by the Officer on behalf of the Company or by an outside body. The training sessions shall beperformed at least once a year. The training sessions shall include a review of the enforcement plan, possible violations and reportingmethods. b.Written training sessions. At least once a year the Officer shall send a presentation via e-mail to the employees that will include anemployee guide – a review of the enforcement plan, possible violations and reporting methods. The employee shall be required to send areturn e-mail to the Officer in which he confirms that he has read the content of the guide and undertakes to act according thereto. The course presentation shall be attached as an annex. Each employee shall complete the course at least once a year. Every November the Officer shall distribute a request via e-mail to all of the Company’s employees and managers to complete the course within onemonth from the e-mail’s distribution date. Toward the expiration of such period (about one week before the target date) the Officer shall distribute a reminder e-mail to all of the Company’semployees and managers. At the end of the period the Officer shall examine the response rate. In each case where an employee/manager shall havefailed to fulfill the request, the Officer shall send an e-mail to the aforesaid employees and their managers, informing that they are required tocomplete the course and the proficiency test within 5 working days. Employees and managers who will fail to fulfill such demand shall be liable forsanctions by the Company pursuant to Chapter 8 of the enforcement plan. The Enforcement Officer shall confirm that 100% of the Company’s employees and managers have participated in the course over the year. At theend of the year, the Enforcement Officer shall issue a report with regard to the administrative enforcement which shall include the percentage of theemployees who shall have participated in training in such year. The course shall be maintained and updated by the Enforcement Officer pursuant to changes in the enforcement plan and/or the assimilation plan. Assimilation and periodic communication – officers/Board of Directors The officers and Board of Directors shall participate in frontal training sessions held by the Officer on behalf of the Company or an outside body.The training sessions shall be held at least once a year. The training sessions shall include a review of the enforcement plan, possible violations,reporting methods. The Enforcement Officer shall confirm that 100% of the Company’s officers/Board of Directors have participated in frontal training sessions over theyear and if not, he shall arrange to make up the missing sessions towards the end of the year. 11.4 Implementation and assimilation of the related procedures in the enforcement plan The Enforcement Officer, in collaboration with the relevant bodies (such as HR), shall map the populations that are relevant to the procedures relatedto the enforcement plan and determine which employees are required to participate in an assimilation process for each of the procedures (the“Mapping and Classification Process”). 42 Such process shall be performed at least once a year. According to the Mapping and Classification Process, the employee shall receive the procedures that are relevant to his areas of responsibility andbe required to sign a document whereby he understands their content and is committed to act according thereto. After the signing by him, the directsupervisor and the Officer shall sign in confirmation and receipt of the document. The Enforcement Officer shall also monitor the employees’aforesaid signatures of the procedures to confirm that they comply with the Mapping and Classification Process and that all of the relevantemployees have signed their commitment to all of the procedures that are relevant to their functions and areas of responsibility. The steering committee responsible for the implementation of the enforcement plan shall confirm that 100% of the employees have signed theprocedures that were sent to them. 11.5 Assimilation among parties external to the Company As part of his work plan, the Officer shall define parties external to the Company that are obligated to comply with the enforcement plan and/or therelated procedures, and have them sign the relevant procedures to attest that they have read and understood the obligations that apply to them byvirtue of the Law, the enforcement plan and the procedures. Existing engagements Insofar as necessary, an annex to the contract shall be added to existing engagements in which the external party undertakes to information securityand prevention of misuse of inside information in particular, and to the fulfillment of any and all regulatory obligations that apply to such party,including the Improvement of Internal Enforcement Proceedings in the ISA Law in general. New engagements Any new engagements with an external party shall be performed after the signing by such party of a confidentiality and engagement agreements. Aspart of such agreements, the external party shall undertake to maintain information security, prevent misuse of inside information in particular, andin general fulfill any and all regulatory obligations that apply to such party including the Improvement of Internal Enforcement Proceedings in theISA Law. 11.6 Monitoring of and reporting on the assimilation of the enforcement plan and the related procedures The Officer shall examine the fulfillment of the assimilation plan and report to the relevant bodies as set forth in Chapter 4 of the enforcement plan. 11.7 Assimilation acts pursuant to the updating of the enforcement plan Once a year and as necessary the Officer shall examine the need for updating the assimilation plan as it is presented below. The plan’s update shall be approved by the steering committee in the course of a meeting that will be convened to deliberate on the matter. In respect of each update of the enforcement plan, the Officer shall examine the need to inform all parties about the main changes or the full, updatedenforcement plan and shall choose the best suited means of assimilation in order to communicate the changes and/or the updated enforcement plan. In addition, in respect of each change the Officer shall examine the need for updating the existing assimilation plan and assimilation tools. The essential elements of the assimilation plan were approved by the Audit Committee and Board of Directors as part of the approval of theenforcement plan. 43 ANNEX A Decisions of the Board of Directors and Audit Committee Audit Committee decision from February 5, 2012: “RESOLVED, that Norman Kotler, Adv., be appointed the person responsible for implementation of the Company’s Administrative Enforcement Plan.” Audit Committee decision from March 21, 2012: “RESOLVED, to approve the Administrative Enforcement Plan as presented to the Committee and to recommend approval of the Plan by the Board ofDirectors.” Board of Directors decision from March 22, 2012: “RESOLVED, to approve the Administrative Enforcement Plan as presented to the Board, with such non-substantive changes that may be subsequentlymade after further review by management and Deloitte.” Board of Directors decision from November 13, 2013: “RESOLVED, to ratify the appointment and authorization of the Audit Committee as the “responsible entity” for supervising the implementation of theCompany’s Internal Enforcement Plan beginning November 24, 2011.” 44 Exhibit GVehicle AgreementThis Vehicle Agreement (the “Agreement”) is entered into on Click here to enter text. by and between BioLineRx Ltd., a company organized under the lawsof the State of Israel, with its offices at Modi’in Technology Park, 2 HaMa’ayan Street, Modi’in 7177871 (“BioLine”), and Click here to enter text., whoseaddress is Click here to enter text. (“Employee”).WHEREAS, BioLine has employed Employee pursuant to a certain Employment Agreement, dated Click here to enter text.; and WHEREAS, Employee has requested that BioLine provide him/her with a vehicle, and BioLine has agreed to provide Employee with a vehicle pursuant tothe terms and conditions set forth herein. Therefore, the parties agree as follows: 1.BioLine shall provide Employee with the use of a vehicle selected by BioLine. BioLine shall have the sole discretion to determine the type of vehicleprovided to Employee in accordance with the then current BioLine car policy. The vehicle, a detailed description of which appears in Exhibit A hereto(the “Vehicle”), will be provided to Employee no later than Click here to enter text. (the “Effective Date”) and for a period of up to thirty-six (36) monthsfrom the calendar month following the Effective Date (the “Term”). Upon receipt of the Vehicle, Employee shall execute the Vehicle Receipt Formattached as Exhibit B hereto. Notwithstanding the abovementioned, the Vehicle provided to Employee may have been leased to BioLine prior to thedate hereof, in which event, the Term shall be amended accordingly, and this Agreement shall apply to the applicable Term. If Employee receives avehicle for the interim period before the Effective Date (the “Temporary Vehicle”), the terms of this Agreement shall apply to the Temporary Vehicle infull. It is clarified, however, that the interim period shall not be considered part of the Term. 2.Payments by Employee 2.1.Employee acknowledges that the benefit he/she receives from the Vehicle is taxable, and agrees to bear all taxes arising out of the use of theVehicle (“Vehicle Taxes”). Employee acknowledges that Vehicle Taxes will be withheld from his/her salary as required by law. 2.2.Vehicle Taxes may be increased according to changes from time to time in the applicable tax regulations, and Employee’s Salary will be reducedaccordingly in the event of such regulatory changes. 2.3.Employee shall be responsible for the following payments: 2.3.1.Fines and penalty payments including parking tickets and costs related to the imposing of a prohibited use notice (מינהלית השבתה); 2.3.2.Fuel over the monthly limit specified in Exhibit A, as may be amended from time to time due to changes in the prices of fuel (the “FuelLimit”). Employee will be charged once every six (6) months for use of fuel over the Fuel Limit, which will be calculated in accordancewith Employee’s average use during the preceding six-month period (e.g., if Employee’s Fuel Limit is 1000 liters, and Employee’s averagemonthly use is 1100 liters, Employee will be charged for 600 liters (excess use of 100 multiplied by six months)); 2.3.3.Fines imposed by the leasing company for mileage costs exceeding the annual limit specified in Exhibit A, as may be amended from time totime based on Employee’s place of residence (the “Mileage Limit”); 2.3.4.Highway 6 expenses (פסקל) and tolls, except for tolls related to business use, as set forth in Section 3.1 below; 45 2.3.5.Tel Aviv Fast Lane expenses, except for tolls related to business use, as set forth in Section 3.1 below; 2.3.6.Fines and expenses imposed by the leasing company for tolls related to travel on Highway 6 or the Tel Aviv Fast Lane that is not based onsubscriptions arranged by Employee; 2.3.7.Insurance deductible, which will be borne by Employee if the damage was caused by Employee, as follows: a.On the third occurrence of any such damage, Employee shall bear 30% of the insurance deductible. b.From the fourth occurrence of any such damage and onwards, Employee shall bear 50% of the insurance deductible. c.Employee will be charged as provided above only if damage was reported to the leasing company in a timely manner. If damage wasnot reported in a timely manner, and as a result the leasing company charges BioLine for additional events of damage, Employee willbear the full cost of the insurance deductible. 2.3.8.Employee shall bear the cost of any flat tires, except for the first two (2) flat tires per year, as indicated in Section 3.1.1 below; and 2.3.9.It is Employee’s responsibility to ensure that the Vehicle has a full tank upon sending the Vehicle to maintenance and repairs. If theVehicle’s tank is not full, and an extra charge is billed for fuel, Employee shall bear the extra fuel charge, provided however that BioLinemay decide in its sole discretion to bear such expense if Employee could not have predicted the repair. 2.4.Employee undertakes to pay, upon first demand, all fines and penalty payments, such as parking tickets, etc., within sixty (60) days of receipt ofthe ticket. If Employee does not pay the required fines, etc., BioLine may withhold such amount from his/her Salary, together with any latepenalties or additional payments which may be assessed. 2.5.Employee confirms and represents that he/she is the holder of the Vehicle as of the Effective Date. Consequently, Employee hereby agrees to theassignment of any tickets, fines, penalties, as well as traffic points (נקודות) to Employee, and authorizes BioLine to carry out such assignment vis-a-vis the competent authority if required. Employee has executed the Confirmation and Assignment deed attached as Exhibit C hereto. 3.Payments by BioLine 3.1.BioLine shall pay or be responsible for the payment of the monthly leasing payment charged by the leasing company for the Vehicle (the “LeasePayment”), and for expenses related to the Vehicle, as follows: 3.1.1.Insurance, licensing fees, maintenance and repairs, and the repair cost of two (2) flat tires a year, in accordance with BioLine’s car policy; 3.1.2.Insurance deductible of 100% if the damage is caused by a third party, and the following portions of the insurance deductible if the damageis caused by Employee: a.100% of the insurance deductible in the first two occurrences; b.70% of the insurance deductible in the third occurrence; c.50% of the insurance deductible in the fourth occurrence and onwards. 3.1.3.Fuel up to the Fuel Limit; 46 3.1.4.Mileage costs up to the Mileage Limit; 3.1.5.Reimbursement for Highway 6 tolls in connection with business related travel only, and subject to the installation by Employee of theHighway 6 meter (פסקל), in accordance with BioLine’s procedures for reimbursement of expenses; 3.1.6.Reimbursement for Tel Aviv Fast Lane tolls in connection with business related travel only, and subject to Employee’s arranging asubscription; and 3.1.7.Other expenses, all as may be decided from time to time by BioLine and in accordance with BioLine’s car policy then in effect. 3.2.For the avoidance of doubt, BioLine shall not be responsible for the payment of any fines, penalties or other expenses as set forth in Section 2.3above. 4.Operation and Use of the Vehicle 4.1.The Vehicle shall be the exclusive responsibility of Employee. Employee shall execute the Undertaking to Secure the Vehicle and Security Codein the form attached as Exhibit D hereto. 4.2.Employee undertakes to abide by any and all laws and regulations regarding the use of the Vehicle and to operate the vehicle in a cautiousmanner. Employee further undertakes to notify BioLine immediately if Employee’s license is revoked for any reason. Employee will take allappropriate measures to avoid loss of or damage to the Vehicle or to any third party, and shall at all times comply with the then current BioLinecar policy. Employee also undertakes to follow any other limitation or requirement set by the terms of the Vehicle’s insurance policy. 4.3.Employee undertakes not to (a) transport more passengers or weight than are allowed by the insurance policy, (b) use the Vehicle for any purposeother than for work-related travel or for his/her own personal needs, (c) drive the Vehicle on unpaved roads or in places which are inappropriate fortravel by a private vehicle, (d) take or drive the Vehicle to any areas which are outside the area of the State of Israel (including the Sinai Peninsulaand the area of the Palestinian Authority), (e) use the Vehicle for towing, for pushing another vehicle or any other object, for competition, forracing, for testing stability or speed or for any other motor sport, (f) use the Vehicle for any illegal use, political purpose or in connection with anyorganization, strike or riot, or (g) leave the keys in the Vehicle while Employee is not in the Vehicle, or leave the Vehicle without activating thelocking mechanism or other means of securing the Vehicle, even for a short time. 4.4.Employee will bear the cost of any expense or damage to the Vehicle or to a third party (a) arising from any breach of the terms and conditions ofthis Agreement or from negligent use of the Vehicle, or (b) for which the insurance policy does not compensate BioLine. In addition, if aprohibited use notice (מינהלית השבתה) is imposed on the Vehicle, Employee shall fully cooperate with BioLine in order to release the Vehicle fromimpound, and shall not be entitled to receive a temporary vehicle during such period. Employee shall indemnify and hold BioLine harmless fromany third party claims relating to the prohibited use notice (מינהלית השבתה), and will indemnify BioLine for any damages to the Vehicle, or anyother damages which BioLine shall incur in connection thereof. 4.5.The persons who are authorized to drive the Vehicle in addition to Employee are the members of Employee’s immediate family (spouse andEmployee’s children) or Employee’s ‘significant other’, for reasonable family use only; provided that each such driver must hold a valid drivers’license. Notwithstanding the foregoing, Employee must request BioLine’s explicit consent with respect to any driver who is over the age of 75 orunder the age of 23, or any driver who has not held a valid driver’s license for at least two years. Without BioLine’s written consent, the driversspecified in the preceding sentence are not authorized to drive the Vehicle and will not be covered by the insurance policy. All the terms set forthin this Agreement are deemed to be accepted by all persons who drive the Vehicle. 47 5.Care and Treatment of the Vehicle 5.1.Employee shall treat the Vehicle as if it was his/her own and shall ensure that the Vehicle remains in good condition. 5.2.Employee will notify BioLine and the police if the Vehicle is stolen as soon as he/she becomes aware of the theft. 5.3.Employee will notify BioLine or the person nominated by it of any damage or malfunction of the Vehicle, as soon as he/she becomes aware of thedamage or malfunction, and will ensure that any required repairs are made. Employee will also notify BioLine or the person nominated by it of theregularly scheduled maintenance dates of the vehicle. All care, maintenance and repairs to the Vehicle will be made only by the leasing companyat its expense, unless Employee is specifically notified otherwise. 5.4.Employee acknowledges that he/she may not make any alterations to the Vehicle’s interior or exterior, nor install any accessories in the Vehicle,including, without limitation, a car stereo or cellular speakerphone (דיבורית) without the prior written consent of BioLine. The cost of installing acellular speakerphone shall be borne by BioLine, provided however that Employee is responsible for making the necessary arrangements for theinstallation of the cellular speakerphone. In addition, Employee acknowledges and undertakes not to add any sticker, sign or other visible noticeon the Vehicle, whether including political statements or otherwise. Employee acknowledges that BioLine may, at its discretion require that theVehicle bear BioLine’s logo. 5.5.If an electronic device for measurement of gas (פזומט) is installed, Employee shall, to the extent possible, refuel only in the gas stations supportingthe device. 5.6.In the event of an accident, Employee: (a) will immediately notify both BioLine and the leasing company and will forward to them details of theaccident in writing; (b) will immediately notify the police and other authorities, to the extent required by law; (c) will not admit or confess to anyguilt or responsibility therefor or provide any information not required by law, nor will accept or propose any offers, payments, arrangements orany other obligations in connection with the accident; (d) will file an accident report provided by BioLine and will include all details includingthe names, addresses, licenses and insurers of all the parties involved, and the license plate numbers of all of the vehicles involved, whether or notany damage was caused to the Vehicle, (e) will not leave the Vehicle at the scene without appropriate cautionary measures, and (f) will notifyBioLine and the leasing company of any summons received to appear before a court. 5.7.In the event of a flat tire, Employee (i) shall change the tire to the spare tire, and notify BioLine, in according with BioLine’s car policy; (ii) shallbe responsible to repair the flat tire as soon as possible, and in no event after traveling more than eighty (80) Kilometers with the spare tire, due tosafety restrictions, and if a new tire is required, Employee shall obtain the approval of the HR department prior to the purchase of a new tire.Employee will be reimbursed for the repair in accordance with BioLine’s procedures for reimbursement of expenses. 6.Return of the Vehicle 6.1.Upon the termination of his/her employment with BioLine for any reason, Employee shall return the Vehicle to BioLine in working order and ingood condition, subject only to wear and tear resulting from careful and reasonable use of the Vehicle. Employee shall return the Vehicle togetherwith the car keys and any duplicates thereof provided to Employee, licenses and all other documents, and the Vehicle shall empty and withoutany object whatsoever belonging to Employee. 48 6.2.It is hereby clarified, that in no event shall Employee place a lien on the Vehicle (in connection with any alleged debt or obligation of BioLinetowards Employee, or for any other reason). 6.3.If, prior to the expiration of the Term, Employee voluntarily terminates his/her employment or BioLine terminates Employee’s employment forCause (as such term is defined in the Employment Agreement), Employee shall reimburse BioLine for any charges or penalties BioLine may sufferdue to the early termination of the lease for the Vehicle; provided, however, that the amount of such penalty shall not exceed (i) the LeasePayment multiplied by three (3) in the event of termination prior to the first anniversary of the Effective Date, (ii) the Lease Payment multiplied bytwo (2) in the event of termination following the first anniversary of the Effective Date, and prior to the second anniversary of the Effective Date,and (iii) one Lease Payment in the event of termination following the second anniversary of the Effective Date, and prior to the third anniversaryof the Effective Date. Such funds will be withheld from Employee’s salary. 6.4.Employee shall not be entitled to use a Company Car during unpaid leaves or absences, unless specifically approved by BioLine in writing. 7.General 7.1.Employee confirms that he/she understands that any breach of or deviation from the terms of this Agreement will cause insurance coverage to bedenied, and that any damage caused by such breach or deviation will be borne by Employee personally. 7.2.Employee confirms and acknowledges that Employee’s obligations hereunder shall apply to any replacement vehicle provided to Employee. 7.3.Employee acknowledges and agrees that the procedures set forth herein may be changed from time to time by BioLine, in its sole discretion. 7.4.For the avoidance of doubt, nothing herein shall obligate BioLine to employ Employee or to continue Employee’s employment with BioLine, orderogate in any way from BioLine’s right to terminate Employee’s employment. 7.5.This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof, and supersedesall prior written or oral agreements with respect thereto. This Agreement may be assigned by BioLine; Employee may not assign this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. ________________________BioLineRx Ltd.By: Philip SerlinTitle: Chief Financial and Operating Officer________________________EmployeeName:Date: 49 Exhibit AVehicle Specifications Name of Employee:I.D Number:Vehicle Details:Registration No.:Make:Model:Year:Color:Accessories: Radio Disk+ PazomatFuel Limit (monthly):Mileage Limit (annual):Payment for extra mileage up to Click here to enter text. Kilometers: NIS 0.12 per km.Payment for extra mileage over Click here to enter text. Kilometers: NIS 0.4 per km.Temporary Vehicle details:Model: SimilarDelivery: End of working day.Insurance Deductible: 800 NIS 50 Exhibit BVehicle Receipt Form Name of Employee:I.D Number:Date:Vehicle Model:Registration No.:Mileage on date of receipt (in kilometers): I hereby confirm the receipt of the said vehicle, together with the following accessories: 1.Valid License; 2.Valid Insurance Certificate; 3.Vehicle Manual; 4.Maintenance Manual; 5.Car Jack; 6.Tire Wrench; 7.Spare Tire; 8.Car Key + other Security Measures; 9.Triangle Warning Sign; 10.Dustbin; and 11.Sound System (Radio and Disk).Additional Accessories: Click here to enter text.Routine vehicle maintenance shall be carried out every 15,000 kilometers.Comments:____________________________________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________________________________Employee Signature: _____________________________ 51 Exhibit CConfirmation and Assignment Deed [deleted] 52 Exhibit DUndertaking to Secure the Vehicle and its Coded Immobilizer1.I the undersigned, Click here to enter text., I.D. no. Click here to enter text., hereby confirm and undertake to BioLine that I and/or any other driver onmy behalf authorized to drive the vehicle, model type Click here to enter text., vehicle number Click here to enter text., shall follow all of theinstructions below: ·I will not leave the vehicle without activating the installed security measures; ·I will not leave the vehicle with the keys inside the vehicle; ·I will not abandon the car keys; ·I will not keep the vehicle’s coded immobilizer number and/or any other security measures, if such are installed, in proximity to the keys; ·I will not leave the security code, if such is installed, inside the vehicle or in its proximity; ·I will not leave a written copy of the security code, if such is installed, in an exposed place in the vehicle; and ·I will watch over the vehicle while taking all reasonable precautions to avoid loss and/or theft of the vehicle. 2.I hereby confirm that should I act contrary to the foregoing instructions or should I breach any of my obligations to safeguard the vehicle as a reasonableand cautious owner safeguards his own property, I will bear all damage expenses and/or loss caused to BioLine as a result of any action and/or failure toact by me/us, without any condition or restriction.3.For the avoidance of doubt it is hereby clarified that my signature below, confirming my obligation in accordance with this document, will takeprecedence over any agreement and/or representation and/or understanding, if there were such, prior to this date. IN WITNESS WHEREOF: Employee Signature: ______________________________ Date: 53Exhibit 12.1CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THESARBANES-OXLEY ACT I, Kinneret Savitsky, certify that: 1.I have reviewed this annual report on Form 20-F of BioLineRx Ltd.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made knownto us by others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internalcontrol over financial reporting; 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information;and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting. Date: March 10, 2016/s/ Kinneret Savitsky Kinneret Savitsky, Ph.D.Chief Executive Officer Exhibit 12.2CERTIFICATION OF THE CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THESARBANES-OXLEY ACT I, Philip Serlin, certify that: 1.I have reviewed this annual report on Form 20-F of BioLineRx Ltd.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made knownto us by others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internalcontrol over financial reporting; 5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information;and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting. Date: March 10, 2016 /s/ Philip Serlin Philip SerlinChief Financial and Operating Officer Exhibit 13.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THESARBANES-OXLEY ACT Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BioLineRx Ltd. (the“Company”) hereby certifies to such officer’s knowledge that: (i) the accompanying Annual Report on Form 20-F of the Company for the year ended December 31, 2015 (the “Report”) fully complies with therequirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 10, 2016/s/ Kinneret Savitsky Kinneret Savitsky, Ph.D.Chief Executive Officer The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made beforeor after the date hereof, regardless of any general incorporation language in such filing. Exhibit 13.2CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THESARBANES-OXLEY ACT Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of BioLineRx Ltd. (the“Company”) hereby certifies to such officer’s knowledge that: (i) the accompanying Annual Report on Form 20-F of the Company for the year ended December 31, 2015 (the “Report”) fully complies with therequirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 10, 2016/s/ Philip Serlin Philip SerlinChief Financial and Operating Officer The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made beforeor after the date hereof, regardless of any general incorporation language in such filing. Exhibit 15.5CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-176419, 333-183976, 333-201326 and 333-208865) and on Form F-3 (Nos. 333-179792, 333-196390 and 333-205700) of BIOLINERX LTD. (the “Company”), of our report dated March 8, 2016,relating to the financial statements of the Company, which appears in this Form 20-F. Tel-Aviv, Israel March 10, 2016/s/ Kesselman & KesselmanCertified Public Accountants (Isr.)A member firm of PricewaterhouseCoopers International Limited Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 68125, Israel, P.O Box 452 Tel-Aviv 61003 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.co.il Kesselman & Kesselman is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity 

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