UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number: 001-38716
GAMIDA CELL LTD.
(Exact name of registrant as specified in its charter)
Israel
(State or other jurisdiction
of incorporation)
116 Huntington Avenue
Boston, MA
(Address of principal executive offices)
Not Applicable
(IRS Employer
Identification No.)
02116
(Zip code)
Securities registered pursuant to Section 12(b) of the Act:
(713) 400-6400
(Telephone Number)
Title of each class
Ordinary Shares, NIS 0.01 par value
Trading Symbol(s)
GMDA
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☒
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☒
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021 (the last day of the
registrant’s most recently completed second fiscal quarter) based on the closing sale price of $6.41 as reported on the Nasdaq Global Market as of that date
was approximately $379.9 million.
The registrant had 60,002,190 ordinary shares outstanding as of March 24, 2022.
Documents incorporated by reference: None.
Part I
Item 1.
Item 1a.
Item 1b.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7a.
Item 8.
Item 9.
Item 9a.
Item 9b.
Item 9c.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
TABLE OF CONTENTS
Forward Looking Statements
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosure
Market For Registrant’s Common Equity, Related Shareholder Matters And Issuer Purchases Of Equity Securities
[Reserved]
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
Quantitative And Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
Controls And Procedures
Other Information
Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
Directors, Executive Officers And Corporate Governance
Executive Compensation
Security Ownership Of Certain Beneficial Owners And Management And Related Shareholder Matters
Certain Relationships And Related Transactions, And Director Independence
Principal Accounting Fees And Services
Exhibits, Financial Statement Schedules
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FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve
substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1: “Business,” Part I, Item 1A: “Risk Factors,”
and Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this
annual report. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”,
“estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. These statements speak only as of the date of
this annual report and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We
have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe
may affect our business, financial condition and results of operations. Forward-looking statements in this annual report include statements as to:
● our expectations regarding timing of submission of regulatory applications or receipt of regulatory approvals for omidubicel, GDA-201 or any of
our other product candidates;
● the timing of initiation of our clinical trials of GDA-201 and our other product candidates, as well as statements regarding the conduct, progress
and results of current and future preclinical studies and clinical trials, and our research and development programs;
● our plans to manufacture omidubicel at a commercial scale, if and when approved for marketing;
● the clinical utility and potential advantages of omidubicel, GDA-201 and our other product candidates;
● our plans regarding utilization of regulatory pathways that would allow for accelerated marketing approval in the United States, the European
Union and other jurisdictions;
● our recurring losses from operations, our estimates regarding anticipated capital requirements and our needs for additional financing;
● our ongoing and planned discovery and development of product candidates;
● our expectations regarding future growth, including our ability to develop, and obtain regulatory approval for, new product candidates;
● our expectations regarding when certain patents may be issued and the protection and enforcement of our intellectual property rights;
● our estimates regarding the commercial potential, and our commercial marketing plan, for omidubicel and our other product candidates;
● our ability to manufacture omidubicel and our other product candidates at levels sufficient for commercialization or clinical development, as
applicable;
● our ability to maintain relationships with certain third parties;
● our planned level of capital expenditures;
● our expectations regarding licensing, acquisitions and strategic partnering; and
● the impact of government laws and regulations.
ii
You should refer to “Item 1A. Risk Factors” in this annual report for a discussion of important factors that may cause our actual results to differ
materially from those expressed or implied by our forward-looking statements. Such risks and uncertainties may be amplified by the COVID-19 pandemic
and the conflict in the Ukraine, and their potential impact on our business and the global economy. As a result of these factors, we cannot assure you that
the forward-looking statements in this annual report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the
inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a
representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-
looking statements in this annual report represent our views as of the date of this annual report. We anticipate that subsequent events and developments
may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no
obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this annual report.
You should read this annual report and the documents that we reference in this annual report and have filed as exhibits to this annual report completely
and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements
by these cautionary statements.
In this report all references to (i) “Gamida,” “Gamida Cell,” “we,” “us,” “our” or the “Company” mean Gamida Cell Ltd. and its wholly-owned
subsidiary, Gamida Cell Inc., unless the context otherwise requires; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act”
refers to the United States Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of 1934, as
amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.
iii
ITEM 1. BUSINESS
Overview
PART I
We are an advanced cell therapy company committed to cures for blood cancers and serious hematologic diseases. We harness our cell expansion
platform to create therapies with the potential to redefine standards of care in areas of serious medical need. While cell therapies have the potential to
address a variety of diseases, they are limited by availability of donor cells, matching a donor to the patient, and the decline in donor cell functionality
when expanding the cells to achieve a therapeutic dose. We have leveraged our NAM platform, or nicotinamide cell expansion technology platform, to
develop a pipeline of product candidates designed to address the limitations of other cell therapies. Our proprietary technology allows for the proliferation
and enhancement of donor cells, which allows for maintaining the cells’ functional therapeutic characteristics, providing a potential treatment alternative
for patients.
Cell therapies involve the delivery of human cells to replace or repair damaged tissue or cells in order to treat a variety of cancers and other diseases.
Hematopoietic stem cell transplantation with donor cells, or allogeneic HSCT, also called bone marrow transplantation, is the most frequently used cell
therapy to treat a variety of hematologic malignancies and other serious conditions. HSCT involves reconstituting a patient’s bone marrow from a seed
population of stem cells obtained from a donor whose blood-forming and immune-system-forming cells are both cancer free and effective at carrying out
their functions.
There are multiple sources of donor cells. The best source for donor cells is a sibling who is a matched related donor, or MRD, but the chances of
having a sibling match in the United States are only 25% to 30%. The majority of patients rely on alternate sources of donor cells, including matched
unrelated donor, or MUD, haploidentical, or “half-matched” donors, and mismatched unrelated donor, or MMUD, as well as umbilical cord blood.
However, due to disease progression and other complications during the time needed to find a suitable donor, unfortunately many patients cannot find an
appropriate donor. According to the CIBMTR, in the U.S., there are approximately 8,000 patients above the age of 12 with hematologic malignancies who
undergo an allogeneic stem cell transplant each year and we believe that number of patients may grow over time. We estimate that there are approximately
1,000 patients each year, who are above the age of 12 and are deemed eligible for an allogeneic stem cell transplant but cannot find an appropriate donor.
Notwithstanding the various potential sources of donor cells, HSCT is subject to a number of significant limitations, including: (i) delays in finding a
suitable match, during which disease progression may make patients ineligible for transplant; (ii) an insufficient number or delayed engraftment of donor
cells, leaving patients without a functioning immune system and leading to potentially life-threatening immune deficiency following transplant; (iii) a lack
of long-term compatibility between the donor cells and the patient’s own cells, resulting in potentially fatal graft versus host disease, or GvHD; and (iv)
older donor age may correspond to a negative impact on the patient’s outcome. In addition, there is ethnic and racial disparity in access to HSCT: data from
2018 indicate that white patients of European descent are approximately four times more likely to receive a transplant than Black patients.
Umbilical cord blood is a readily available source of stem cells for patients who need HSCT and do not have a matched related donor. It is easier to
find a match when using stem cells derived from cord blood, since a full match is not required for a successful transplant using cord blood. However, on
average, a typical cord blood graft contains approximately one-tenth the number of stem and progenitor cells compared to stem cell grafts from adult bone
marrow or peripheral blood donors. This lower number of cells may delay engraftment of the donor cells and reconstitution of the immune system. This, in
turn, increases both time in the hospital and the likelihood that a patient might contract a life-threatening infection.
Omidubicel, our lead product candidate, is designed to address the limitations of HSCT. Omidubicel consists of NAM-expanded and enhanced
hematopoietic stem cells and differentiated immune cells, including T cells. The final cell therapy product is cryopreserved until the patient is ready to
begin the transplant, when it is thawed and infused. Omidubicel has the potential to be a universal stem cell graft in two broad patient groups: (i) patients
with high-risk leukemias and lymphomas who require HSCT but who lack access to an appropriate matched related donor; and (ii) patients with severe
hematologic disorders such as severe aplastic anemia.
1
In October 2021, the complete results from our pivotal Phase 3 clinical study of omidubicel in 125 patients with various hematologic malignancies
were published in the peer-reviewed medical journal Blood. The trial achieved its primary endpoint of time to neutrophil engraftment as well as all three of
the prespecified secondary endpoints. These secondary endpoints were the proportion of patients who achieved platelet engraftment by day 42, the
proportion of patients with grade 2 or grade 3 bacterial or invasive fungal infections in the first 100 days following transplant, and the number of days alive
and out of the hospital in the first 100 days following transplant. All three secondary endpoints demonstrated statistical significance in an intent-to-treat
analysis.
In December 2021, we also reported data from an analysis of a subset of 37 patients from the Phase 3 randomized trial of omidubicel at Annual
Meeting of the American Society of Hematology, or ASH. The analysis was aimed at investigating the reduced infection rates observed in the study and
showed that the omidubicel-treated patients had more rapid recovery of a wide variety of immune cells including CD4+ T cells, B cells, NK cells and
dendritic cell subtypes. The robust recovery of the immune system provides rationale for fewer severe bacterial, fungal and viral infections in patients
treated with omidubicel. Additional analyses are ongoing to further characterize the immune recovery following omidubicel transplantation.
In early 2022, the FDA agreed that the initiation of our rolling biologics license application, or BLA, submission for omidubicel was appropriate and
we initiated the rolling submission process. We plan to complete submission of the BLA in the first half of 2022.
In addition, we have applied our NAM cell expansion technology to natural killer, or NK, cells, to develop our initial NK product candidate, GDA-
201, an investigational, NK cell-based immunotherapy for the treatment of hematologic and solid tumors in combination with standard of care antibody
therapies. GDA-201 is currently being evaluated in a Phase 1/2 investigator-sponsored trial for the treatment of relapsed or refractory non-Hodgkin
lymphoma, or NHL, and multiple myeloma, or MM. Data from the trial demonstrate that GDA-201 was well-tolerated and no dose-limiting toxicities were
observed in 19 patients with NHL and 16 patients with MM. The data show that therapy using GDA-201 with monoclonal antibodies demonstrated
significant clinical activity in heavily pretreated patients with advanced NHL. Of the 19 patients with NHL, 13 complete responses and one partial response
were observed, with an overall response rate of 74% and a complete response rate of 68%. At the December 2021 Annual Meeting of ASH, we reported
two-year follow-up data from this clinical trial on outcomes and cytokine biomarkers associated with survival. The data demonstrated a median duration of
response of 16 months (range 5-36 months), an overall survival at two years of 78% (95% CI, 51%–91%) and a safety profile similar to that reported
previously.
In September 2021, we submitted an investigational new drug application, or IND, for a Phase 1/2 clinical trial of GDA-201 in patients with follicular
and diffuse large B-cell lymphomas. The FDA placed this IND on clinical hold prior to the initiation of patient dosing. The FDA has requested
modifications in donor eligibility procedures and assay qualifications. We are in active communication with the FDA with the objective to address these
requests to satisfy the requirements for IND acceptance and study initiation. We expect to initiate our Phase 1/2 study of GDA-201 in patients with
follicular and diffuse large B-cell lymphomas in 2022.
We are led by an experienced management team with extensive expertise in developing oncology therapies and manufacturing cell therapies and other
complex biologics. Our director and chief executive officer, Julian Adams, played a central role in the discovery and development of bortezomib, or
Velcade®, a widely used therapy for MM and other blood cancers approved by the FDA in 2003. Dr. Adams also led research and development, or R&D,
efforts at Infinity Pharmaceuticals, Inc., which helped lead to the 2018 FDA approval of duvelisib, also known as Copiktra®, for the treatment of certain
leukemias and lymphomas.
2
Pipeline
The figure below summarizes key information about our current pipeline of product candidates:
Our Strategy
Our goal is to deliver curative cell therapies to patients with serious and life-threatening medical conditions. The key strategies to achieve our goal are
the following:
● Obtain regulatory approval for omidubicel in hematologic malignancies.
We have completed an international, multicenter, randomized, pivotal Phase 3 clinical trial evaluating transplantation with omidubicel compared to
standard umbilical cord blood in 125 patients with various hematological malignancies, including acute lymphocytic leukemia, or ALL, acute myeloid
leukemia, or AML, myelodysplastic syndrome, or MDS, chronic myeloid leukemia, or CML, and lymphoma. The primary endpoint was time to neutrophil
engraftment. The trial achieved its primary endpoint, as well as all three of the prespecified secondary endpoints. In February 2022, we initiated submission
of the BLA for omidubicel on a rolling basis. We plan to submit the full BLA for omidubicel in the first half of 2022, and if approved in the United States,
we plan to seek regulatory approval in the European Union and other geographies.
● Maximize commercial value of our product candidates.
In parallel with our rolling BLA submission for omidubicel, we are assessing alternatives for the commercialization of omidubicel, including
potential U.S. or global partnerships. We also reported the results of an analysis of resource utilization data from the first 100 days after transplant for 108
patients in the pivotal Phase 3 trial that will help to inform pricing and reimbursement. Additionally, we are developing a reimbursement strategy modeled
upon recently approved cell therapies in oncology, including potentially through the New Technology Add-on Payment program.
3
● Reducing operating expenses.
With the objective of extending our cash runway into mid-2023, consistent with the timeline for potential U.S. approval of omidubicel, we are reducing
operating expenses primarily by delaying hiring and planned spending in 2022 and implementation of a workforce reduction of approximately 10% in
January 2022.
● Pursue the potential of GDA-201 for the treatment of follicular and diffuse large B-cell lymphomas.
We have applied our NAM technology platform to develop the lead product candidate, GDA-201, in our NK cell pipeline. GDA-201 is currently being
evaluated in an investigator-sponsored, Phase 1/2 clinical study in patients with NHL or MM, in combination with rituximab or elotuzumab, respectively.
At the December 2021 Annual Meeting of ASH, we reported two-year follow-up data from the clinical trial on outcomes and cytokine biomarkers
associated with survival. The data demonstrated a median duration of response of 16 months (range 5- 36 months), an overall survival at two years of 78%
(95% CI, 51%–91%) and a safety profile similar to that reported previously. In September 2021, we submitted an IND for a Phase 1/2 clinical trial of
GDA-201 in patients with follicular and diffuse large B-cell lymphomas. The FDA placed this IND on clinical hold prior to the initiation of patient dosing.
The FDA has requested modifications in donor eligibility procedures and assay qualifications. We are in active communication with the FDA with the
objective to address these requests and enable IND acceptance. We expect to initiate our Phase 1/2 study of GDA-201 in patients with follicular and diffuse
large B-cell lymphomas in 2022.
● Advancing genetically modified NK cell immunotherapy programs.
We plan to continue to leverage our platform technology with a goal of discovering additional product candidates and expanding into new therapeutic
areas. We continue to advance our NAM-enabled genetically modified NK cell pipeline, which utilizes CAR, membrane bound- and CRISPR-mediated
strategies to increase targeting, potency and persistence against hematologic malignancies and solid tumors. We plan to execute preclinical proof of concept
studies for our genetically modified NK therapeutic targets and to select pipeline candidates for IND enabling studies by the end of 2022. We also believe
our technology can be applied to other cells with therapeutic potential, and we plan to continue to invest in our research and development activities.
NAM Cell Expansion Technology
While cell-based therapies have the potential to address a variety of medical conditions, one of the key technical challenges for developing treatments
with this approach is the expansion of therapeutically functional cells. In order for cell therapies to be clinically effective, there must be a sufficient
quantity of therapeutically active cells for treatment, which requires the donor cells to be expanded in cell culture. While this may increase the number of
cells, the functionality of those cells often diverges from the therapeutic functionality of the original donor cells. This shortcoming in the cells used for
treatment can result in suboptimal clinical outcomes.
Our NAM cell expansion technology is designed to address this challenge by leveraging the biochemical properties of the small molecule nicotinamide
in our manufacturing process. We expand and enhance the number of donor cells while maintaining their functional therapeutic characteristics through the
proprietary combination of NAM, intended to maintain silencing of cell differentiation and preservation of gene expression, and particular cytokines which
promote cell growth. Our optimized manufacturing process results in robust and replicable batch production, enabling the generation of standardized
donor-derived cell products, potentially resulting in better clinical outcomes.
We have presented research describing the mechanism of action for the role of NAM in expanding CD34+ stem cells. The research included
transcriptome, transcription factor, and pathway analysis to elucidate the factors that lead to the preservation of engraftment after ex vivo expansion of
CD34+ hematopoietic stem cells derived from umbilical cord blood (the starting point for omidubicel) compared to CD34+ cells grown in the absence of
NAM. Analyses showed that the presence of NAM reduced the expression of genes involved in the production of reactive oxygen and nitrogen species,
suggesting that cell stress was minimized during expansion. In addition, NAM also decreased growth factor of pathways responsible for activation and
differentiation of hematopoietic stem cells, suggesting NAM expanded cells while keeping them in an undifferentiated state. The presence of NAM also led
to a decrease in the expression of genes responsible for matrix metalloproteinase secretion, simulating the microenvironment of the bone marrow.
Additionally, NAM led to an increased expression of telomerase genes, which is believed to enable cells to remain in a more quiescent, stem-like state.
These data provide further scientific rationale for the favorable stem cell engraftment and patient outcomes that were observed in the Phase 3 clinical study
of omidubicel.
We have also applied NAM technology in developing GDA-201 and the other product candidates in our NK cell pipeline, and we are exploring this
technology for other cells with therapeutic potential.
4
Hematologic Malignancies and Allogeneic HSCT
Overview
Hematologic malignancies are characterized by an abnormal and excessive proliferation of malignant blood cells that replace normal blood cells in the
bone marrow and the circulation. In some patients, these cancerous cells proliferate rapidly, requiring urgent treatment. Patients are initially treated with
chemotherapy in order to destroy the malignant cells in a rapid manner. However, in most patients, remission is temporary and the disease will return after
initial treatment. One of the most effective treatment options for these patients is hematopoietic stem cell transplantation, or HSCT, where the blood-
forming cells in the patient are destroyed using chemotherapy, radiation or a combination of both. These patients then receive new bone marrow stem cells
from a healthy donor.
Allogeneic HSCT is the transplantation of hematopoietic stem cells, derived from a donor’s bone marrow or peripheral blood, or standard umbilical
cord blood. HSCT involves reconstituting a person’s entire blood and bone marrow from a seed population of cells. In some clinical settings, autologous
HSCT may be performed, in which cells are derived from the patient and reinfused at a later date. In leukemia and other hematologic malignancies, it is
more appropriate to use allogeneic HSCT obtained from a donor, which ensures that the graft does not contain the patient’s malignant cells and leverages
the ability of donor cells to fight against a patient’s cancer, which is known as the “graft versus leukemia” effect.
In HSCT, a patient is treated with chemotherapy and/or radiation to destroy the residual cancerous or defective cells that reside in the bone marrow.
This procedure, called myeloablation, also destroys the hematopoietic stem cells that are responsible for forming red blood cells, platelets and white blood
cells. Stem cells from a donor are then infused into a patient, migrate and home to the bone marrow and begin to proliferate and differentiate into various
types of blood cells, eventually leading to a full reconstitution of the bone marrow and immune system.
The intent of HSCT is to cure patients of their hematologic malignancies. As of 2016, more than 500,000 allogeneic HSCT procedures have been
performed worldwide over the past 50 years with over 30,000 being performed per year, of which 8,500 are in the United States. Approximately half of
such patients are cured of their hematologic malignancies. From 2006 to 2016, the number of patients receiving an allogeneic HSCT procedure increased
by approximately 5% per year in the United States due to multiple factors, including an aging population and new transplant modalities.
Approximately 90% of HSCT procedures performed in the United States are for patients with various hematologic malignancies.
Although the number of allogeneic HSCT procedures performed is growing and there are new modalities for the procedure, HSCT continues to have a
number of limitations. There are two major areas of unmet need. First, of those who receive a transplant, there is concomitant morbidity and mortality
associated with the treatment. Second, a significant number of patients who are candidates for transplant do not receive one in a timely fashion. We believe
that omidubicel can address these significant limitations.
5
Current Sources of Donor Cells for Allogeneic HSCT
There are multiple potential sources of donor cells for transplants. For each donor, there are various baseline requirements including age and overall
health. In general, younger donors produce more and better cells for HSCT than older donors. Donor matching is determined by human leukocyte antigens,
or HLA, which are proteins present on most cells and inherited genetically. HLA are recognized by the immune system, and “foreign” or nonmatching
HLA may be rejected. Therefore, matching of HLA between bone marrow donor and recipient is needed for a successful transplant outcome.
The optimal source of donor cells is a matched sibling, but the chances of having a sibling match are only 25% to 30%. An alternate source of donor
cells is a MUD, but only 30% of patients requiring a transplant have a good to intermediate probability of finding a MUD. Furthermore, it takes
approximately four months on average to identify an appropriate MUD who is medically suitable and willing to donate. During this lengthy time period,
there is a risk of disease recurrence. Over time, the patient may also become ineligible due to other health complications. Moreover, prolonged donor
searches heighten anxiety for patients and their families. In addition, there is ethnic and racial disparity in access to HSCT: data from 2018 indicate that
white patients of European descent are approximately four times more likely to receive a transplant than Black patients. The ability to find a match through
this process is particularly challenging for individuals of ethnic backgrounds that are not well represented in donor databases.
If a matched donor cell source is not identified, there are three alternatives for transplant candidates: mismatched unrelated donor, haploidentical
donors and umbilical cord donors. Haploidentical, or “half-matched” donors, and MUD are only partially compatible with the recipient. Because of the
immune incompatibility in transplants from such donors, there is a high risk of GvHD, infection and other complications.
Alternatively, donor cells can be obtained from umbilical cord blood. In contrast to MUD transplants, which require a greater degree of matching,
matching requirements for cord blood are less stringent than those from unrelated donors, leading to a greater probability for finding a match: 96% for
Caucasians of European descent, 81% for Black patients, and 82-91% of other minorities. This obviates the need to go through a prolonged search process
with uncertain outcomes in order to find a donor and arrange for the collection of donor cells. Because the donor T cells in cord blood are naïve, meaning
that they have not matured, they readily adapt to the recipient and are associated with a low risk of a patient developing GvHD, in particular chronic
GvHD. Furthermore, transplantation with cord blood reduces the risk of potential transmission of an infection from an adult donor.
Limitations of Allogeneic HSCT
There are three critical limitations to successful HSCT:
● delays in finding a suitable match, during which disease progression may make patients ineligible for a transplant;
● insufficient number or delayed engraftment of donor cells, leaving patients without a functioning immune system and leading to potentially life-
threatening immune deficiency following transplant; and
● lack of long-term compatibility between the donor cells and the patient’s own cells, resulting in potentially fatal GvHD.
Omidubicel is Designed to Address the Limitations of HSCT
In addition to the general limitations of HSCT, the low number of hematopoietic cells in standard umbilical cord blood is a major clinical constraint.
With standard umbilical cord blood, the small number of stem cells infused leads to a prolonged time to engraftment, the process by which donor stem cells
home to the bone marrow, differentiate, and repopulate the recipient’s blood cells. Longer time to engraftment is associated with a higher rate of post-
transplant complications, longer hospitalization time, and an increase in transplant-related mortality. Omidubicel is designed to address the limitations of
allogeneic HSCT because it expands the number of donor cord blood stem cells while maintaining the cells’ functional therapeutic characteristics. The
omidubicel manufacturing process also enhances cell functionality.
6
Omidubicel consists of two fractions of a unit of cord blood separated based on the expression of a marker on the surface of individual cells known as
CD133. A cell’s CD133 status reflects its “stem cell” properties. Those cells that express CD133 represent a pool of stem or progenitor cells, cells that are
capable of generating blood cells that can differentiate into a variety of cell subtypes. The CD133-positive stem or progenitor cells are also capable of
reproducing themselves. Once the cells bearing this marker, are isolated, they are cultured using the proprietary NAM technology platform to expand their
number while maintaining their regenerative properties. After approximately three weeks, the cells are harvested and cryopreserved. The United States
Adopted Names Council selected omidubicel as the name for these cells.
Those cells that do not express CD133 represent other types of more mature, differentiated cells, including essential components of the immune system
such as T cells. These mature cells cannot engraft but can provide immunological support until T cells derived from the stem cell graft recover. The
CD133-negative cells are also cryopreserved and retained for use as the second component of omidubicel. We refer to the two components collectively as
“omidubicel.”
Omidubicel is shipped cryogenically to transplant centers where both components are thawed and infused to patients on the day of transplantation. The
thawing process occurs in a closed system and can also be performed at the patient’s bedside for ease of administration. The cryopreserved product resulted
in engraftment results similar to those obtained with non-cryopreserved product in a Phase 1 pilot study at Duke University.
● Omidubicel is a stem cell graft with less stringent matching requirements than conventional HSCT, intended to reduce problems with donor
matching. If approved, this will provide an option for the patients who have lengthy searches to find a suitable match and may never receive one,
thereby creating an opportunity to improve outcomes and access to HSCT for such patients.
● Omidubicel is designed to deliver a therapeutic dose of stem cells that may lead to rapid engraftment and immune reconstitution.
● Omidubicel provides a compatible graft, observed to reduce morbidities including GvHD and infections.
Given these characteristics, omidubicel may serve as a new alternative to existing graft modalities as well as expand the transplant market for those
who are unable to find a match.
Omidubicel: Clinical Trial Results
Our clinical trials of omidubicel include an initial safety evaluation of omidubicel in a Phase 1 pilot study at Duke University, a Phase 1/2 clinical trial
that enrolled 36 patients in an international, multicenter, open-label, single-arm trial, and a Phase 3 clinical trial that evaluated 125 patients in a pivotal,
international, multi-center, randomized trial. All patients in our clinical trials of omidubicel had been previously treated for various hematologic
malignancies, including ALL, AML, MDS, CML and lymphoma. These patients were deemed to be in remission and at high risk of subsequent relapse.
Pivotal Phase 3 Trial
In January 2020, we enrolled the last patient in the pivotal, international, multi-center, randomized Phase 3 trial of omidubicel. Initiated in 2017, the
study compared omidubicel to single or double standard, unmanipulated umbilical cord blood transplantation. Randomization was stratified by treatment
center, disease risk, age and intent to perform single or double cord blood transplant. The primary endpoint of time to neutrophil engraftment was met.
All secondary endpoints—time to platelet engraftment, the incidence of grade 2 or grade 3 bacterial or invasive fungal infections and the number of
days alive and out of hospital during the first 100 days following transplantation—were also met.
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A total of 125 patients were randomized at 33 centers in the United States, South America, Europe and Asia. These 125 patients formed the basis of the
intent-to-treat, or ITT, analysis. Of the 62 patients randomized to omidubicel, 52 were transplanted per protocol with the omidubicel graft. Of the 63
patients randomized to the control arm, 56 were transplanted as per protocol.
Phase 3 Study Schema
Phase 3 Patient Disposition and Analysis Populations
Patient demographics were well-balanced in the two study arms, with a median age in the early 40s. The study population was diverse, with
approximately 40% either Black, Asian, Latino or patients characterized under “other”. The majority of patients (over 70%) had acute leukemia. With
respect to the transplant, all patients received myeloablative conditioning regimens, with approximately half of the patients receiving a total-body-
irradiation regimen, and approximately half receiving a chemotherapy-only conditioning regimen. Myeloablative conditioning therapy is a combination of
chemotherapy agents, and in some cases radiotherapy, that is expected to produce low blood counts and is administered in order to reduce the tumor
burden, suppress the patient’s immune system, and allow engraftment of donor stem cells. Over 70% of patients had a 4/6 HLA matching cord, either
serving as the starting material for omidubicel, or as the standard control. A double cord transplant was intended for two-thirds of patients randomized to
the standard cord arm. The omidubicel unit was expanded a median 133-fold to a median of 6.6 x 10e8 CD34+ cells. This provided the patients with a
median CD34+ cell dose of 9 x 10e6 CD34+ cells/kg, which is a larger cell dose than can be collected from many healthy adult stem cell donors. In
contrast, recipients on the control arm received a median 0.3 x 10e6 CD34+ cells/kg.
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Phase 3 Patient Demographics
Phase 3 Baseline Disease and Transplant Characteristics
9
The primary endpoint was time to neutrophil engraftment, based on recovery of neutrophils, a type of white blood cell that helps fight infections. In the
ITT population, the patients randomized to omidubicel engrafted at median of 12 days following transplantation (95% confidence interval 10-15 days).
Those randomized to the control arm engrafted at a median of 22 days (95% confidence interval 19-25 days). This was statistically significant (p<0.001). In
the as-treated, or AT, analysis, patients who received omidubicel had a median time to neutrophil engraftment of 10 days, vs 20.5 days for the control. The
cumulative incidence of neutrophil engraftment was 96% for omidubicel recipients and 89% for the controls.
Cumulative Incidence of Neutrophil and Platelet Engraftment
The results of the study were published in October 2021 in the peer reviewed ASH journal Blood. Results included statistically significant positive
results in all three secondary endpoints: platelet engraftment, infections, and hospitalization. Platelets are required for normal blood clotting. Platelet
engraftment on day 42 after transplant was achieved in 55% of those randomized to omidubicel and 35% of those randomized to the control arm (ITT).
This difference had a p value of 0.028.
Patients randomized to omidubicel were less likely to develop a grade 2 or grade 3 bacterial or invasive fungal infection: 37% versus 57% for those
randomized to the control arm (p=0.03). The cumulative incidence of first grade 3 viral infection during the first year after transplantation was also lower
for those randomized to omidubicel (10% vs 26%; p=0.02). When looking at the overall number and rate of infections, or infection density, during the first
year after transplantation, the risk ratio for all infections, irrespective of severity, was significantly lower among recipients of omidubicel.
Incidence of Serious Bacterial and Viral Infection Post-Transplant
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Relative Risk (95% CI) for Bacterial, Viral, and all Infections at One Year
Patients randomized to omidubicel spent a median of 60.5 days alive and out of the hospital during the first 100 days following transplantation,
compared to 48 days for control patients (p=0.005).
In the ITT population, the cumulative incidence of non-relapse mortality at 210 days following randomization was 11% for omidubicel and 24% for
control. The incidence of relapse at 15 months following randomization was 25% for omidubicel and 17% for the controls. These differences were not
statistically different.
Incidence of Non-Relapse Mortality and Incidence of Relapse
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There was no statistically significant difference between the omidubicel arm and the control arm in one year overall survival or disease-free survival.
The Hazard Ratio of overall survival was 0.57 in favor of omidubicel, p=0.09.
Disease-Free Survival and Overall Survival
The safety profile for omidubicel recipients in this study was consistent with the expected toxicities of allogeneic stem cell transplantation following
conditioning therapy, and there was no increase in adverse events, serious adverse events, or infusion reactions in the omidubicel arm compared to control.
GvHD is a multisystem disorder that is common in allogeneic HSCT. GvHD occurs when immune cells from a donor graft recognize the transplant
recipient host as foreign and initiate an immune reaction. Acute GvHD usually presents around the time of engraftment and manifests as rash, nausea,
vomiting, abdominal pain, diarrhea, or increased serum bilirubin. Chronic GvHD is usually diagnosed later during the first year post-transplant, and clinical
manifestations include skin involvement, gastrointestinal disease, and increased bilirubin. There was no statistically significant difference between
omidubicel and control patients in the cumulative incidence of acute GvHD in the first 100 days post-transplant.
Grade 2-4 acute GvHD was observed in 56% of omidubicel recipients and 43% of controls. The numbers for grade 3/4 (severe) acute GvHD were 14%
and 21% for omidubicel and control, respectively. There was also no statistically significant difference in the cumulative incidence of chronic GvHD (all
grades, including mild, moderate and severe) in the first year, 35% vs 29% for omidubicel and control, respectively. Overall, the results of the Phase 3
study showed superior hematopoietic recovery, decreased risk of serious infection, and shorter duration of hospitalization in patients treated with
omidubicel, with an acceptable safety profile.
In November 2021, we completed a Type B Pre-BLA meeting with the FDA for omidubicel during which the FDA requested that we provide revised
analysis of the manufacturing data generated at our manufacturing facility in Kiryat Gat, Israel to demonstrate the analytical comparability of the
omidubicel produced at Kiryat Gat to the omidubicel that was produced at the clinical manufacturing sites for the Phase 3 study. In January 2022, we
received positive Type B meeting correspondence from the FDA that we had established the requisite analytical comparability. Based on the positive Phase
3 trial results and the comparability analysis, the FDA agreed that the initiation of a rolling BLA submission is appropriate. In February 2022, we initiated
the rolling submission process with the FDA, and we plan to submit the full BLA for omidubicel to the FDA in the first half of 2022.
Omidubicel has Breakthrough Therapy Designation from the FDA. Additionally, omidubicel received orphan drug designation from both the FDA and
the EMA.
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Phase 1/2 Clinical Trial
The main objective of the Phase 1/2 study was to evaluate the safety and efficacy of omidubicel treatment in patients with hematologic malignancies
following myeloablative conditioning therapy. The study compared outcomes against a group of historic controls that were identified from data collected
by the Center for International Blood and Marrow Transplant Research, or CIBMTR, which tracks all allogeneic transplants conducted in the United States.
From the CIBMTR database, we identified 146 age and disease matched patients who received standard cord blood transplants and served as historic
controls.
The primary endpoint of this study was also time to neutrophil engraftment, which was also met. Patients treated with omidubicel recovered their
neutrophils (500 cells per microliter) with a median recovery of 11.5 days after transplantation, which is significantly shorter than the 21 days observed in
the historic controls (p<0.001). Platelet counts recovered within a median time period of 34 days in the omidubicel treated patients, compared to 46 days in
the historic controls (p<0.001). For both neutrophils and platelets, the percentage of patients who achieved engraftment was higher than in the historic
controls. The age-adjusted cumulative incidence of neutrophil engraftment at 42 days following transplantation was 94% for omidubicel recipients and
85% for the CIBMTR comparator cohort.
Rates of acute GvHD, chronic GvHD, infections, and hospitalization, as well as safety findings, were similar to those observed in the Phase 3 study.
Omidubicel: Health Economic Implications
The potential clinical advantages of omidubicel could lead to societal benefits such as enabling patients to return to work, spend time with loved ones
and enjoy improved quality of life. Omidubicel may also reduce the costs to the healthcare system versus standard cord HSCT due to potentially shortened
isolation and intensive care hospital stays, reduced re-admission rates and decreased severity and rates of infections. At the December 2021 Annual
Meeting of ASH, we reported the results of an analysis of resource utilization data from the first 100 days after transplant for 108 patients in the Phase 3
trial showing that the omidubicel-treated patients had significantly shorter durations of hospitalization and intensive care unit stays, and fewer consultant
visits, procedures, and transfusions than the patients in the control arm. These data provide further evidence of the clinical benefit associated with the more
rapid hematopoietic recovery in patients treated with omidubicel and the corresponding reduction in healthcare resource utilization. These data will help to
inform pricing and reimbursement.
Omidubicel for the Treatment of Bone Marrow Failure Disorders
In addition to hematologic malignancies, we are pursuing the development of omidubicel for the treatment of severe aplastic anemia and other bone
marrow failure disorders. Severe aplastic anemia is a rare disease, with an estimated incidence in the United States of 600-900 patients per year.
Underlying causes include autoimmune disease, certain medications or toxic substances, and inherited conditions. However, the cause is unknown in
approximately half of all cases of severe aplastic anemia. The disease is characterized by stem cells in the bone marrow that are damaged and unable to
produce enough new blood cells. This leads to extremely low blood cell counts and platelet levels, and often requires patients to be immediately
hospitalized for treatment.
Allogeneic HSCT is the treatment of choice for patients with severe aplastic anemia who have an available matched sibling donor. Among the 2,471
patients with severe aplastic anemia receiving HSCT with a matched sibling donor between 2005 and 2015, the three-year probability of survival was 91%
for those younger than 18 years, and 78% for patients 18 years of age or older. Among the 1,751 recipients of HSCT with a MUD during the same period,
the probabilities of survival were 78% and 68% for severe aplastic anemia patients under 18 years and greater than or equal to 18 years, respectively. We
believe omidubicel may be able to provide a treatment option for those patients who are unable to locate such a donor in time.
The goal in treating these diseases is to replace defective bone marrow cells with cells derived from cord blood donors. Omidubicel is currently being
evaluated in a Phase 1/2 NIH-sponsored clinical trial. In this trial, omidubicel is administered in combination with a reduced conditioning preparative
protocol, which is designed to minimize toxicity, in up to 62 patients with severe aplastic anemia or hypoplastic myelodysplastic syndrome, another bone
marrow failure disease. This research protocol is designed to evaluate the safety and effectiveness of transplantation with omidubicel to overcome the high
incidence of graft rejection associated with standard cord blood HSCT in severe aplastic anemia patients, where graft rejection occurs in up to 50% of
subjects. In December 2020, we reported updated and expanded data at the Annual Meeting of ASH that demonstrated that patients with severe aplastic
anemia treated with omidubicel achieved sustained early engraftment.
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Omidubicel for the Treatment of Non-Malignant Disorders
Omidubicel has also been tested in patients with sickle cell disease, or SCD, for which HSCT is currently the only clinically established cure. The
results of our Phase 1/2 clinical trial were published in Blood. Overall, 16 patients with severe SCD were treated, 13 patients with omidubicel in
conjunction with a standard unit of cord blood, and three patients with standalone omidubicel. All patients initially engrafted at a median of seven days for
double cord and eight days for single cord. Two of the patients died, one due to chronic GvHD and the other due to secondary graft failure. The rate of
grades II-IV acute GvHD was 69%, and the rate of grades III-IV acute GvHD was 23%. The engraftment results were favorable when compared to those
from a study of 29 patients with SCD who underwent HSCT with cells from a MUD donor. In that study, 27 of the patients had neutrophil engraftment, and
the median time to engraftment was 12 days. There were eight deaths, seven due to GvHD and one due to graft rejection; 19 of 29 were disease-free at two
years. While the clinical study in patients with SCD is currently closed, we continue to believe that omidubicel has potential to replace other allogeneic
HSCT procedures in certain hematologic diseases and some metabolic disorders.
Our NK Cell Pipeline
Our pipeline of NK cell-based cancer immunotherapies is comprised of GDA-201 and four additional preclinical programs that involve modifications
intended to direct NK cells against specific tumor markers to improve their cancer killing capabilities in both hematological and solid tumors.
GDA-201 is our lead investigational NK cell-based cancer immunotherapy product candidate. GDA-201 addresses a key limitation in the therapeutic
potential of NK cells by increasing the cytotoxicity and in vivo retention and proliferation in the bone marrow and lymphoid organs of NK cells expanded
in culture conditions. GDA-201 is currently being evaluated in an investigator-sponsored Phase 1/2 trial for the treatment of NHL and MM. We believe that
GDA-201 may have broad potential in both hematologic malignancies and in solid tumors.
In September 2021, we submitted an IND for a Phase 1/2 clinical trial of GDA-201 for the treatment of patients with follicular and diffuse large B-cell
lymphomas. In October 2021, the FDA placed this IND on clinical hold prior to the initiation of patient dosing. The FDA has requested modifications in
donor eligibility procedures and assay qualifications. We are in active communication with the FDA with the objective to address these requests and to
enable IND acceptance. We expect to initiate our Phase 1/2 study of GDA-201 in patients with follicular and diffuse large B-cell lymphomas in 2022.
Limitations of Therapeutic Antibodies in Cancer Treatment
NHL is the most common malignancy of B cells. An estimated 77,240 new cases of NHL were diagnosed in the United States in 2020. The five-year
survival rate for those with NHL is approximately 73%. The combination of an antibody such as rituximab and chemotherapy is the standard of care for
patients with NHL. However, many patients develop resistance to rituximab, and when used as monotherapy, only 15% of patients respond. One
mechanism that contributes to this resistance is the inability of patient or autologous NK cells to locate and kill tumor cells that rituximab has bound to.
Treatment with donor-derived NK cells may overcome this resistance.
NK Cells: Broad Anti-Cancer Potential
Extensive research efforts are ongoing to generate cellular products for the treatment of cancer patients. There is much interest in the field in the
potential of NK cells because they have potent anti-tumor properties. In contrast to other immune cell therapies, NK cells can be used independently from
genetic matching, potentially enabling NK cells to serve as a universal donor-based therapy when combined with certain antibodies.
NK cells’ tumor killing activity is greatly enhanced by antibodies that recognize tumor cells, which trigger ADCC. In ADCC, the binding of an
antibody to a cell marks it for destruction by NK cells. A number of antibody products have been approved by the FDA as therapeutics in oncology, each of
which has limited efficacy as monotherapy. The effectiveness of these antibodies can potentially be enhanced through coadministration with NK cells. A
key limitation in the application of NK cells in cell therapy has been the traditionally challenging task of generating sufficient numbers of highly functional
NK cells in culture.
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Our Solution: GDA-201
We have developed GDA-201, a cell therapy product candidate generated by expansion of NK cells using our NAM technology. We believe that GDA-
201 has potential application in boosting the innate immune response to cancer. Functional studies have shown that our GDA-201 cells expanded in culture
with our NAM technology and the cytokine IL-15 display increased tumor killing activity over NK cells expanded with IL-15 but without NAM. We have
also demonstrated ADCC with GDA-201 in combination with antibodies, including rituximab.
An investigator-sponsored Phase 1/2 clinical study of GDA-201 in patients with MM or NHL was initiated in 2017 at the University of Minnesota.
These patients have relapsed or refractory NHL or MM, meaning that their disease has come back after standard therapy and/or they are not responding to
standard therapy for their disease. In combination with GDA-201, these patients also receive therapeutic antibodies, which, in the case of NHL, includes
rituximab, and in the case of MM, elotuzumab. At the December 2021 Annual Meeting of ASH, we reported two-year follow-up data from the clinical trial
on outcomes and cytokine biomarkers associated with survival. The safety profile was consistent with that reported previously: there were no dose limiting
toxicities in the 35 treated patients. In 19 patients with lymphoma, the data demonstrated a median duration of response of 16 months (range 5- 36 months),
an overall survival at two years of 78% (95% CI, 51%–91%).
Phase 1/2 Study of GDA-201 in Patients with Non-Hodgkin Lymphoma or Multiple Myeloma
Treatment included lymphodepleting chemotherapy with fludarabine and cyclophosphamide followed by two doses of GDA-201 (Days 0 and 2) and
low-dose IL-2 (6 million units subcutaneously). Three doses of monoclonal antibodies were administered pre and post GDA-201. The study was designed
to determine the maximum tolerated dose of GDA-201 cells. Patients who derived clinical benefit received a second cycle of GDA-201 infusion without
lymphodepleting chemotherapy. A total of 35 patients were treated in three cohorts of escalating cellular doses of GDA-201, with a maximum dose of 200
million cell/kg. Sixteen patients with MM and 19 patients with NHL were evaluable. The median age was 61 and the oldest patient was 83 years old.
Among the patients with NHL, eight had diffuse large B-cell lymphoma, or DLBC, 10 had follicular lymphoma, or FL, and one had mantle cell lymphoma.
Patients were heavily pre-treated with a median of three lines of prior chemotherapy (range 1-8 lines). Four of the NHL patients and three of the MM
patients had prior HSCT.
There were no dose limiting toxicities at any of the doses administered. One patient, who initially was thought to have cytokine release syndrome, died
of E-coli sepsis. The most common Grade 3 or 4 adverse events were decreased neutrophil count, febrile neutropenia, anemia and low platelet count,
generally attributed to lymphodepleting chemotherapy. No neurotoxic events, GvHD or marrow aplasia were observed.
Among the 16 patients with MM, one patient achieved a complete response, and four patients achieved stable disease. Among the 19 patients with
NHL, 13 achieved a complete response and one achieved a partial response. Overall response rate among the 19 NHL patients was 74%, with responses
observed in 8 patients with FL and 5 patients with DLBCL. Median duration of response was 10 months with a range of 1 – 28 months. In three patients, an
initial partial response deepened over time to a complete response: one (patient 009) without any further therapy, and two in the context of a second cycle
of GDA-201 and rituximab. Two patients with complete response who received a second cycle of GDA-201 after initial complete response had maintained
a complete response after a total of 6 and 12 months, respectively.
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Responses in Patients with Lymphoma Treated with GDA-201
Given the results of this study, we have developed a cryopreserved, allogeneic, readily available formulation of GDA-201 to enable further clinical
trials. In September 2021, we submitted an IND for a Phase 1/2 clinical trial of GDA-201 for the treatment of patients with follicular and diffuse large B-
cell lymphomas. In October 2021, the FDA placed this IND on clinical hold prior to the initiation of patient dosing. The FDA has requested modifications
in donor eligibility procedures and sterility assay qualification. We are in active communication with the FDA with the objective to address these requests
and to enable IND acceptance. We expect to initiate our Phase 1/2 trial of GDA-201 in patients with follicular and diffuse large B-cell lymphomas in 2022.
Our Additional NK Cell Programs
We continue to advance the other programs in our NAM-enabled genetically modified NK cell pipeline, which utilize CAR, membrane bound- and
CRISPR-mediated strategies to increase targeting, potency and persistence against hematologic malignancies and solid tumors. We plan to execute
preclinical proof of concept studies and to select pipeline candidates for IND enabling studies in the following targets by the end of 2022:
● GDA-301: Knockout of CISH (cytokine inducible SH2 containing protein) in NK cells using CRISPR/Cas9 in combination with a membrane-
bound IL-15/IL-15Ra. Designed to improve tumor killing by promoting activation of NK cells and inhibiting negative feedback signals. Potential
applications exist across a range of solid tumors and hematologic malignancies.
● GDA-401: Undisclosed target genetically engineered to enhance NK cell survival in the solid tumor microenvironment for potential application
across a broad range of solid tumors.
● GDA-501: CAR-engineered NK cells to target HER2+ solid tumors with the potential to enhance homing and activation against cancers with
HER2 overexpression, including breast, ovarian, lung, bladder, and gastric cancers.
● GDA-601: Knockout of CD38 on NK cells to avoid fratricide by CD38-targeting antibodies in combination treatment of multiple myeloma,
combined with a CD38 CAR designed to enhance killing of multiple myeloma cells.
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Competition
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on
proprietary products. While we believe that our technology platform, development experience and scientific knowledge provide us with competitive
advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology
companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates that we successfully
develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
We anticipate intensifying competition in the field of cell therapies as new therapies are approved and advanced technologies become available.
Many of our competitors will have substantially greater financial, technical and human resources. Competitors may also have more experience
developing, obtaining approval for, and marketing novel treatments in the indications we are pursuing. These factors could give our competitors an
advantage over us in recruiting and retaining qualified personnel, completing clinical development, and commercializing their products. Competitors that
are able to obtain FDA or other regulatory approval for their products more rapidly than we can for our products may also establish a stronger market
position, diminishing our commercial opportunity. Key considerations that would impact our capacity to effectively compete include the efficacy, safety,
ease of use, as well as pricing and reimbursement of our products.
There are several clinical-stage development programs that seek to improve human umbilical cord blood transplantation through the use of an
allogeneic HSCT graft. In addition, there are clinical-stage development programs that focus on natural killer cells. Companies active in these areas
include, but are not limited to:
Allogeneic HSCT Graft: Magenta Therapeutics, ExCellThera, Garuda Therapeutics and Bellicum Pharmaceuticals; and
Natural Killer Cell product: Takeda Pharmaceutical Company, Fate Therapeutics, Artiva, Sanofi, MiNK Therapeutics, ONK Therapeutics, Shoreline,
Cellularity, NKarta, Wugen, Century Therapeutics, Appia Bio and FujiFilm Cellular Dynamics.
Manufacturing
Omidubicel is currently manufactured at our Kiryat Gat, Israel facility using a scalable self-assembly process with well-defined unit operations. This
highly specialized and precisely controlled manufacturing process enables us to manufacture product candidates reproducibly and efficiently for clinical
and commercial applications. We anticipate using the Kiryat Gat facility to also manufacture our other pipeline therapies, including our NK cell therapies.
We currently rely on third-party clinical cell processing facilities and contract manufacturers for all our required raw materials, active ingredients and
finished products for our preclinical research and clinical trials. We previously relied on a third party, Lonza Netherlands B.V., or Lonza, to conduct a
material portion of our product manufacturing for omidubicel until production was increased at our Kiryat Gat manufacturing facility.
In June 2019, we entered into a Manufacturing Services Agreement, or the Services Agreement, with Lonza, to provide for the future commercial
production after potential FDA approval of omidubicel. Under the Services Agreement, Lonza agreed to construct and dedicate production suites prior to
anticipated commercial launch. Additionally, the Services Agreement gives us the option to increase the number of Lonza’s dedicated production suites
over time to ensure commercial supply of omidubicel.
The term of the Services Agreement is the shorter of seven years from the date of execution or five years from the date of the first FDA approval of
omidubicel. The Services Agreement may be terminated in the event of an uncured material breach by one of the parties. The Services Agreement also
provides that if we have not received FDA approval of omidubicel by December 31, 2021, we have the right to terminate the Services Agreement upon 30
days’ written notice. Either party may terminate without cause after the referenced time periods, but only after the Initial Term expires, which will happen
on June 10, 2022. Further, the Services Agreement may be terminated by either party upon notice in the event of dissolution, termination of existence,
liquidation or business failure of the other party, the uncured appointment of a custodian or receiver to the other party or un-dismissed institution of
insolvency, reorganization or bankruptcy proceedings.
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In December 2021, we engaged in discussions with Lonza executive leadership regarding our desire to wind down Lonza’s manufacturing of
omidubicel under the Services Agreement and our desire to affect a mutual termination of the Services Agreement. These discussions are ongoing. As of
December 31, 2021, we have paid Lonza an aggregate of approximately $28.2 million pursuant to the Services Agreement.
We have a contract through the end of 2022 with Hadasit Medical Research Services & Development Co. Ltd., a technology transfer company of
Hadassah Medical Center in Jerusalem, for the manufacture of GDA-201 and we plan to begin manufacturing GDA-201 at our Kiryat Gat facility in 2023.
Marketing, Sales and Distribution
Our strategy is to ensure omidubicel is made available to appropriate patients, and we are evaluating strategic alternatives for commercialization of
omidubicel, if approved, which include commercializing omidubicel ourselves or entering into potential strategic alliances or licensing arrangements with
pharmaceutical companies and other partners. We are preparing for potential approval of omidubicel and our commercial launch thereafter, and we have
added sales, marketing, and supply chain personnel to our workforce. Our Chief Commercial and Chief Operating Officer, Michele Korfin, is based in the
U.S., and we have a wholly-owned U.S. subsidiary, Gamida Cell Inc., to support our U.S. development efforts.
If we receive regulatory approvals for our products in markets outside of the United States, we intend, where appropriate, to pursue commercialization
relationships, including strategic alliances and licensing arrangements with pharmaceutical companies and other strategic partners that are equipped to
market or sell our products through their well-developed sales, marketing and distribution organizations in such countries.
Intellectual Property
We strive to protect and enhance the proprietary technologies, inventions, products and product candidates, methods of manufacture, methods of using
our products and product candidates, and improvements thereof that are commercially important to our business. We protect our proprietary intellectual
property by, among other things, filing patent applications in the United States and in jurisdictions outside of the United States covering our proprietary
technologies, inventions, products and product candidates, methods, and improvements that are important to the development and implementation of our
business.
As of January 12, 2022, we own 32 issued patents and 61 pending patent applications worldwide, including six U.S. issued patents, six pending U.S.
non-provisional patent applications and three pending U.S. provisional patent applications.
We own two issued patents in the United States and 17 issued foreign patents related to our omidubicel product candidate. The patents that we own
outside of the United States are granted in Australia, Canada, Europe, Hong Kong, Israel, Japan, Singapore, and South Africa. In addition, we own two
pending U.S. non-provisional patent applications and 16 pending foreign patent applications related to our omidubicel product candidate. These patents and
pending patent applications contain composition-of-matter claims to our omidubicel product candidate, and claims to methods of producing and methods of
treatment using omidubicel. Not accounting for any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity
and/or maintenance fees are paid timely, these patents, and if granted, these patent applications, will expire from 2023 to 2038. In particular, U.S. Patent
No. 7,955,852, EP Patent No. 1576089, EP Patent No. 2206773, JP Patent No. 4738738, and IL Patent No. 163180, which relate to methods of expanding a
population of hematopoietic stem cells by culturing the cells with nicotinamide or nicotinamide analogs, and transplantable cell populations produced by
these methods, expire in 2023, not accounting for any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity
and/or maintenance fees are paid timely and U.S. Patent No. 8,846,393, EP Patent No. 1974012, JP Patent No. 5102773 and IL Patent No. 191669, which
relate to methods of enhancing cell homing and engraftment potential of hematopoietic stem cells by expansion in the presence of nicotinamide, expire in
2026, not accounting for any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity and/or maintenance fees
are paid timely.
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We own nine issued foreign patents related to GDA-201. The patents that we own outside of the United States are granted in Australia, Canada,
Europe, Hong Kong, Israel, Canada, and Japan. In addition, we own four pending U.S. non-provisional patent applications, one U.S. provisional patent
applications and 36 pending foreign patent applications related to our GDA-201 product candidate. These patents and pending patent applications contain
composition-of-matter claims to our GDA-201 product candidate, and claims to methods of producing and methods of treatment using our GDA-201
product candidate. Not accounting for any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity and/or
maintenance fees are paid timely, these patents, and if granted, the U.S. non-provisional patent applications and foreign patent applications, will expire
from 2030 to 2040, and patents, and if granted, patent applications claiming priority to the U.S. provisional patent application will expire in 2042. In
particular, EP Patent No. 2519239, EP Patent No. 3184109, JP Patent No. 5943843, JP Patent No. 6215394 and IL Patent No. 220660 and CA Patent No.
2,785,627, which relate to methods of expanding a population of natural killer cells by culturing the cells with nicotinamide or nicotinamide analogs, and
transplantable cell populations produced by these methods, expire in 2030, not accounting for any patent term adjustment, regulatory extension or terminal
disclaimers, and assuming that all annuity and/or maintenance fees are paid timely.
We own one U.S. provisional application related to GDA-301 and GDA-601. This pending provisional patent application contains composition-of-
matter claims to our GDA-301 and GDA-601 product candidates, and claims to methods of producing and methods of treatment using our GDA-301 and
GDA-601 product candidates. Not accounting for any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity
and/or maintenance fees are paid timely, patent applications claiming priority to this U.S. provisional application, if granted, would expire in 2042.
We own two U.S. provisional applications related to GDA-501. These pending provisional patent applications contain composition-of-matter claims to
our GDA-501 product candidate, and claims to methods of producing and methods of treatment using our GDA-501 product candidate. Not accounting for
any patent term adjustment, regulatory extension or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, patent
applications claiming priority to these U.S. provisional applications, if granted, would expire in 2042.
In addition, we filed for and obtained trademark registration in the China, Europe, Hong Kong, Mexico, Canada, Brazil, Russian Federation, Israel,
Great Britain and WIPO (International) for “Gamida Cell”, and in Israel for “Symrepliq”, “Gamida-Cell Assist”, “Nampluri”, “Namrepli”, “Namtypic”,
“Omisirge” and “Omplusto”. We also rely upon trade secrets, know-how and continuing technological innovation to develop, strengthen and maintain our
competitive position.
The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries in which we have
filed, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a
patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and
granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a patent that covers a drug or biological
product may also be eligible for patent term extension when FDA approval is granted for a portion of the term effectively lost as a result of the FDA
regulatory review period, subject to certain limitations and provided statutory and regulatory requirements are met. Any such patent term extension can be
for no more than five years, only one patent per approved product can be extended, the extension cannot extend the total patent term beyond 14 years from
approval, and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. We may not receive
an extension if we fail to exercise due diligence during the testing phase or regulatory review process, fail to apply within applicable deadlines, fail to apply
prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we
request. In the future, if and when our product candidates receive approval from the FDA or foreign regulatory authorities, we expect to apply for patent
term extensions on issued patents we may obtain in the future covering those products, depending upon the length of the clinical trials for each product and
other factors. There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or
favorable adjustment to the term of any of our patents.
Provisional patent applications are not eligible to become issued patents until, among other things, we file a non-provisional patent application within
12 months of filing of one or more of our related provisional patent applications. If we do not timely file any non-provisional patent applications, we may
lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent
applications.
As with other biotechnology and pharmaceutical companies, our ability to establish and maintain our proprietary and intellectual property position for
our product candidates will depend on our success in obtaining effective patent claims and enforcing those claims if granted. There can be no assurance that
any of our current or future patent applications will result in the issuance of patents or that any of our current or future issued patents will provide any
meaningful protection of our product candidates or technology. For more information regarding the risks related to our intellectual property, see “Item 1A:
Risk Factors—Risks Related to Our Intellectual Property.”
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Research Grants
Grants under the Innovation Law
Under the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984, and the provisions of the
applicable regulations, rules, procedures and benefit tracks, (collectively, the “Innovation Law”), research and development programs that meet specified
criteria and are approved by a committee of the IIA are eligible for grants. The grants awarded are typically up to 50% of the project’s expenditures, as
determined by the research committee and subject to the benefit track under which the grant was awarded. A company that receives a grant from the IIA, or
a grant recipient, is typically required to pay royalties to the IIA on income generated from products incorporating know-how developed using such grants
(including income derived from services associated with such products), until 100% of the U.S. dollars linked grant plus annual LIBOR interest is repaid.
The rate of royalties to be paid may vary between different benefits tracks, as shall be determined by the IIA. Under the regular benefits tracks the rate of
royalties varies from 3% to 3.5% of the income generated from the IIA-supported products. The obligation to pay royalties is contingent on actual income
generated from such products and services. In the absence of such income, no payment of such royalties is required.
The terms of the grants under the Innovation Law also generally require that the products developed as part of the programs under which the grants
were given be manufactured in Israel and that the know-how developed thereunder may not be transferred outside of Israel, unless a prior written approval
is received from the IIA (such approval is not required for the transfer of a portion of the manufacturing capacity which does not exceed, in the aggregate,
10% of the portion declared to be manufactured outside of Israel in the applications for funding, in which case only notification is required) and additional
payments are required to be made to the IIA. It should be noted that this does not restrict the export of products that incorporate the funded know-how. See
“Item 1A: Risk Factors—Risks Related to Israeli Law and Our Operations in Israel” for additional information.
Since our incorporation, we have received grants from the IIA relating to various projects. We were members of Bereshit Consortium, sponsored by
IIA in which certain of our technologies were developed, such program does not require payments of royalties to the IIA, but all other restrictions under the
Innovation Law, such as local manufacturing obligations and know-how transfer limitations, as further detailed hereunder, are applicable to the know how
developed by us with the funding received in such consortium program. No royalties have been paid to the IIA in respect of any grant. Our total
outstanding obligation to the IIA, including the interest accrued through December 31, 2021, amounts to approximately $44.7 million.
Government Regulation
The FDA and other regulatory authorities at federal, state, and local levels, as well as in non-U.S. countries, extensively regulate, among other things,
the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record
keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing.
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing
regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:
● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices, or GLP,
regulation;
● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant
changes are made;
● approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the trial is commenced;
● performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product
candidate for its intended purpose;
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● preparation of and submission to the FDA of a Biologics License Application, or BLA, after completion of all pivotal clinical trials;
● a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; satisfactory completion of an FDA Advisory
Committee review, if applicable;
● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to
assess compliance with current Good Manufacturing Practices, or cGMP, and to assure that the facilities, methods and controls are adequate to
preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good
Clinical Practices, or GCP; and
● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.
Preclinical and Clinical Development
Prior to beginning the first clinical trial with a product candidate, we must submit an IND to the FDA. An IND is a request for authorization from the
FDA to administer an investigational new drug product to humans. The central focus of an IND submission is on the general investigational plan and the
protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and
pharmacodynamic characteristics of the product; chemistry, manufacturing, and controls information; and any available human data or literature to support
the use of the investigational product. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30
days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial. In such a
case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial
can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.
For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap.
● Phase 1: The investigational product is initially introduced into patients with the target disease or condition. These studies are designed to test the
safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with
increasing doses, and, if possible, to gain early evidence on effectiveness.
● Phase 2: The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the
preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical
trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.
● Phase 3: The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically
significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These
clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product
approval.
In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more
information about the product. These so- called Phase 4 studies may be made a condition to approval of the BLA. Concurrent with clinical trials,
companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate, and
must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must
be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the identity,
strength, quality and purity of the final product, or for biologics, the safety, purity and potency. Compliance with Good Tissue Practices, or GTPs, is also
required to the extent applicable. These are FDA regulations and guidance documents that govern the methods used in, and the facilities and controls used
for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation,
transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are
manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. Good Tissue Practices regulations also
require tissue establishments to register and list their HCT/Ps with the FDA and when applicable, to evaluate donors through screening and testing.
Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not
undergo unacceptable deterioration over its shelf life.
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BLA Submission and Review
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development,
nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. The
BLA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous results as well as positive
findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and propose labeling, among other things. The
submission of a BLA requires payment of a substantial application user fee to FDA, unless a waiver or exemption applies.
Once a BLA has been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application for filing, or, if the
application qualifies for priority review, six months after the FDA accepts the application for filing. The FDA may issue a refusal-to-file letter if the BLA is
not sufficiently complete to permit substantive review. In both standard and priority reviews, the review process is often significantly extended by FDA
requests for additional information or clarification. The FDA reviews a BLA to determine among other things, whether a product is safe, pure and potent
and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and
potency. The FDA may convene an advisory committee to provide clinical insight on application review questions. Before approving a BLA, the FDA will
typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the
manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within
required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. If
the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the
submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA
ultimately may decide that the application does not satisfy the regulatory criteria for approval.
After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product will be produced, the FDA may
issue an approval letter or a Complete Response letter. An approval letter authorizes commercial marketing of the product with specific prescribing
information for specific indications. A Complete Response letter will describe all of the deficiencies that the FDA has identified in the BLA, except that
where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response letter
without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling. In issuing the Complete Response letter,
the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or
clarification. The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information
and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.
If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses
for which such product may be marketed. For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to
ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a product and
to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication
plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may
condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the
FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product
reaches the marketplace. The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety
and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.
Post-Approval Requirements
Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including,
among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and
advertising and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims,
are subject to prior FDA review and approval. There also are continuing user fee requirements, under which FDA assesses an annual program fee for each
product identified in an approved BLA. Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and
certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose
certain procedural and documentation requirements upon us and our third-party manufacturers.
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Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before
being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us
and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of
production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.
The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product
reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or
with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety
information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions
under a REMS program. Other potential consequences include, among other things:
● restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls;
● fines, warning letters or holds on post-approval clinical studies;
● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product
approvals;
● product seizure or detention, or refusal of the FDA to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating to safety
and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies
actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other
things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available
products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are
common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The
FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the
subject of off-label use of their products.
Breakthrough Therapy Designation
A sponsor may seek FDA designation of a product candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one
or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may
demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed
early in clinical development. The designation allows more intensive FDA interaction and guidance. The breakthrough therapy designation is a distinct
status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met. If a product is designated
as breakthrough therapy, the FDA will work to expedite the development and review of such drug.
Other Healthcare Regulations
Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payers, patient
organizations and customers, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the
business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our
product candidates, if approved. Such laws include those described below.
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The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or
receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual
for, or purchasing, leasing, ordering, or arranging for the purchase, lease or order of, any good, facility, item or service reimbursable under Medicare,
Medicaid or other federal healthcare programs. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical
manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other hand. The term remuneration has been interpreted broadly
to include anything of value. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution.
The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing,
purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a
particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead,
the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all facts and circumstances. Additionally, the
Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the PPACA,
amended the intent requirement of the federal Anti-Kickback Statute, and other healthcare criminal fraud statutes, so that a person or entity no longer needs
to have actual knowledge of the federal Anti-Kickback Statute, or the specific intent to violate it, to have violated the statute. The PPACA also provided
that a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for payment of items or services
resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
The federal civil and criminal false claims laws, including the federal civil False Claims Act, or FCA, prohibit, among other things, any person or
entity from knowingly presenting, or causing to be presented, a false claim for payment to, or approval by, the U.S. federal government, including the
Medicare and Medicaid programs, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent
claim or to avoid, decrease or conceal an obligation to pay money to the federal government. As a result of a modification made by the Fraud Enforcement
and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government.
In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payers if they are deemed to
“cause” the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of
the federal government alleging violations of the FCA and to share in any monetary recovery. FCA liability is potentially significant in the healthcare
industry because the statute provides for treble damages and mandatory penalties. Government enforcement agencies and private whistleblowers have
investigated pharmaceutical companies for or asserted liability under the FCA for a variety of alleged impermissible promotional and marketing activities,
such as providing free product to customers with the expectation that the customers would bill federal programs for the product; providing consulting fees
and other benefits to physicians to induce them to prescribe products; engaging in promotion for “off-label” uses; and submitting inflated best price
information to the Medicaid Rebate Program.
The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibits, among
other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false
or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit
program, regardless of whether the payer is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully
obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or
device a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare
benefits, items or services relating to healthcare matters. Additionally, the PPACA amended the intent requirement of some of these criminal statutes under
HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation.
Additionally, the federal Open Payments program pursuant to the Physician Payments Sunshine Act, created under Section 6002 of the PPACA and its
implementing regulations, require some manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare,
Medicaid or the Children’s Health Insurance Program (with specified exceptions) to report annually information related to specified payments or other
transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals
(such as physician assistants and nurse practitioners) and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the
physicians, and teaching hospitals and to report annually specified ownership and investment interests held by physicians and their immediate family
members.
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In addition, we may be subject to data privacy and security regulation of both the federal government and the states in which we conduct our business.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose
requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities subject to the law,
such as health plans, healthcare clearinghouses, and certain healthcare providers, and their business associates, defined as independent contractors or agents
of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a
covered entity and their subcontractors that use, disclose, access, or otherwise process protected health information. Among other things, HITECH created
new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties and HIPAA’s security standards directly applicable to business
associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA
laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
Many states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to items or services reimbursed
by any third-party payer, including commercial insurers. We may also be subject to state laws that require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, state and local
laws that require the registration of pharmaceutical sales representatives, state laws that require drug manufacturers to report information related to
payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information, and/or state laws
governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not
have the same effect, thus complicating compliance efforts.
Ensuring that our internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations will likely
be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or
case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were found to be in violation of any of these laws
or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines,
disgorgement, imprisonment, possible exclusion from government funded healthcare programs, contractual damages, reputational harm, diminished profits
and future earnings, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve
allegations of non-compliance with these laws, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians
or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal,
civil or administrative sanctions, including exclusions from government funded healthcare programs.
Coverage and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. In the
United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on
the extent to which third-party payers provide coverage, and establish adequate reimbursement levels for such products. In the United States, third-party
payers include federal and state healthcare programs, private managed care providers, health insurers and other organizations.
The process for determining whether a third-party payer will provide coverage for a product may be separate from the process for setting the price of a
product or for establishing the reimbursement rate that such a payer will pay for the product. Third-party payers may limit coverage to specific products on
an approved list, or also known as a formulary, which might not include all of the FDA-approved products for a particular indication. Third-party payers
are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical products, therapies and services, in
addition to questioning their safety and efficacy.
We may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our products,
in addition to the costs required to obtain the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. Payer’s
decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, the determination of one payer to
provide coverage for a product does not assure that other payers will also provide such coverage for the product.
Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our
investment in product development.
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Different pricing and reimbursement schemes exist in other countries. In the EU, governments influence the price of pharmaceutical products through
their pricing and reimbursement rules and control of national health care systems that in some countries subsidize a large part of the cost of those products
for consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has
been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-
effectiveness of a particular product candidate to then available therapies. Other EU member states allow companies to fix their own prices for medicines,
but monitor and control company profits. The downward pressure on health care costs has become very intense.
As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-
priced markets exert a commercial pressure on pricing within a country.
The marketability of any of product candidates for which we receive regulatory approval for commercial sale may suffer if the government and third-
party payers fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care in the United States has increased and we expect
will continue to increase the pressure on healthcare pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if
favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage
policies and reimbursement rates may be implemented in the future.
Healthcare Reform Measures
The United States and some non-U.S. jurisdictions are considering or have enacted a number of legislative and regulatory proposals designed to
change the healthcare system. Among policy makers and payers in the United States and elsewhere, there is significant interest in promoting changes in
healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical
industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
For example, the pharmaceutical industry in the United States has been affected by the passage of PPACA, which, among other things: imposed new
fees on entities that manufacture or import certain branded prescription drugs; expanded pharmaceutical manufacturer obligations to provide discounts and
rebates to certain government programs; implemented a licensure framework for follow-on biologic products; expanded health care fraud and abuse laws;
revised the methodology by which rebates owed by manufacturers to the state and federal government under the Medicaid Drug Rebate Program are
calculated for certain drugs and biologics, including products that are inhaled, infused, instilled, implanted or injected; imposed an additional rebate similar
to an inflation penalty on new formulations of drugs; extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in
Medicaid managed care organizations; expanded the 340B program which caps the price at which manufacturers can sell covered outpatient
pharmaceuticals to specified hospitals, clinics and community health centers; and provided incentives to programs that increase the federal government’s
comparative effectiveness research.
There have been judicial and Congressional challenges to certain aspects of the PPACA. While Congress has not passed comprehensive repeal
legislation, several bills affecting the implementation of certain taxes under the PPACA have been signed into law. The Tax Act includes a provision
repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who fail to maintain
qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. On June 17, 2021, the U.S. Supreme Court
dismissed a challenge on procedural grounds that argued the PPACA is unconstitutional in its entirety because the “individual mandate” was repealed by
Congress. Thus, the PPACA will remain in effect in its current form. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden
issued an executive order to initiate a special enrollment period from February 26, 2021 through August 15, 2021 for purposes of obtaining health
insurance coverage through the PPACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their
existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that
include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the PPACA.
It is possible that the PPACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the healthcare
reform measures of the Biden administration.
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Other legislative changes have been proposed and adopted in the United States since the PPACA was enacted. In August 2011, the Budget Control Act
of 2011, among other things, included aggregate reductions of Medicare payments to providers of 2.0% per fiscal year, which went into effect in April
2013, and due to subsequent legislative amendments, including the BBA, will remain in effect through 2031 with the exception of a temporary suspension
from May 1, 2020 through March 31, 2022 unless additional U.S. Congressional action is taken. Under current legislation, the actual reduction in Medicare
payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. In addition, in January 2013, President Obama signed into law the
American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several categories of healthcare providers and increased
the statute of limitations period for the government to recover overpayments to providers from three to five years. Additional changes that may affect our
business include new quality and payment programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and
CHIP Reauthorization Act of 2015, or MACRA, which ended the use of the statutory formula for clinician payment and established a quality payment
incentive program, also referred to as the Quality Payment Program. In November 2019, CMS issued a final rule finalizing the changes to the Quality
Payment Program but its overall impact remains unclear. Additionally, Congress is considering additional health reform measures.
In addition, there has been particular and increasing legislative and enforcement interest in the United States with respect to drug pricing practices in
recent years, particularly with respect to drugs that have been subject to relatively large price increases over relatively short time periods. Specifically, there
have been several recent U.S. Presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to,
among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, reduce the
cost of prescription drugs under Medicare and reform government program reimbursement methodologies for pharmaceutical products. For example, on
July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to
implement several of the administration’s proposals. As a result, the FDA concurrently released a final rule and guidance in September 2020 providing
pathways for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, HHS finalized a regulation removing
safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit
managers, unless the price reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022
to January 1, 2023 in response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a
new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been
delayed by the Biden administration until January 1, 2023. On November 20, 2020, CMS issued an interim final rule implementing the Trump
administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest
price paid in other economically advanced countries, effective January 1, 2021. As a result of litigation challenging the Most Favored Nation model, on
December 27, 2021, CMS published a final rule that rescinds the Most Favored Nation model interim final rule.
Additionally, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple
provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing
High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as
potential administrative actions HHS can take to advance these principles. No legislation or administrative actions have been finalized to implement these
principles. It is unclear whether these or similar policy initiatives will be implemented in the future.
In addition, individual states in the United States have become increasingly active in passing legislation and implementing regulations designed to
control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and
marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In
the future, there will likely continue to be proposals relating to the reform of the U.S. healthcare system, some of which could further limit coverage and
reimbursement of products. It is also possible that additional governmental action is taken in response to the COVID-19 pandemic.
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The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering or authorizing payment or offering of
anything of value, directly or indirectly, to any non-U.S. official, political party or candidate for the purpose of influencing any act or decision of the non-
U.S. entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in
the United States to comply with accounting provisions requiring the companies to maintain books and records that accurately and fairly reflect all
transactions of the companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for
international operations.
Non-U.S. Government Regulation
To the extent that any of our product candidates, once approved, are sold in a country outside of the United States, we may be subject to similar non-
U.S. laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse
laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.
In order to market our future products in the EEA (which is comprised of the 27 Member States of the European Union plus Norway, Iceland and
Liechtenstein) and many other jurisdictions, we must obtain regulatory approvals from such jurisdictions. More precisely, in the EEA, medicinal products
can only be commercialized after obtaining a Marketing Authorization, or MA. There are two types of marketing authorizations:
● the Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for
Medicinal Products for Human Use of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA.
The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products and
medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and viral diseases. The
Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a
significant therapeutic, scientific or technical innovation or which are in the interest of public health in the European Union; and
● National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are
available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for
marketing in a Member State of the EEA, this National MA can be recognized in another Member State through the Mutual Recognition
Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in
various Member States through the Decentralized Procedure.
Under the above-described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an
assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Data and Marketing Exclusivity
In the EEA, new products authorized for marketing, or reference products, qualify for eight years of data exclusivity and an additional two years of
market exclusivity upon marketing authorization. The data exclusivity period prevents generic or biosimilar applicants from relying on the preclinical and
clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the European Union
during a period of eight years from the date on which the reference product was first authorized in the European Union. The market exclusivity period
prevents a successful generic or biosimilar applicant from commercializing its product in the European Union until 10 years have elapsed from the initial
authorization of the reference product in the European Union. The 10-year market exclusivity period can be extended to a maximum of eleven years if,
during the first eight years of those 10 years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications
which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
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Pediatric Investigation Plan
In the EEA, marketing authorization applications for new medicinal products not authorized have to include the results of studies conducted in the
pediatric population, in compliance with a pediatric investigation plan, or PIP, agreed with the EMA’s Pediatric Committee, or PDCO. The PIP sets out the
timing and measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being sought. The PDCO
can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and
safety of the product in adults. Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or
appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in
adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients. Once the
marketing authorization is obtained in all Member States of the European Union and study results are included in the product information, even when
negative, the product is eligible for six months’ supplementary protection certificate extension.
Orphan Drug Designation
In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that the product is intended for the diagnosis,
prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the European
Union when the application is made, or that the product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or
serious and chronic condition in the European Community and that without incentives it is unlikely that the marketing of the drug in the EU would generate
sufficient return to justify the necessary investment. For either of these conditions, the applicant must demonstrate that there exists no satisfactory method
of diagnosis, prevention or treatment of the condition in question that has been authorized in the EU or, if such method exists, the drug will be of significant
benefit to those affected by that condition.
In the EEA, an application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the
product. Marketing authorization for an orphan drug leads to a ten-year period of market exclusivity. During this market exclusivity period, the EMA or the
member state competent authorities, cannot accept another application for a marketing authorization, or grant a marketing authorization, for a similar
medicinal product for the same indication. The period of market exclusivity is extended by two years for medicines that have also complied with an agreed
PIP.
This period may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan
drug designation, for example because the product is sufficiently profitable not to justify market exclusivity. Market exclusivity can be revoked only in very
selected cases, such as consent from the marketing authorization holder, inability to supply sufficient quantities of the product, demonstration of “clinical
superiority” by a similar medicinal product, or, after a review by the Committee for Orphan Medicinal Products, requested by a member state in the fifth
year of the marketing exclusivity period (if the designation criteria are believed to no longer apply). Medicinal products designated as orphan drugs
pursuant are eligible for incentives made available by the European Union and its Member States to support research into, and the development and
availability of, orphan drugs.
Employees
As of December 31, 2021, we had 166 full-time employees and 2 part-time employees, 120 of whom are based in Israel and 48 of whom are based in
the United States. Of these employees, 122 are primarily engaged in research and development activities and 46 are primarily engaged in general and
administrative and commercialization matters. A total of 16 employees have an M.D. or Ph.D. degree. None of our employees is represented by a labor
union. We have never experienced any employment-related work stoppages and believe our relationships with our employees are good Israeli labor laws
govern the length of the workday and workweek, minimum wages for employees, procedures for hiring and dismissing employees, determination of
severance pay, annual leave, sick days, advance notice of termination, payments to the National Insurance Institute, and other conditions of employment
and include equal opportunity and anti-discrimination laws. While none of our employees is party to any collective bargaining agreements, 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 in Israel by order of the Israeli Ministry of Economy and
Industry. These provisions primarily concern pension fund benefits for all employees, insurance for work-related accidents, recuperation pay and travel
expenses. We generally provide our employees with benefits and working conditions beyond the required minimums.
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On January 31, 2022, we announced a workforce reduction plan, or the Plan, pursuant to which we downsized our then current workforce by
approximately 10%. The Plan was enacted to better align our resources to fund operations into mid-2023 which is the anticipated timeline for potential
approval of omidubicel in the United States. Affected employees were offered separation benefits, including severance payments and temporary healthcare
coverage assistance, which severance payments, in Israel, are required under applicable law.
We are an equal opportunity employer that pledges to not discriminate against employees based on race, color, religion, sex, national origin, age,
disability or genetic information. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and
integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected
employees, consultants and directors through the granting of equity-based compensation awards. We strive to create a diverse environment, and our
commitment to diversity, equity and inclusion begins with our leadership team of diverse backgrounds and experiences, including three women on the
board of directors.
We are committed to the Environmental Health and Safety (EHS) safety of our employees. We continuously strive to maintain our strong safety
performance as we continue to grow our business around the globe. The keys to our EHS success are a workforce that is engaged, a management team who
supports and invests in employee safety, and the leadership of our skilled EHS team. In the last several years, the team has added dedicated EHS
professionals to individual sites to train employees and ensure compliance with applicable safety standards and regulations. The team hosts regular
meetings to share information and discuss best practices across plants.
We are also committed to developing our future leaders at every level. Our talent processes start with understanding what current and future talent is
needed to deliver business goals, followed by a talent review process to assist managers with evaluating talent. Learning and development is a critical part
of creating our culture of high performance, innovation, and inclusion. We believe on-the-job experience is an outstanding way to learn, and performance
and development plans ensure that managers and employees have conversations about career aspirations, mobility, developmental goals and interests.
We are committed to creating an open and accountable workplace where employees feel empowered to speak up and raise issues. In an ongoing effort
to understand our employees’ needs, and deliver on our values of trust, accountability and collaboration, we listen. We regularly host company-wide and
business unit town halls to offer employees an opportunity to ask questions about Company activities and policies that impact them. We solicit and receive
questions and feedback from our employees through this process. We also provide multiple channels to speak up, ask for guidance, and report concerns.
Environmental, Health and Safety Matters
We are subject to extensive environmental, health and safety laws and regulations in a number of jurisdictions, primarily Israel, governing, among
other things: the use, storage, registration, handling, emission and disposal of chemicals, waste materials and sewage; chemicals, air, water and ground
contamination; air emissions and the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly
dispose of chemicals, waste materials and sewage. Our operations use chemicals and produce waste materials and sewage and require permits from various
governmental authorities including, local municipal authorities, the Ministry of Environmental Protection and the Ministry of Health. The Ministry of
Environmental Protection and the Ministry of Health, local authorities and the municipal water and sewage company conduct periodic inspections in order
to review and ensure our compliance with the various regulations. These laws, regulations and permits could potentially require the expenditure by us of
significant amounts for compliance or remediation. If we fail to comply with such laws, regulations or permits, we may be subject to fines and other civil,
administrative or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we may be
required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including exposure to hazardous
substances we use, store, handle, transport, manufacture or dispose of), property damage or contribution claims. Some environmental, health and safety
laws allow for strict, joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a responsible party under
such laws. Such developments could have a material adverse effect on our business, financial condition and results of operations. In addition, laws and
regulations relating to environmental, health and safety matters are often subject to change. In the event of any changes or new laws or regulations, we
could be subject to new compliance measures or to penalties for activities that were previously permitted.
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Our Values
At Gamida Cell, our actions are guided by five core values that are the foundation of who we are and who we aspire to be. We live these values on a
daily basis. For our values to impact our goal of bringing life-changing cell therapies to patients, they must be at the center of everything we do:
● Put Patients First: Our reason to wake up each day.
● Be Respectful: We are ethical and kind.
● Drive to Success: We work hard and play hard.
● Embrace Change: Our adaptability advances medicine.
● Be Bold: We strive for cures.
We are committed to promoting integrity, honesty and professionalism and maintaining the highest standards of ethical conduct in all of the Company’s
activities. The Company’s success depends on its reputation for integrity and fairness. Therefore, it is essential that the highest standards of conduct and
professional integrity be observed in all contacts made by the Company’s directors and employees, including officers, with customers, shareholders,
suppliers, government officials, fellow employees and members of the general public. In this regard, Gamida Cell has established this written set of policies
dealing with the rules and policies of conduct to be used in conducting the business affairs of the Company, which is available on our website
(https://investors.gamida-cell.com/corporate-governance/documents-charters).
Environmental matters
By the nature of our operations and the size of our facility in Kiryat Gat, Israel, we do not consume a significant amount of energy. Our clean rooms
are designed to limit our energy consumption, and we do not have significant emissions from our operations. We will continue to assess the environmental
impact of our operations.
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ITEM 1A. RISK FACTORS
Investing in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, in addition
to the other information set forth in this annual report on Form 10-K, including the consolidated financial statements and the related notes included
elsewhere in this annual report on Form 10-K, before purchasing our ordinary shares. If any of the following risks actually occurs, our business, financial
condition, cash flows and results of operations could be negatively impacted. In that case, the trading price of our ordinary shares would likely decline and
you might lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may
impair our business operations.
Principal Risk Factors
Our business is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in
this “Risk Factors” section and include, among others:
● We have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future,
and we may never achieve or maintain profitability.
● We will need to raise substantial additional funding, which may not be available on acceptable terms, or at all. Failure to obtain funding on
acceptable terms and on a timely basis may require us to curtail, delay or discontinue our product development efforts or other operations.
● We may not have the ability to raise the funds necessary to repurchase our 5.875% convertible senior notes due 2026, or the Notes, for cash upon a
fundamental change.
● The Indenture governing the Notes contains restrictions and other provisions regarding events of default that may make it more difficult to execute
our strategy or to effectively compete or that could adversely affect our liquidity.
● Raising additional capital may cause dilution to our shareholders and our share price to fall, restrict our operations or require us to relinquish rights
to our technologies or product candidates.
● We have never generated any revenue from product sales and may never be profitable.
● Our business has been and could continue to be adversely affected by the evolving and ongoing COVID-19 global pandemic in regions where we
or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations.
● We are heavily dependent on the success of our product candidates, including obtaining regulatory approval to market our product candidates in
the United States, the European Union and other geographies.
● We have experienced delays in regulatory approvals for omidubicel and GDA-201, and we may be unable to obtain further regulatory approvals
for omidubicel, GDA-201, and our other potential product candidates.
● The results of earlier studies and trials may not be predictive of future trial results, and our clinical trials may fail to adequately demonstrate the
safety and efficacy of our product candidates.
● Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data
become available and are subject to audit and verification procedures that could result in material changes in the final data.
● The success of our NAM technology platform and our product candidates is substantially dependent on developments within the emerging field of
cellular therapies, some of which are beyond our control.
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● Because our product candidates are based on novel technologies, it is difficult to predict the time and cost of development and our ability to
successfully complete clinical development of these product candidates and obtain the necessary regulatory approvals for commercialization.
● We may find it difficult to enroll patients in our clinical studies, which could delay or prevent us from proceeding with clinical trials.
● Our product candidates and the administration process may cause undesirable side effects or have other properties that could delay or prevent their
regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing
approval, if any, and result in costly and damaging product liability claims against us.
● Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize any of our
product candidates, and the approval may be for a narrower indication than we seek or be subject to other limitations or restrictions that limit its
commercial profile.
● Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.
● A Breakthrough Therapy Designation by the FDA may not lead to a faster development or regulatory review or approval process and it does not
increase the likelihood that our product candidates will receive marketing approval.
● We may be unable to maintain the benefits associated with orphan drug designations that we have obtained, including market exclusivity, which
may cause our revenue, if any, to be reduced.
● Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our
product candidates and may affect the prices we may set.
● Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payers, patient
organizations and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.
● Legislative or regulatory healthcare reforms in the United States may make it more difficult and costly for us to obtain regulatory clearance or
approval of our product candidates and to produce, market and distribute our products after clearance or approval is obtained.
We have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future, and
we may never achieve or maintain profitability.
We are a clinical-stage biopharmaceutical company. We have incurred net losses each year since our inception in 1998, including net losses of $89.8
million and $61.6 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we had an accumulated deficit of
$337.5 million.
We have devoted substantially all our financial resources to designing and developing our product candidates, including conducting preclinical studies
and clinical trials, building a manufacturing facility at Kiryat Gat, Israel and providing general and administrative support for these operations. We expect
to continue to incur significant expenses and increasing operating losses for the foreseeable future. Our ability to ultimately achieve recurring revenue and
profitability, which we do not expect to occur for at least several years, is dependent upon our ability to successfully complete the development of our
product candidates, and to obtain necessary regulatory approvals for and successfully manufacture, market and commercialize our products.
We anticipate that our expenses will increase substantially based on a number of factors, including to the extent that we:
● prepare for potential commercialization and/or strategic partnerships for omidubicel, if and when approved for marketing;
● continue our clinical development of omidubicel, GDA-201 and other potential product candidates;
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● seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies;
● identify, assess, acquire, license and/or develop other product candidates;
● establish and validate our commercial-scale manufacturing facilities in accordance with current good manufacturing practices, or cGMP;
● establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
● hire personnel and invest in additional infrastructure to support our operations as a public company and expand our product development;
● enter into agreements to license intellectual property from, or to, third parties;
● develop, maintain, protect and expand our intellectual property portfolio; and
● experience any delays or encounter issues with respect to any of the above, including but not limited to, failed studies, complex results,
manufacturing issues or other regulatory challenges that require longer follow-up of existing studies, additional major studies or additional
supportive studies in order to pursue marketing approval.
To date, we have financed our operations primarily through our public offerings of equity securities, private placements of debt and equity securities
and royalty-bearing grants that we received from the Israeli Innovation Authority, or the IIA, formerly known as the Office of the Chief Scientist of the
Ministry of Economy and Industry, including from Bereshit Consortium, sponsored by the IIA. The amount of our future net losses will depend, in part, on
the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Even if we obtain
regulatory approval to market omidubicel or any other product candidates, our future revenue will depend upon the size of any markets in which such
product candidates receive approval, and our ability to achieve sufficient market acceptance, pricing and reimbursement from third-party payers for such
product candidates. Further, the net losses that we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period
comparison of our results of operations may not be a good indication of our future performance. We may also incur other unanticipated costs from our
operations.
Operating our business and servicing our debt requires a significant amount of cash, and we will need to obtain additional funding in the future to
continue to sufficiently fund our operations and pay our substantial debt, including our convertible senior notes that mature in February 2026.
In order to fund further operations we will be required to raise additional funds, seek alternative means of financial support, or both, in order to
continue operations. We may seek these funds through a combination of private and public equity offerings, debt financings, government grants, strategic
collaborations and licensing arrangements. Additional financing may not be available when we need it or may not be available on terms that are favorable
to us. If we are unable to raise the requisite funds, we will need to curtail or cease operations.
Developing our product candidates is expensive, and we expect our research and development expenses to increase substantially in connection with
our ongoing activities, particularly as we advance our product candidates through preclinical studies and clinical development in an effort to obtain
regulatory approval. We recently initiated submission of a Biologics License Application, or BLA, for omidubicel on a rolling basis, and we plan to submit
the full BLA to the FDA in the first half of 2022. We also plan to continue our Phase 1/2 investigator-sponsored clinical trial of omidubicel for the
treatment of severe aplastic anemia and, pending FDA clearance of our IND for a Phase 1/2 clinical trial of GDA-201 in patients with follicular and diffuse
large B-cell lymphomas, we expect to initiate a clinical trial of GDA-201 in 2022.
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In addition, our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes,
depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may never
generate cash flow from operations sufficient to support our operations, service our debt and make necessary capital expenditures. As a result, we may be
required to adopt one or more alternatives, subject to the restrictions contained in the Indenture between Gamida Cell Ltd., Gamida Cell Inc., and
Wilmington Savings Fund Society, FSB, entered into on February 16, 2021, or the Indenture, governing the Notes, such as selling assets, restructuring debt
or obtaining additional equity capital on terms that may be onerous and which are likely to be highly dilutive. As of December 31, 2021, we had cash and
cash equivalents and trading financial assets of $95.9 million. In February 2021, we raised an additional $75.0 million through a sale of convertible notes,
and we currently believe that our existing capital resources will be sufficient to meet our projected operating requirements into mid-2023. We will require
significant additional financing in the future to fund our operations. Our future funding requirements will depend on many factors, including, but not
limited to:
● the cost, timing and outcomes of regulatory reviews of omidubicel, GDA-201 and our other potential product candidates;
● the progress, results and costs of our current and planned clinical trials of GDA-201 and our other product candidates;
● the costs of qualifying our planned commercial-scale cGMP manufacturing facility at Kiryat Gat, Israel, and/or engaging third-party
manufacturers;
● the scope, progress, results and costs of product development, laboratory testing, manufacturing, preclinical development and clinical trials for any
other product candidates that we may develop or otherwise obtain in the future;
● the cost of our future activities, including establishing sales, marketing and distribution capabilities for any product candidates in any particular
geography where we receive marketing approval for such product candidates;
● the terms and timing of any collaborative, licensing and other arrangements that we may establish;
● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims; and
● the level of revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval.
Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that
takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In
addition, our product candidates, if approved, may not achieve commercial success. Our product revenue, if any, will be derived from or based on sales of
product candidates that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to
achieve our business objectives. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect
our ability to develop and commercialize our product candidates. We cannot guarantee that future financing will be available in sufficient amounts or on
terms acceptable to us, if at all, and the terms of any financing may adversely affect the interests or rights of our shareholders.
We may not have the ability to raise the funds necessary to repurchase the Notes for cash upon a fundamental change.
Holders of the Notes have the right to require us to repurchase their Notes for cash upon the occurrence of a fundamental change at a repurchase price
equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. This use of cash may have a material
adverse effect on our liquidity. Furthermore, we may not have enough available cash or be able to obtain financing at the time we are required to repurchase
the Notes. In addition, our ability to repurchase the Notes for cash may be limited by law, regulatory authority or agreements governing our future
indebtedness. Our failure to repurchase Notes for cash at a time when the repurchase is required by the Indenture pursuant to which the Notes were issued
would constitute a default under the Indenture.
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The Indenture governing the Notes contains restrictions and other provisions regarding events of default that may make it more difficult to execute our
strategy or to effectively compete or that could adversely affect our liquidity.
Subject to certain exceptions and qualifications, the Indenture governing the Notes restricts our ability to, among other things, (i) pay dividends or
make other payments or distributions on capital stock, or purchase, redeem, defease or otherwise acquire or retire for value any capital stock, (ii) incur
indebtedness or issue preferred stock, other than certain forms of permitted debt, (iii) sell assets or dispose of certain material assets, (iv) enter into certain
transactions with affiliates or (v) merge, consolidate or sell all or substantially all assets. The Indenture also requires us to make an offer to repurchase the
Notes upon the occurrence of certain asset sales or disposition of certain material assets. These restrictions may make it difficult to successfully execute our
business strategy or effectively compete with companies that are not similarly restricted. The Indenture governing the Notes also provides that a number of
events will constitute an event of default, including, among other things, (i) a failure to pay interest or additional amounts for 30 days, (ii) failure to pay the
principal of the notes when due at maturity, upon redemption, upon any required repurchase, upon declaration of acceleration or otherwise, (iii) failure to
comply with our obligation to exchange the Notes in accordance with the Indenture upon a holder’s exercise of its exchange right, (iv) not issuing certain
notices required by the Indenture within a timely manner, (v) failure to comply with the other covenants or agreements in the Notes or the Indenture, (vi) a
default or other failure by us to make required payments under our other indebtedness having an outstanding principal amount of $10.0 million or more,
(vii) failure by us to pay final judgments aggregating in excess of $20.0 million, and (viii) certain events of bankruptcy or insolvency. In the case of an
event of default arising from certain events of bankruptcy or insolvency with respect to us, all outstanding Notes will become due and payable immediately
without further action or notice. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Such acceleration of our debt could have a material
adverse effect on our liquidity if we are unable to negotiate mutually acceptable terms with the holders of the Notes or if alternate funding is not available
to us. Furthermore, if we are unable to repay the Notes upon an acceleration or otherwise, we would be forced into bankruptcy or liquidation.
Raising additional capital may cause dilution to our shareholders and our share price to fall, restrict our operations or require us to relinquish rights to
our technologies or product candidates.
Until such time, if ever, as we can generate substantial product revenue, we expect to obtain additional capital through a combination of equity
offerings, debt financings, collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity
or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that
adversely affect your rights as a shareholder. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional
debt. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish certain rights to our
technologies or our product candidates, or to grant licenses on terms that are not favorable to us.
Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are
favorable or if we have specific strategic considerations. The issuance of additional securities, whether equity or debt, by us, or the possibility of such
issuance, may cause the market price of our shares to decline.
We have also entered into an Open Market Sale Agreement, or the Sales Agreement under which we may offer and sell our ordinary shares having an
aggregate gross sales price of up to $50 million from time to time through Jefferies LLC. Pursuant to the Sales Agreement and upon delivery of notice by
the Company, Jefferies may sell our ordinary shares under an “at the market offering”. The sale of a substantial amount of our ordinary shares in this
manner may depress the market price for our ordinary shares.
If we are unable to obtain funding on acceptable terms and on a timely basis, we may be required to significantly curtail, delay or discontinue one or
more of our research, development or manufacturing programs or the commercialization of any approved product, or be unable to expand our operations or
otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
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We have never generated any revenue from product sales and may never be profitable.
We have no products approved for marketing in any jurisdiction, and we have never generated any revenue from product sales. Our ability to generate
revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of, and
obtain the regulatory and marketing approvals necessary to commercialize one or more of our product candidates. Our ability to generate future revenue
from the commercialization of omidubicel is uncertain. If we decide to commercialize omidubicel on our own, we will have to undertake sufficient costs to
build out a sales and distribution team. If we enter into one or more partnerships for the commercialization of omidubicel, we will surrender a portion of
our revenue to our partner or partners, and if we securitize royalty streams related to omidubicel, future revenues would be held in trust for beneficiaries of
the financing in exchange for which we would receive certain payments based on an assessment of future sales. Furthermore, revenue from product sales
will depend heavily on our ability to:
● obtain regulatory approvals and marketing authorizations for omidubicel and those of our other product candidates for which we complete clinical
studies;
● develop and obtain regulatory approval for a sustainable and scalable in-house and/or third-party manufacturing process for omidubicel that meets
all applicable regulatory standards;
● establish and maintain supply and, if applicable, manufacturing relationships with third parties that can provide adequate, in both amount and
quality, products to support clinical development and the market demand for our product candidates, if and when approved;
● complete research and preclinical and clinical development of our product candidates in a timely and successful manner;
● launch and commercialize our product candidates for which we obtain regulatory and marketing approval, either directly by establishing a sales
force, marketing and distribution infrastructure, and/or with collaborators or distributors;
● expose, educate and train physicians and other medical professionals to use our products;
● price omidubicel and our other product candidates, if and when approved, in a manner designed to encourage market acceptance from the medical
community and third-party payers;
● ensure procedures utilizing our product candidates are approved for coverage and adequate reimbursement from governmental agencies, private
insurance plans, managed care organizations, and other third-party payers in jurisdictions where they have been approved for marketing;
● address any competing technological and market developments that impact our product candidates or their prospective usage by medical
professionals;
● identify, assess, acquire and/or develop new product candidates;
● negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter and perform our obligations under such
collaborations;
● maintain, protect and expand our portfolio of intellectual property rights, including patents, patent applications, trade secrets and knowhow;
● avoid and defend against third-party interference, infringement or other intellectual property related claims; attract, hire and retain qualified
personnel; and
● locate and lease or acquire suitable facilities to support our clinical development, manufacturing facilities and commercial expansion.
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Even if one or more of our product candidates is approved for marketing and sale, we anticipate incurring significant incremental costs associated with
commercializing such product candidates. Our expenses could increase beyond expectations if we are required by the U.S. Food and Drug Administration,
or the FDA, the European Medicines Agency, or the EMA, or other regulatory agencies or ethical committees in medical centers, to change our
manufacturing processes or assays or to perform clinical, nonclinical, or other types of studies in addition to those that we currently anticipate. Even if we
are successful in obtaining regulatory approvals to market one or more of our product candidates, our revenue earned from such product candidates will be
dependent in part upon the size of the markets in the territories for which we gain regulatory approval for such products, the accepted price for such
products, our ability to obtain reimbursement for such products at any price, whether we own the commercial rights for that territory in which such
products have been approved and the expenses associated with manufacturing and marketing such products for such markets. Therefore, we may not
generate significant revenue from the sale of such products, even if approved. Further, if we are not able to generate significant revenue from the sale of our
approved products, we may be forced to curtail or cease our operations. Due to the numerous risks and uncertainties involved in product development, it is
difficult to predict the timing or amount of increased expenses, or when, or if, we will be able to achieve or maintain profitability.
Our business could be adversely affected by the evolving and ongoing COVID-19 global pandemic in regions where we or third parties on which we
rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations. The COVID-19 pandemic could
adversely affect our operations, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct
business.
Our business could be adversely affected by the effects of the recent and evolving COVID-19 pandemic, which was declared by the World Health
Organization as a global pandemic. The COVID-19 pandemic has resulted in travel and other restrictions in order to reduce the spread of the disease
including in the Commonwealth of Massachusetts, where our U.S. operations are focused.
Some of our third-party manufacturers which we use for the supply of materials for product candidates or other materials necessary to manufacture
product to conduct preclinical tests and clinical trials are located in countries affected by COVID-19. Quarantines, shelter-in-place and similar government
orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, whether related to COVID-19
or other infectious diseases could impact personnel at third-party manufacturing facilities, or the availability or cost of materials, which would disrupt our
supply chain, and should they experience additional disruptions, such as temporary closures or suspension of services, we would likely experience delays in
advancing these tests and trials. Currently, we expect no material impact on the clinical supply of omidubicel or GDA-201.
Our clinical trials may also be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment may be delayed due to prioritization
of hospital resources toward the COVID-19 pandemic. Some patients may not be able to comply with clinical trial protocols if quarantines impede patient
movement or interrupt healthcare services. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare
providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.
The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic impact
brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global
financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or other market
corrections resulting from the spread of COVID-19 could materially affect our business and the value of our ordinary shares.
The global pandemic of COVID-19 continues to rapidly evolve. The extent to which the COVID-19 pandemic impacts our business, our clinical
development and regulatory efforts will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the
ultimate geographic spread of the disease, the duration of the outbreak, efficacy of vaccines, travel restrictions, quarantines, social distancing requirements
and business closures in the United States and other countries, business disruptions and the effectiveness of actions taken in the United States and other
countries to contain and treat the disease. Accordingly, we do not yet know the full extent of potential delays or impacts on our business, our clinical and
regulatory activities, healthcare systems or the global economy as a whole. However, these impacts could adversely affect our business, financial condition,
results of operations and growth prospects.
In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of
heightening many of the other risks and uncertainties described in this “Risk Factors” section and in the “Risk Factors” incorporated by reference herein.
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Risks Related to the Discovery, Development and Clinical Testing of Our Product Candidates
We are heavily dependent on the success of our product candidates, including obtaining regulatory approval to market our product candidates in the
United States, the European Union and other geographies.
To date, we have deployed all our efforts and financial resources to: (i) research and develop our NAM, or nicotinamide, cell expansion platform, our
lead product candidate, omidubicel, for the treatment of hematologic malignancies, and our second product candidate, GDA-201, for the treatment of NHL,
and our other potential product candidates, including conducting preclinical and clinical studies and providing general and administrative support for these
operations; and (ii) develop and secure our intellectual property portfolio for our product candidates. Our future success is dependent on our ability to
successfully develop, obtain regulatory approval for and commercialize one or more of our current and future product candidates. Our product candidates’
marketability is subject to significant risks associated with successfully completing current and future clinical trials and commercializing our product
candidates that receive regulatory approval, including:
● our ability to develop, qualify and maintain a commercially viable manufacturing process that is compliant with cGMP and produces omidubicel
that has the same treatment profile as the products used in our clinical trials, whether at our facility at Kiryat Gat or through third party
manufacturers;
● completion of the Phase 1/2 clinical trial of GDA-201 and the acceptance by the FDA of the sufficiency of early development data to support
approval of the IND application that we submitted;
● acceptance by the FDA, EMA or other regulatory agencies of our parameters for regulatory approval relating to omidubicel and our other product
candidates, including our proposed indications, primary and secondary endpoint assessments and measurements, safety evaluations and regulatory
pathways;
● the acceptance by the FDA, EMA or other regulatory agencies of the number, design, size, conduct and implementation of our clinical trials, our
trial protocols and the interpretation of data from preclinical studies or clinical trials;
● our ability to successfully complete the clinical trials of our product candidates, including timely patient enrollment and acceptable safety and
efficacy data and our ability to demonstrate the safety and efficacy of the product candidates undergoing such clinical trials;
● the acceptance by the FDA of the sufficiency of the data we collect from our preclinical studies and our investigator-sponsored Phase 1/2 clinical
trial of omidubicel for the treatment of severe aplastic anemia;
● the willingness of the FDA, EMA or other regulatory agencies to schedule an advisory committee meeting in a timely manner to evaluate and
decide on the approval of our regulatory filings, if such advisory committee meetings are required;
● the recommendation of the FDA’s advisory committee to approve our applications to market omidubicel and our other product candidates in the
United States, and the EMA in the European Union, if such advisory committee reviews are scheduled, without limiting the approved labeling,
specifications, distribution or use of the products, or imposing other restrictions;
● the satisfaction of the FDA, EMA or other regulatory agencies with the safety and efficacy of our product candidates;
● the prevalence and severity of adverse events associated with our product candidates;
● the timely and satisfactory performance by third-party contractors, trial sites and principal investigators of their obligations in relation to our
clinical trials;
● our success in educating medical professionals and patients about the benefits, administration and use of our product candidates, if approved;
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● the availability, perceived advantages, relative cost, safety and efficacy of alternative and competing treatments for the indications addressed by
our product candidates;
● the effectiveness of our marketing, sales and distribution strategy, and operations, as well as that of any current and future licensees;
● the extent to which third-party payers provide coverage and adequate reimbursement for procedures utilizing our products; and/or
● our ability to obtain, maintain, protect and enforce our intellectual property rights with respect to our product candidates and to regulatory
guidelines.
Many of these clinical, regulatory and commercial risks are beyond our control. Accordingly, we cannot assure you that we will be able to advance any
of our product candidates through clinical development, or to obtain regulatory approval of or commercialize any of our product candidates. If we fail to
achieve these objectives or overcome the challenges presented above, we could experience significant delays or an inability to successfully commercialize
our product candidates. Accordingly, we may not be able to generate sufficient revenue through the sale of our product candidates to enable us to continue
our business.
We may be unable to obtain regulatory approval for our product candidates.
The research, development, testing, manufacturing, labeling, packaging, approval, promotion, advertising, storage, recordkeeping, marketing,
distribution, post-approval monitoring and reporting and export and import of drug products are subject to extensive regulation by the FDA, the EMA and
by regulatory authorities in other countries. These regulations differ from country to country. To gain approval to market our product candidates, we must
provide data from well-controlled clinical trials that adequately demonstrate the safety and efficacy of the product for the intended indication to the
satisfaction of the FDA, EMA or other regulatory authority. We have not yet obtained regulatory approval to market any of our product candidates in the
United States or any other country. The FDA, EMA or other regulatory agencies can delay, limit or deny approval of our product candidates for many
reasons, including:
● regulatory requests for additional analyses, reports, data, non-clinical and preclinical studies and clinical trials, including with respect to our and
our third-party manufacturer’s production of omidubicel in commercial processes that has the same treatment profile as the product used in our
successful Phase 3 clinical trial;
● our inability to demonstrate that the product candidates are safe and effective for the target indication to the satisfaction of the FDA, EMA or other
regulatory agencies;
● regulatory requests to provide additional data regarding analytical and clinical comparability from our planned commercial manufacturing sites, or
the failure of a regulatory agency to accept the manufacturing processes or facilities at our manufacturing site or those of third-party
manufacturers with which we contract;
● the FDA’s, EMA’s, or other regulatory agencies’ disagreement with our clinical trial protocol, the interpretation of data from preclinical studies or
clinical trials, or adequacy of the conduct and control of clinical trials;
● clinical holds, other regulatory objections to commencing or continuing a clinical trial or the inability to obtain regulatory approval to commence a
clinical trial in countries that require such approvals, including the clinical hold the FDA placed on our GDA-201 IND prior to the initiation of
patient dosing for our planned Phase 1/2 study in NHL;
● the population studied in the clinical trial may not be sufficiently broad or representative to assess safety in the patient population for which we
seek approval;
● unfavorable or inconclusive results of clinical trials and supportive non-clinical studies, including unfavorable results regarding safety or efficacy
of our product candidates observed in clinical trials;
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● our inability to demonstrate that clinical or other benefits of our product candidates outweigh any safety or other perceived risks;
● any determination that a clinical trial presents unacceptable health risks to subjects;
● our inability to obtain approval from institutional review boards, or IRBs, to conduct clinical trials at their respective sites;
● the non-approval of the formulation, labeling or the specifications of our product candidates;
● the potential for approval policies or regulations of the FDA, EMA or other regulatory agencies to significantly change in a manner rendering our
clinical data insufficient for approval; or
● resistance to approval from the advisory committees of the FDA, EMA or other regulatory agencies for any reason including safety or efficacy
concerns.
In the United States, we are required to submit a BLA to obtain FDA approval before marketing omidubicel or any of our product candidates. A BLA
must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety, purity and potency, or efficacy,
for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing and controls for the product. In
November 2021, we completed a Type B Pre-Biologics License Application, or pre-BLA meeting with the FDA for omidubicel during which the FDA
requested that we provide revised analysis of the manufacturing data generated at our wholly-owned commercial manufacturing facility in Kiryat Gat,
Israel to demonstrate the comparability to the omidubicel that was produced at the clinical manufacturing sites for the Phase 3 study. Although the FDA has
agreed that we established analytical comparability between the omidubicel product that is manufactured at our commercial manufacturing facility and the
omidubicel product that was manufactured for the Phase 3 trial, there is no guarantee that we will continue to meet the FDA’s manufacturing requirements
in the future.
In connection with our BLA submission, the FDA may conduct an inspection of our Kiryat Gat, Israel manufacturing facility to ensure that it can
manufacture omidubicel and our other product candidates, if and when approved, in compliance with the applicable regulatory requirements. The FDA may
also inspect our clinical trial sites to ensure that our studies are properly conducted. Obtaining approval of a BLA is a lengthy, expensive and uncertain
process, and approval may not be obtained. Upon submission of a BLA, the FDA must make an initial determination that the application is sufficiently
complete to accept the submission for filing. We cannot be certain that our rolling BLA submission for omidubicel, or any future submissions, will be
accepted for filing and review by the FDA, or ultimately be approved. If our planned application for omidubicel is not accepted for review or approval, the
FDA may require that we conduct additional clinical or preclinical trials, or take other actions before it will reconsider our application. If the FDA requires
additional studies or data, we would incur increased costs and delays in the marketing approval process, which may require us to expend more resources
than we have available. In addition, the FDA may not consider any additional information to be complete or sufficient to support approval.
Regulatory authorities outside of the United States, such as in the European Union, also have requirements for approval of biologics for commercial
sale with which we must comply prior to marketing in those areas. Regulatory requirements can vary widely from country to country and could delay or
prevent the introduction of our product candidates. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries,
and obtaining regulatory approval in one country does not mean that regulatory approval will be obtained in any other country.
However, the failure to obtain regulatory approval in one jurisdiction could have a negative impact on our ability to obtain approval in a different
jurisdiction. Approval processes vary among countries and can involve additional product candidate testing and validation and additional administrative
review periods. Seeking additional regulatory approvals outside the United States and European Union could require additional nonclinical studies or
clinical trials, which could be costly and time consuming. These regulatory approvals may include all of the risks associated with obtaining FDA or EMA
approval. For all of these reasons, if we seek such regulatory approvals for any of our other product candidates, we may not obtain such approvals on a
timely basis, if at all.
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Even if we receive approval of any regulatory filing for omidubicel, the FDA may grant any such approval contingent on the performance of costly and
potentially time-consuming additional post-approval clinical trials or subject to contraindications, black box warnings, restrictive surveillance or a Risk
Evaluation and Mitigation Strategy, or REMS. Further, the FDA, EMA or other regulatory authorities may also approve our product candidates for a more
limited indication or a narrower patient population than we originally requested, and these regulatory authorities may not approve the labeling that we
believe is necessary or desirable for the successful commercialization of our product candidates. Following any approval for commercial sale of omidubicel
or our product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, as well as new safety
information, will be subject to additional FDA notification, or review and approval. Also, regulatory approval for any of our product candidates may be
withdrawn. To the extent we seek regulatory approval in jurisdictions outside of the United States and European Union, we may face challenges similar to
those described above with regulatory authorities in applicable jurisdictions.
Any delay in obtaining, or inability to obtain, applicable regulatory approval for any of our product candidates would delay or prevent
commercialization of our product candidates and would thus negatively impact our business, results of operations and prospects.
Clinical development is difficult to design and implement and involves a lengthy and expensive process with uncertain outcomes.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Bone marrow transplant and cell-based
therapies that appear promising in the early phases of development may fail to reach the market. Further, a failure of one or more of our clinical trials can
occur at any time during the clinical trial process. We do not know whether future clinical trials, if any, will begin on time, need to be redesigned, enroll an
adequate number of patients on time or be completed on schedule, if at all. Clinical trials can be delayed, suspended or terminated for a variety of reasons,
including failure to:
● generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;
● obtain regulatory approval, or feedback on trial design, in order to commence a trial;
● identify, recruit and train suitable clinical investigators;
● reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be
subject to extensive negotiation and may vary significantly among CROs and clinical trial sites, and have such CROs and sites effect the proper
and timely conduct of our clinical trials;
● obtain and maintain IRB approval at each clinical trial site;
● identify, recruit and enroll suitable patients to participate in a trial;
● have a sufficient number of patients complete a trial or return for post-treatment follow-up;
● ensure clinical investigators and clinical trial sites observe trial protocol or continue to participate in a trial;
● address any patient safety concerns that arise during the course of a trial;
● address any conflicts with new or existing laws or regulations;
● add a sufficient number of clinical trial sites;
● manufacture sufficient quantities at the required quality of product candidate for use in clinical trials; or
● raise sufficient capital to fund a trial.
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We may also experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing
approval or commercialize our product candidates, including:
● we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials;
● clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct
additional clinical trials or abandon development programs;
● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may
be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;
● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
● regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or
amend a trial protocol;
● we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial
sites and CROs;
● we or our investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including noncompliance
with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding
that the participants are being exposed to unacceptable health risks;
● the cost of clinical trials of our product candidates may be greater than we anticipate;
● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient
or inadequate;
● there may be changes in government regulations or administrative actions;
● our product candidates may have undesirable adverse effects or other unexpected characteristics;
● we may not be able to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
● we may not be able to demonstrate that a product candidate provides an advantage over current standards of care of future competitive therapies in
development;
● regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; and
● any future collaborators that conduct clinical trials may face any of the above issues, and may conduct clinical trials in ways they view as
advantageous to them but that are suboptimal for us.
We may also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being
conducted, by the trial’s data safety monitoring board, by the FDA, EMA or other regulatory agencies. Such authorities may suspend or terminate one or
more of our clinical trials due to a number of factors, including our failure to conduct the clinical trial in accordance with relevant regulatory requirements
or clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA or other regulatory agencies resulting in the imposition of a
clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or
administrative actions or lack of adequate funding to continue the clinical trial.
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Further, conducting clinical trials in countries outside of the United States and European Union, as we plan to do for our product candidates, presents
additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in foreign countries to adhere to clinical
protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with jurisdiction-
specific regulatory schemes, as well as political and economic risks relevant to such jurisdictions.
In addition, disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter difficulties or delays in initiating, screening,
enrolling, conducting, or completing our ongoing and planned preclinical studies and clinical trials. Clinical site initiation and patient screening and
enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Investigators and patients may not be able to
comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, our ability to recruit and retain
patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, could be limited, which in
turn could adversely impact our clinical trial operations. Additionally, we may experience interruption of key clinical trial activities, such as clinical trial
site monitoring, due to limitations on travel, quarantines or social distancing protocols imposed or recommended by federal or state governments,
employers and others in connection with the ongoing COVID-19 pandemic. As a result of the COVID-19 pandemic, we have faced and may continue to
face delays in meeting our anticipated timelines for our ongoing and planned clinical trials. Specifically, the initial timeline for submission of our BLA for
omidubicel was delayed, in part, as a result of the impact of the COVID-19 pandemic on our operations.
If we experience delays in carrying out or completing any clinical trial of our product candidates, the commercial prospects of our product candidates
may be harmed, and our ability to generate product revenue from any of these product candidates will be delayed. In addition, any delays in completing our
clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product
sales and generate revenue. Any of these occurrences may significantly harm our business and financial condition. In addition, many of the factors that
cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product
candidates.
The results of earlier studies and trials may not be predictive of future trial results, and our clinical trials may fail to adequately demonstrate the safety
and efficacy of our product candidates.
Results from preclinical studies or early-stage clinical trials are not necessarily predictive of future clinical trial results, and interim results of a clinical
trial are not necessarily indicative of final results. For example, our Phase 1/2 clinical trial of GDA-201 demonstrated significant clinical activity in patients
with non-Hodgkin lymphoma, with 13 complete responses and one partial response observed in 19 patients, for a response rate of 74%. However, further
clinical trials may show that the response rate in a larger sample size is lower than 74%. A decrease in the response rate could cause us to abandon further
development of GDA-201 in this indication.
There is a high failure rate for product candidates proceeding through clinical trials. Many companies in the pharmaceutical industry have suffered
significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained
from preclinical and clinical activities are subject to varying interpretations, including conclusions about relapse rates that are based on small sample sizes
of data, which may delay, limit or prevent regulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors,
including due to changes in regulatory policy during the period of our product candidate development. Success in preclinical testing and early clinical trials
does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product
candidate.
Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data
become available and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publish interim, “top-line” or preliminary data from our clinical studies. Interim data from clinical trials that we may
complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data
become available. Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially
different from the preliminary data previously published. In addition, successful results in one or a few patients may not be indicative of the final results
after completion of treatment of all patients in a clinical trial. As a result, interim and preliminary data should be viewed with caution until the final data are
available. Adverse changes between preliminary or interim data and final data could significantly harm our business prospects.
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The success of our NAM technology platform and our product candidates is substantially dependent on developments within the emerging field of
cellular therapies, some of which are beyond our control.
Our NAM expansion technology platform and our product candidates are designed to increase the therapeutic functionality of cell therapy products,
which represents a novel development within the field of cellular therapeutics. Stem cell therapies in turn represent a relatively new therapeutic area that
presents a number of scientific, clinical, regulatory and ethical challenges. Any adverse developments in the field of stem cell therapies generally, and in
the practice of hematopoietic stem cell transplant in particular, will negatively impact our ability to develop and commercialize our product candidates. In
particular, we currently anticipate that omidubicel and any additional product candidates that we develop from our NAM technology platform would be
adopted into the current standard of care for hematopoietic stem cell transplant, or HSCT, procedures. If the market for HSCT procedures declines or fails
to grow at anticipated levels for any reason, or if the development and commercialization of therapies targeted at the underlying cause of diseases addressed
by omidubicel obviate the need for patients to undergo HSCT procedures, our business prospects will be significantly harmed.
Because our product candidates are based on novel technologies, it is difficult to predict the time and cost of development and our ability to successfully
complete clinical development of these product candidates and obtain the necessary regulatory approvals for commercialization.
Our product candidates are based on our novel NAM technology platform, and unexpected problems related to this new technology may arise that
could cause us to delay, suspend or terminate our development efforts. Regulatory approval of novel product candidates such as ours can be more expensive
and take longer, than for other more well-known or extensively studied pharmaceutical or biopharmaceutical product candidates due to our and regulatory
agencies’ lack of experience with them. Stem cell therapies represent a relatively new therapeutic area, and the FDA has cautioned consumers about
potential safety risks associated with these therapies. To date, there are relatively few approved stem cell products.
Regulatory requirements governing cell therapy products have changed frequently and may continue to change in the future. For example, the FDA
established the Office of Cellular, Tissue and Gene Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review
of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. In addition, adverse
developments in clinical trials of potential stem cell therapies conducted by others may cause the FDA or other regulatory bodies to change the
requirements for approval of any of our product candidates. These regulatory authorities and advisory groups and the new requirements or guidelines they
promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in
regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval
limitations or restrictions.
We may find it difficult to enroll patients in our clinical studies, which could delay or prevent us from proceeding with clinical trials.
Identifying and qualifying patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical trials
depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in our clinical
trials if we encounter difficulties in enrollment. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient
population, the nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, the existing
body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing
drugs for the same indication, the proximity of patients to clinical sites, clinicians’ and patients’ perceptions as to the potential advantages of the product
candidate being studied in relation to other available therapies, including any drugs that may be approved for the indications we are investigating, the
eligibility criteria for the study, our ability to obtain and maintain patient consents and the risk that patients enrolled in clinical trials will drop out of the
trials before completion. For example, patients may prefer to undergo treatment with stem cell transplantation with cells sourced from matched related
donors, matched unrelated donors or haploidentical donors, as opposed to being treated with omidubicel, which would adversely affect the enrollment of
our clinical trials.
We may not be able to identify, recruit and enroll a sufficient number of patients to complete our clinical studies because of the perceived risks and
benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical studies, the proximity and availability of
clinical study sites for prospective patients and the patient referral practices of physicians. If patients are unwilling to participate in our studies for any
reason, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of potential products will be delayed.
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In addition, any negative results we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain
patients in other clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention may result in increased costs,
program delays or both, which could have a harmful effect on our ability to develop our product candidates, or could render further development
impossible. For example, the impact of public health epidemics, such as the ongoing COVID-19 pandemic, may delay or prevent patients from enrolling or
from receiving treatment in accordance with the protocol and the required timelines, which could delay our clinical trials, or prevent us from completing
our clinical trials at all, and harm our ability to obtain approval for such product candidate. Further, if patients drop out of our clinical trials, miss follow-up
visits, or otherwise fail to follow clinical trial protocols, whether as a result of the COVID-19 pandemic or actions taken to slow the spread of COVID-19
or otherwise, the integrity of data from our clinical trials may be compromised or not accepted by the FDA or other regulatory authorities, which would
represent a significant setback for the applicable program. In addition, we may rely on CROs and clinical trial sites to ensure proper and timely conduct of
our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual
performance.
Our product candidates and the administration process may cause undesirable side effects or have other properties that could delay or prevent their
regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if
any, and result in costly and damaging product liability claims against us.
Undesirable side effects, including toxicology, caused by our product candidates, or the drugs encapsulated by our product candidates, could cause us
or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictive label or the delay or denial of regulatory approval by
the FDA, EMA or other regulatory agencies. Results of our studies could reveal a high and unacceptable severity and prevalence of these or other side
effects. In such an event, our clinical studies could be suspended or terminated, and the FDA, EMA or other regulatory agencies could order us to cease
further development of or deny or withdraw approval of our product candidates for any or all targeted indications. Moreover, during the conduct of clinical
trials, patients report changes in their health, including illnesses, injuries and discomforts, to their study doctor. Often, it is not possible to determine
whether or not the product candidate being studied caused these conditions.
Drug-related, drug-product related, formulation-related and administration-related side effects could affect patient recruitment, the ability of enrolled
patients to complete the clinical study or result in potential product liability claims, which could exceed our clinical trial insurance coverage. We obtain
clinical trial insurance policies with respect to all our clinical studies. The insurance policies are in accordance with the local regulations applicable in the
jurisdictions where the studies are performed outside of clinical trials.
Further, patients with the diseases targeted by our product candidates are often already in severe and advanced stages of disease and have both known
and unknown significant pre-existing and potentially life-threatening health risks. Severe (grade 4) infusion reactions have also been reported in
approximately 4% of patients treated with omidubicel. The most common adverse events related to omidubicel were graft versus host disease, or GvHD,
(10%), pain (8%), transplant failure (4%), hypertension (4%), and dyspnea (2%). During the course of treatment, patients may suffer adverse events,
including death, for reasons that may be related to our product candidates. In our Phase 1/2 clinical trial of omidubicel for the treatment of sickle cell
disease, or SCD, which is a chronic illness, two of the patients died: one due to chronic GvHD and the other due to secondary graft failure. In our Phase 1/2
trial of omidubicel for the treatment of hematologic malignancies, approximately 10% of patients who received omidubicel experienced serious GvHD. In
our Phase 1/2 clinical trial of GDA-201, adverse events included one patient who died of E. coli sepsis. There was also a low level of sporadic engraftment
failures. Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively impact or end
our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts.
Even in a circumstance in which we do not believe that an adverse event is related to our products, the investigation into the circumstance may be
time-consuming or inconclusive. For instance, allogeneic bone marrow transplant, the area in which omidubicel is being used, is associated with serious
complications, including death. In addition, there are expected toxicities for patients who receive an allogeneic bone marrow transplant, such as infertility.
Thus, while not directly associated with omidubicel, there are attendant risks with the space in which our product candidates operate, and any related
investigations may interrupt our development and commercialization efforts, delay our regulatory approval process, or impact and limit the type of
regulatory approvals our product candidates receive or maintain. As a result of these factors, a product liability claim, even if successfully defended, could
have a material adverse effect on our business, financial condition or results of operations.
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Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by
such products, a number of potentially significant negative consequences could result, including, but not limited to:
● regulatory authorities may suspend or withdraw approvals of such product;
● regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication;
● additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any
component thereof;
● we may be required to create a REMS, which could include a medication guide outlining the risks of such side effects for distribution to patients, a
communication plan for healthcare providers and/or other elements to assure safe use;
● we may be required to recall a product, change the way a product candidate is administered or conduct additional clinical trials;
● we could be sued and held liable for harm caused to patients;
● the product may become less competitive; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could
significantly harm our business, results of operations and prospects.
Risks Related to Government Regulation
Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize any of our product
candidates, and the approval may be for a narrower indication than we seek or be subject to other limitations or restrictions that limit its commercial
profile.
We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if
our current or future product candidates meet safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review
processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other
regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional
government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development,
clinical trials and the review process.
Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in
the form of warnings or a REMS. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may
grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims
that are necessary or desirable for the successful commercialization of any of our product candidates. Any of the foregoing scenarios could materially harm
the commercial prospects for our product candidates and materially and adversely affect our business, financial condition, results of operations and
prospects.
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Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.
If one of our product candidates is approved, it will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage,
advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post- market
information, including both federal and state requirements in the United States and European Union and requirements of comparable regulatory authorities.
Manufacturers and manufacturers’ facilities are required to comply with extensive FDA, EMA and the requirements of additional regulatory
authorities, including ensuring that quality control and manufacturing procedures conform to cGMP regulations. As such, we and our contract
manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any approved
marketing application. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory
compliance, including manufacturing, production, and quality control.
We will have to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to
prescription drugs and biologics are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s
approved label. As such, we may not promote our products “off-label” for indications or uses for which they do not have approval. The holder of an
approved application must submit new or supplemental applications and obtain approval for certain changes to the approved product, product labeling, or
manufacturing process. We could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of our products in general or in
specific patient subsets. An unsuccessful post- marketing study or failure to complete such a study could result in the withdrawal of marketing approval.
If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or
problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency
may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable
regulatory requirements, a regulatory agency or enforcement authority may, among other things:
● issue warning letters;
● impose civil or criminal penalties;
● suspend or withdraw regulatory approval;
● suspend any of our clinical studies;
● refuse to approve pending applications or supplements to approved applications submitted by us;
● impose restrictions on our operations, including closing our contract manufacturers’ facilities; or
● seize or detain products, or require a product recall.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate
negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and
generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating
results will be adversely affected.
Moreover, the policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could
prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may
arise from future legislation or administrative or executive action, either in the United States or abroad. If we are slow or unable to adapt to changes in
existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing
approval that we may have obtained and we may not achieve or sustain profitability.
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A Breakthrough Therapy Designation by the FDA may not lead to a faster development or regulatory review or approval process and it does not
increase the likelihood that our product candidates will receive marketing approval.
We have obtained Breakthrough Therapy Designation for omidubicel for the treatment of hematologic malignancies and may receive it in the future if
the clinical data support such a designation for one or more of our other product candidates. A breakthrough therapy is defined as a drug or biologic that is
intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary
clinical evidence indicates that the drug, or biologic, may demonstrate substantial improvement over existing therapies on one or more clinically significant
endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough
therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development
while minimizing the number of patients placed in ineffective control regimens. Biologics designated as breakthrough therapies by the FDA may also be
eligible for accelerated approval.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our current or future product
candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.
In any event, the receipt of a Breakthrough Therapy Designation for omidubicel for the treatment of hematologic malignancies may not result in a
faster development process, review or approval compared to drugs considered for approval under non-expedited FDA review procedures and does not
assure ultimate approval by the FDA. In addition, the FDA may later decide that the product no longer meets the conditions to qualify for Breakthrough
Therapy Designation.
We may be unable to maintain the benefits associated with orphan drug designations that we have obtained, including market exclusivity, which may
cause our revenue, if any, to be reduced.
We have obtained orphan drug designation for omidubicel from the FDA and the EMA for the treatment of hematologic malignancies, and we may
pursue orphan drug designation for certain of our future product candidates. Under the Orphan Drug Act, the FDA may designate a drug or biologic
product as an orphan drug if it is intended to treat a rare disease or condition, defined as a patient population of fewer than 200,000 in the United States, or
a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be
recovered from sales in the United States. In the European Union, the EMA’s Committee for Orphan Medicinal Products, or COMP, grants orphan drug
designation to promote the development of products that are intended for the diagnosis, prevention, or treatment of a life-threatening or chronically
debilitating condition affecting not more than five in 10,000 persons in the European Union. Additionally, designation is granted for products intended for
the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and chronic condition when, without incentives, it is unlikely
that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug or biological product or where
there is no satisfactory method of diagnosis, prevention, or treatment, or, if such a method exists, the medicine must be of significant benefit to those
affected by the condition.
In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs,
tax advantages, and application fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation,
the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same
indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or
where the manufacturer is unable to assure sufficient product quantity the orphan patient population. In the European Union, orphan drug designation
entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug or biological product
approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is
sufficiently profitable not to justify maintenance of market exclusivity.
Even though we have obtained orphan drug designation for omidubicel from the FDA and the EMA for the treatment of hematologic malignancies, we
may not be the first to obtain marketing approval for such indication due to the uncertainties associated with developing pharmaceutical products. Further,
orphan drug exclusivity may not effectively protect the product candidate from competition because different drugs with different active moieties can be
approved for the same condition. Even after an orphan drug is approved, the FDA or EMA can subsequently approve the same drug with the same active
moiety for the same condition if the FDA or EMA concludes that the later drug is clinically superior in that it is safer, more effective, or makes a major
contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug or biologic nor gives the
drug or biologic any advantage in the regulatory review or approval process.
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Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product
candidates and may affect the prices we may set.
In the United States, the European Union and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative and
regulatory changes and proposed changes to the healthcare system that could affect our future results of operations. In particular, there have been and
continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For
example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively
the PPACA, was enacted, which substantially changed the way healthcare is financed by both governmental and private payers. Among the provisions of
the PPACA, those of greatest importance to the pharmaceutical and biotechnology industries include the following: an annual, non-deductible fee payable
by any entity that manufactures or imports certain branded prescription drugs and biologic agents (other than those designated as orphan drugs), which is
apportioned among these entities according to their market share in certain government healthcare programs;
● new requirements to report certain financial arrangements with physicians and teaching hospital personnel including transplant teams, including
reporting “transfers of value” made or distributed to physicians, as defined by such law, and reporting investment interests held by physicians and
their immediate family members;
● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled,
infused, instilled, implanted or injected;
● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals
with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;
● a licensure framework for follow-on biologic products;
● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research,
along with funding for such research; and
● establishment of a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and
service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
There have been judicial and Congressional challenges to certain aspects of the PPACA. For example, tax legislation enacted on December 22, 2017,
titled “an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” or the Tax Act,
included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who
fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. On June 17, 2021, the U.S.
Supreme Court dismissed a challenge on procedural grounds that argued the PPACA is unconstitutional in its entirety because the “individual mandate”
was repealed by Congress. Thus, the PPACA will remain in effect in its current form. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021,
President Biden issued an executive order to initiate a special enrollment period from February 26, 2021 through August 15, 2021 for purposes of obtaining
health insurance coverage through the PPACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider
their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs
that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the
PPACA. It is possible that the PPACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the
healthcare reform measures of the Biden administration.
In addition, other legislative changes have been proposed and adopted in the United States since the PPACA was enacted. In August 2011, the Budget
Control Act of 2011, among other things, led to aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into
effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2031 with the exception of a temporary
suspension from May 1, 2020 through March 31, 2022 unless additional action is taken by Congress. Under current legislation, the actual reduction in
Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. In January 2013, the American Taxpayer Relief Act of
2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging
centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to
five years. Additionally, Congress is considering additional health reform measures. These new laws or any other similar laws introduced in the future may
result in additional reductions in Medicare and other health care funding, which could negatively affect our customers and accordingly, our financial
operations.
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Moreover, payment methodologies are subject to changes in healthcare legislation and regulatory initiatives. For example, CMS has developed value-
based payment models for a variety of care settings, including the inpatient prospective payment system used for reimbursing inpatient hospital services. In
addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which
has resulted in several U.S. Presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to,
among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under government payer programs, and review the
relationship between pricing and manufacturer patient programs. At the federal level, the Trump administration used several means to propose or
implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives. For example, on July 24, 2020 and
September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the
administration’s proposals. As a result, the FDA concurrently released a final rule and guidance in September2020, providing pathways for states to build
and submit importation plans for drugs from Canada. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price
reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price
reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in
response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for
certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed by the Biden
administration until January 1, 2023. On November 20, 2020, CMS issued an interim final rule implementing the Trump administration’s Most Favored
Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically
advanced countries, effective January 1, 2021. As a result of litigation challenging the Most Favored Nation model, on December 27, 2021, CMS published
a final rule that rescinds the Most Favored Nation model interim final rule. Additionally, in July 2021, the Biden administration released an executive order,
“Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on
September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a
variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. No
legislation or administrative actions have been finalized to implement these principles. It is unclear whether these or similar policy initiatives will be
implemented in the future.
We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S.
federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing
pressures.
Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and
biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost
disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated
price controls on payment amounts by third- party payers or other restrictions could harm our business, results of operations, financial condition and
prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical
products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our
product candidates or put pressure on our product pricing.
In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product
candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or
member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the
European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a
matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches
to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in
most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Any
increase in European Union and national regulatory burdens on those wishing to develop and market products could prevent or delay marketing approval of
our product candidates, restrict or regulate post- approval activities and affect our ability to commercialize our product candidates, if approved. In markets
outside of the United States and European Union, reimbursement and healthcare payment systems vary significantly by country, and many countries have
instituted price ceilings on specific products and therapies.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action in the United
States, the European Union or any other jurisdiction. It is also possible that additional government action is taken in response to the COVID-19 pandemic.
If we or any third parties we may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or
if we or such third parties are not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been
obtained and we may not achieve or sustain profitability.
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Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payers, patient
organizations and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.
Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payers, patient
organizations and customers, may expose us to broadly applicable fraud and abuse, privacy and security and other healthcare laws and regulations. These
laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market,
sell and distribute our product candidates, if approved. Such laws include:
● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering,
receiving or providing any remuneration (including any kickback, bribe, or certain rebate), directly or indirectly, overtly or covertly, in cash or in
kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good,
facility, item or service, for which payment may be made, in whole or in part, under any U.S. federal healthcare program, such as Medicare and
Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a
violation;
● the U.S. federal civil and criminal false claims, including the civil False Claims Act, which prohibit, among other things, including through civil
whistleblower or qui tam actions, and civil monetary penalties laws which prohibit individuals or entities from knowingly presenting, or causing to
be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to
be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease
or conceal an obligation to pay money to the U.S. federal government. Pharmaceutical manufacturers can cause false claims to be presented to the
U.S. federal government by engaging in impermissible marketing practices, such as the off-label promotion of a product for an indication for
which it has not received FDA approval. In addition, the government may assert that a claim including items and services resulting from a
violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;
● the Health Insurance Portability and Accountability Act, or HIPAA, which imposes criminal and civil liability for, among other things, knowingly
and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare
benefits, items or services. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the
healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations,
which also imposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy and security of
individually identifiable health information of covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain
healthcare providers, as well as their business associates, independent contractors of a covered entity that perform certain services involving the
use or disclosure of individually identifiable health information on their behalf and their subcontractors that use, disclose, access, or otherwise
process individually identifiable health information;
● the Food Drug and Cosmetic Act, or the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and
medical devices;
● the U.S. Public Health Service Act, which prohibits, among other things, the introduction into interstate commerce of a biological product unless a
biologics license is in effect for that product;
● the U.S. Physician Payments Sunshine Act and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and
medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report
annually to the government information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists,
optometrists, podiatrists, and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and
teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
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● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices,
including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed
by any third-party payer, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise
restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug
manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of
value provided to healthcare professionals and entities; state and local laws requiring the registration of pharmaceutical sales representatives; and
state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating compliance efforts; the U.S. Foreign Corrupt Practices Act of 1977, as amended,
which prohibits, among other things, U.S. companies and their employees and agents from authorizing, promising, offering, or providing, directly
or indirectly, corrupt or improper payments or anything else of value to non-U.S. government officials, employees of public international
organizations and non-U.S. government owned or affiliated entities, candidates for non-U.S. political office, and non-U.S. political parties or
officials thereof; and
● similar healthcare laws and regulations in the European Union and other jurisdictions, including reporting requirements detailing interactions with
and payments to healthcare providers.
Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will
involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes,
regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in
violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant
penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare
and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance,
disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.
If any of the physicians or other providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may
be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment, which could
affect our ability to operate our business. Further, defending against any such actions can be costly, time-consuming and may require significant personnel
resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.
Legislative or regulatory healthcare reforms in the United States may make it more difficult and costly for us to obtain regulatory clearance or approval
of our product candidates and to produce, market and distribute our products after clearance or approval is obtained.
From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory
clearance or approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often
revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or
reinterpretations of existing regulations may impose additional costs or lengthen review times of our product candidates. We cannot determine what effect
changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such
changes could, among other things, require:
● changes to manufacturing methods;
● change in protocol design;
● additional treatment arm (control);
● recall, replacement, or discontinuance of one or more of our products; and
● additional recordkeeping.
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We face competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We face
competition from major multinational pharmaceutical companies, established and early-stage biotechnology companies, and universities and other research
institutions. Many of our competitors have greater financial and other resources, such as larger research and development staff and more experienced
marketing and manufacturing organizations. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining
regulatory approvals, recruiting patients and manufacturing pharmaceutical products. These companies also have significantly greater research, sales and
marketing capabilities and collaborative arrangements in our target markets with leading companies and research institutions.
Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel therapeutics or to in-license novel
therapeutics that could make the product candidates that we develop obsolete. As a result of all of these factors, our competitors may succeed in obtaining
patent protection or FDA approval or discovering, developing and commercializing treatments in the rare disease indications that we are targeting before
we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large,
established companies.
Doctors may recommend that patients undergo stem cell transplantation using cells from matched related donors, matched or mismatched unrelated
donors, haploidentical donors or unmodified umbilical cord blood instead of using omidubicel or may choose other therapy options instead of our other
NAM-derived product candidates. In addition, there are several clinical-stage development programs that seek to improve umbilical cord blood
transplantation through the use of ex vivo expansion technologies to increase the quantity of hematopoietic stem cells for use in HSCT or the use of ex vivo
differentiation technologies to increase the quantity of hematopoietic progenitor cells for use in HSCT. We are aware of several other companies with
product candidates in various stages of development for allogeneic HSCT grafts, including Magenta Therapeutics, ExCellThera, Garuda Therapeutics and
Bellicum Pharmaceuticals, and for NK cells, including, Takeda Pharmaceutical Company Limited, Fate Therapeutics, Artiva, Sanofi, MiNK Therapeutics,
ONK Therapeutics, Shoreline, Cellularity, NKarta, Wugen, Century Therapeutics, Appia Bio and FujiFilm Cellular Dynamics. In addition, many
universities and private and public research institutes may develop technologies of interest to us but license them to our competitors. Our competitors may
succeed in developing, acquiring or licensing on an exclusive basis, technologies and drug products that are more effective or less costly than omidubicel or
any other product candidates that we are currently developing or that we may develop, which could render our products obsolete and noncompetitive.
We believe that our ability to successfully compete will depend on, among other things:
● the results of our preclinical studies and clinical trials;
● our ability to recruit and enroll patients for our clinical trials;
● the efficacy, safety and reliability of our product candidates;
● the speed at which we develop our product candidates;
● our ability to design and successfully execute appropriate clinical trials;
● our ability to protect, develop and maintain intellectual property rights related to our products;
● our ability to maintain a good relationship with regulatory authorities;
● the timing and scope of regulatory approvals, if any;
● our ability to commercialize and market any of our product candidates that receive regulatory approval;
● market perception and acceptance of stem cell therapeutics;
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● acceptance of our product candidates by physicians and institutions that perform HSCT procedures;
● the price of our products;
● coverage and adequate levels of reimbursement under private and governmental health insurance plans, including Medicare; and
● our ability to manufacture and sell commercial quantities of any approved products to the market.
If our competitors market products that are more effective, safer or less expensive than our future products, if any, or that reach the market sooner than
our future products, if any, we may not achieve commercial success. Any inability to successfully compete effectively will adversely impact our business
and financial prospects.
Even if we obtain and maintain approval for omidubicel or our other product candidates from the FDA, we may never obtain approval outside of the
United States, which would limit our market opportunities and adversely affect our business.
Approval of a product candidate in the United States by the FDA does not ensure approval of such product candidate by regulatory authorities in other
countries or jurisdictions, and approval by non-U.S. regulatory authority does not ensure approval by regulatory authorities in other countries or by the
FDA. However, the failure to obtain approval from the FDA or other regulatory authorities may negatively impact our ability to obtain approval in non-
U.S. countries. Sales of omidubicel or our other product candidates outside of the United States will be subject to the regulatory requirements of other
jurisdictions governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable regulatory
authorities in other countries also must approve the manufacturing and marketing of the product candidate in those countries. Approval procedures vary
among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States,
including additional preclinical studies or clinical trials. In many countries outside the United States, a product candidate must be approved for
reimbursement before it can be approved for sale in that country. In some cases, the price that we intend to charge for our product candidates, if approved,
is also subject to approval.
We intend to submit a marketing authorization application to the EMA for approval of omidubicel in the European Union, but obtaining such approval
from the European Commission following the opinion of the EMA is a lengthy and expensive process. Even if a product candidate is approved, the
applicable regulatory agency may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or
require expensive and time-consuming additional clinical trials or reporting as conditions of approval. Regulatory authorities in countries outside of the
United States and the European Union also have requirements for approval of product candidates with which we must comply prior to marketing in those
countries. Obtaining non-U.S. regulatory approvals and compliance with non-U.S. regulatory requirements could result in significant delays, difficulties
and costs for us and could delay or prevent the introduction of our product candidates in certain countries.
Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for a
product candidate may be withdrawn. If we fail to comply with the regulatory requirements, our target market will be reduced and our ability to realize the
full market potential of omidubicel or our other product candidates will be harmed and our business, financial condition, results of operations and prospects
will be adversely affected.
The misuse or off-label use of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in
costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be
costly to our business.
We initially intend to seek marketing approval for omidubicel for the treatment of hematologic malignancies. We will train our marketing and sales
personnel or the marketing and sales personnel of any strategic partner to not promote our products, if approved, for any other uses outside of any FDA-
cleared indications for use, known as “off-label use.”
We cannot, however, prevent a physician from using our products off-label, when in the physician’s independent professional medical judgment, he or
she deems it appropriate. As a result, there may be increased risk of injury to patients if physicians attempt to use our products for these uses for which they
are not approved. Furthermore, the use of our products for indications other than those approved by the FDA or any non-U.S. regulatory body may not
effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients.
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If the FDA, EMA or any other regulatory body in a jurisdiction in which we operate determines that our promotional materials or training constitute
promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions,
including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or
criminal penalties. It is also possible that other federal, state or non-U.S. enforcement authorities might take action under other regulatory authority, such as
false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including,
but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare
programs and the curtailment of our operations.
Collection and use of data, including personal information, is governed by restrictive regulations that could lead to government enforcement actions,
private litigation, adverse publicity, or other adverse actions that could negatively affect our operating results of business
The collection and use of personal health data in the European Union are governed by the provisions of the General Data Protection Regulation ((EU)
2016/679), or GDPR. This legislation imposes requirements relating to (a) having legal bases for processing personal information relating to identifiable
individuals and transferring such information outside the European Economic Area including to the United States, (b) providing details to those individuals
regarding the processing of their personal information, (c) keeping personal information secure and confidential, (d) having data processing agreements
with third parties who process personal information, (e) responding to individuals’ requests to exercise their rights in respect of their personal information,
(f) reporting security breaches involving personal data to the competent national data protection authority and, possibly, affected individuals, (g) appointing
data protection officers, (h) conducting data protection impact assessments and (i) recordkeeping. The GDPR imposes additional responsibilities and
liabilities in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new data
protection rules. Further, the GDPR prohibits the transfer of personal data to countries outside the European Economic Area, such as the United States,
which are not considered by the European Commission to provide an adequate level of data protection. Switzerland has adopted similar restrictions.
Although there are legal mechanisms to allow for the transfer of personal data from the EEA and Switzerland to the United States, they are subject to legal
challenges and uncertainty regarding compliance with the European Union data protections laws. Failure to comply with the requirements of the GDPR and
related national data protection laws of the member states of the European Union may result in substantial fines (up to or the great of €20 million or 4% of
annual global revenue), other administrative penalties and civil claims being brought against us, which could have a material adverse effect on our
business, results of operations and financial condition. Such civil claims, based on a private right of actions in the GDPR, allow data subjects and consumer
associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the
GDPR.
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Risks Related to our Reliance on Third Parties
We rely on third parties to conduct certain elements of our preclinical studies and clinical trials and perform other tasks for us. If these third parties do
not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain
regulatory approval for or commercialize our product candidates.
We have relied upon, and plan to continue to rely upon, third-party vendors, including CROs, to monitor and manage data for our ongoing preclinical
studies and clinical trials. We rely on these parties for execution of our preclinical studies and clinical trials, and we control only certain aspects of their
activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory
and scientific standards, and our reliance on the vendors and CROs does not relieve us of our regulatory responsibilities.
We and our CROs and other vendors are required to comply with good clinical practice, or GCP, cGMP, the Helsinki Declaration, the International
Council for Harmonization Guideline for Good Clinical Practice, applicable European Commission Directives on Clinical Trials, laws and regulations
applicable to clinical trials conducted in other territories, good laboratory practices, or GLP, which are regulations and guidelines enforced by the FDA, the
Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable regulatory authorities for all our product candidates
in clinical development as well as rules and regulations regarding the collection and use of personal data such as the GDPR.
Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, study sites and other
contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, including GCP and cGMP regulations, the clinical data
generated in our clinical studies may be deemed unreliable and the FDA, EMA or comparable regulatory authorities may require us to perform additional
clinical studies before approving our marketing applications. Our failure to comply with these regulations may require us to repeat clinical studies, which
would delay the regulatory approval process.
If any of our relationships with these third-party CROs or vendors terminate, we may not be able to enter into arrangements with alternative CROs or
vendors or do so on commercially reasonable terms. In addition, our CROs are not our employees, and, except for remedies available to us under our
agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical
programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the
quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other
reasons, our clinical studies may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully
commercialize our product candidates. CROs may also generate higher costs than anticipated, which could adversely affect our results of operations and
the commercial prospects for our product candidates, increase our costs and delay our ability to generate revenue.
Replacing or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period
when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines.
Though we carefully manage our relationships with our CROs, we may encounter similar challenges or delays in the future, which could have a material
adverse impact on our business, financial condition and prospects.
Independent clinical investigators and CROs that we engage to conduct our clinical trials may not devote sufficient time or attention to our clinical
trials or be able to repeat their past success.
We expect to continue to depend on third parties, including independent clinical investigators and CROs, to conduct our clinical trials. CROs may also
assist us in the collection and analysis of data. There is a limited number of third-party service providers and vendors that specialize or have the expertise
required to achieve our business objectives. Identifying, qualifying and managing performance of third-party service providers can be difficult, time
consuming and cause delays in our development programs.
These investigators and CROs will not be our employees and we will not be able to control, other than through contract, the amount of resources,
including time, which they devote to our product candidates and clinical trials. If independent investigators or CROs fail to devote sufficient resources to
the development of our product candidates, or if their performance is substandard, it may delay or compromise the prospects for approval and
commercialization of any product candidates that we develop.
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Investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with
such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or other regulatory authorities. The FDA
or other regulatory authorities may conclude that a financial relationship between us and an investigator has created a conflict of interest or otherwise
affected interpretation of the study. The FDA or other regulatory authorities may therefore question the integrity of the data generated at the applicable
clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval or rejection of our marketing
applications by the FDA or other regulatory authorities, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of
our product candidates.
In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk
that this information will be misappropriated. Further, the FDA and other regulatory authorities require that we comply with standards, commonly referred
to as GCP, for conducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate and that the rights,
integrity and confidentiality of trial subjects are protected. Failure of clinical investigators or CROs to meet their obligations to us or comply with GCP
procedures could adversely affect the clinical development of our product candidates and harm our business.
We rely on a limited number of suppliers to provide the raw materials other than cord blood (serum and growth factor) needed to produce our product
candidates. We have a relationship with a single supplier, Miltenyi Biotec GmbH, for certain equipment (columns and beads) necessary to create our
product candidates.
We do not have any control over the availability of these raw materials or pieces of equipment. If we or our providers are unable to purchase these raw
materials or equipment on acceptable terms, at sufficient quality levels, or in adequate quantities, if at all, the development and commercialization of our
product candidates or any future product candidates, could be delayed or there could be a shortage in supply, which could impair our ability to meet our
development objectives for our product candidates or generate revenue from the sale of any approved products.
Even following our establishment of our own planned cGMP-compliant manufacturing capabilities, we intend to continue to rely on third-party
suppliers for these raw materials and pieces of equipment, which will expose us to risks including:
● failure of any supplier to become or maintain its status as a cGMP-compliant manufacturer of raw materials, which status is a prerequisite to our
attainment of a BLA for omidubicel and our other product candidate;
● termination or nonrenewal of supply or service agreements with third parties in a manner or at a time that is costly or damaging to us; and
● disruptions to the operations of our third-party suppliers and service providers caused by conditions unrelated to our business or operations,
including the bankruptcy of the supplier or service provider.
We rely on a single facility located in Kiryat Gat, Israel to manufacture omidubicel. Severe natural or other disaster, power outages or disruption at this
site could have a material adverse effect on our ability to manufacture sufficient commercial supply.
After the termination of the Services Agreement with Lonza and unless and until we establish an alternative supplier, we will be solely dependent on
our facility in Kiryat Gat, Israel for the manufacture of the commercial supply of omidubicel, if omidubicel is approved. We have completed construction
on the facility in Kiryat Gat and we are now working to qualify our manufacturing process and facility with the FDA’s cGMP regulations. Severe natural or
other disasters, power outages, ongoing or revived hostilities or other political or economic factors could severely disrupt our manufacturing operations at
our Kiryat Gat facility. If any event occurred that prevented us from using all or a significant portion of this facility or otherwise disrupted operations, it
may be difficult or, in certain cases, impossible for us to continue manufacturing omidubicel for a substantial period of time in sufficient quantities, or at
all. The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate to guarantee a sufficient
continuation of supply in the event of a serious disaster or similar event. Although we intend to establish an alternative source supplier or manufacturer for
the commercial supply of omidubicel, we cannot guarantee that we will be able to establish an alternative source, supplier or partner for the manufacturing
of omidubicel at acceptable commercial terms, or at all.
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Our reliance on third parties requires us to share our trade secrets and other intellectual property, which increases the possibility that a competitor will
discover them or that our trade secrets and other intellectual property will be misappropriated or disclosed.
Because we rely on third parties to provide us with the materials that we use to develop and manufacture our product candidates, we may, at times,
share trade secrets and other intellectual property with such third parties. We seek to protect our proprietary technology in part by entering into
confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements, or other similar
agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These
agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets and intellectual property.
Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases
the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in
violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our
trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.
Despite our efforts to protect our trade secrets, our competitors or other third parties may discover our trade secrets, either through breach of these
agreements, independent development or publication of information including our trade secrets by third parties. A competitor’s or other third party’s
discovery of our trade secrets would impair our competitive position and have an adverse impact on our business, financial condition, results of operations
and prospects.
We face a variety of challenges and uncertainties associated with our dependence on the availability of human umbilical cord blood units, or CBUs, at
cord blood banks for the manufacture of omidubicel.
CBUs are one of the raw materials for the manufacture of omidubicel. The CBUs currently used in the manufacture of omidubicel are procured
directly by the clinical cell processing facilities from cord blood banks, which hold more than 800,000 CBUs that have been donated, processed and
cryopreserved. However, the availability of CBUs for the manufacture of omidubicel depends on a number of regulatory, political, economic and technical
factors outside of our control, including:
● government policies relating to the regulation of CBUs for clinical use;
● the availability of government funding for cord blood banks;
● pregnancy and birth rates, which we expect to decline temporarily in response to the COVID-19 pandemic, and the willingness of mothers to
consent to the donation of CBUs and the terms of such consent;
● individual cord blood bank policies and practices relating to CBU acquisition and banking;
● the pricing of CBUs;
● the methods used in searching for and matching CBUs to patients, which involve emerging technology related to current and future CBU
parameters that guide the selection of an appropriate CBU for transplantation; and
● methods for the procurement and shipment of CBUs and their handling and storage at clinical sites, any or all of which may have been
complicated by public health policies aimed at slowing the spread of the COVID-19 virus.
Additionally, we do not have control over the types of CBUs used in the manufacture of omidubicel. We rely heavily on these clinical cell processing
facilities to procure CBUs from cord blood banks that are compliant with government regulations and within the current standard of care. In addition, we
may identify specific characteristics of CBUs, such as their volume and red blood cell content, that may limit their ability to be used to manufacture
omidubicel even though these CBUs may otherwise be suitable for use in allogeneic transplant. As a result, the requirement for CBUs to meet our
specifications may limit the potential inventory of CBUs eligible for use in the manufacture of omidubicel. There is a large variability in the tests, methods
and equipment utilized by cord blood banks in testing CBUs before storage. This could result in CBUs that are found to be unsuitable for production after
their arrival at the manufacturing site. In the United States, cord blood banks are required to file a BLA and meet certain continued regulatory requirements
in order to bank and provide CBUs for transplantation. Despite these requirements, most of the cord blood banks in the United States are not licensed.
While the FDA currently allows CBUs from unlicensed cord blood banks to be used for transplantation and we have used CBUs from such facilities in the
manufacture of omidubicel for our clinical trials, the FDA may later prohibit the use of such CBUs for transplantation. Additionally, although CBUs from
non-U.S. cord blood banks, which are generally unlicensed, are currently available in the United States for use in transplantation and we have used CBUs
from non-U.S. cord blood banks in our clinical trials, we anticipate we will not be able to use cord blood from non-U.S. cord blood banks for the
manufacturing of omidubicel. Any inability to procure adequate supplies of CBUs will adversely impact our ability to develop and commercialize
omidubicel.
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Risks Related to Our Intellectual Property
If we are unable to obtain, maintain or protect intellectual property rights related to any of our product candidates or any future product candidates, we
may not be able to compete effectively in our market.
We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our
technologies and product candidates. Our success depends in large part on our ability to obtain and maintain patent and other intellectual property
protection in the United States and in other countries with respect to our proprietary technology and product candidates.
We have sought to protect our proprietary position by filing patent applications in the United States and in other countries, with respect to our novel
technologies and product candidates, which are important to our business. Patent prosecution is expensive and time consuming. We may not be able to
prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions. It is also possible
that we will fail to identify patentable aspects of our research and development activities before it is too late to obtain patent protection.
Further, the patent position of biopharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which
legal principles remain unsettled. This renders the patent prosecution process particularly expensive and time-consuming. There is no assurance that all
potentially relevant prior art relating to our patent applications has been found and that there are no material defects in the form, preparation, or prosecution
of our patent applications, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully
issue, and even if such patents cover our product candidates, because the issuance of a patent is not conclusive as to its inventorship, scope, validity or
enforceability, our patents or pending patent applications may be challenged in the courts or patent offices in the United States and abroad, which may
result in such patents being narrowed, found unenforceable or invalidated. For example, we may be subject to a third party pre-issuance submission of prior
art to the United States Patent and Trademark Office, or USPTO, or become involved in post-grant review procedures, oppositions, derivations,
reexaminations, inter parts review, or IPR, or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights
of others. An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held
unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products,
or limit the duration of the patent protection of our technology and products. Furthermore, even if they are unchallenged, our patent applications and any
future patents may not adequately protect our intellectual property, provide exclusivity for our product candidates, or prevent others from designing around
our claims. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
If we cannot obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively and our business and
results of operations would be harmed.
In addition to the protection afforded by any patents that have been or may be granted, we rely on trade secret protection and confidentiality
agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any
other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not
covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into
confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of
our data, trade secrets and intellectual property by maintaining the physical security of our premises and physical and electronic security of our information
technology systems. Notwithstanding these measures, organizations and systems, agreements or security measures may be breached, and we may not have
adequate remedies for any breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by
competitors. Although we expect all our employees and consultants and other third parties who may be involved in the development of intellectual property
for us to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary knowhow,
information, or technology to enter into confidentiality agreements, we cannot provide any assurances that we have entered into such agreements with all
applicable third parties or that all such agreements have been duly executed. Even if we have entered into such agreements, we cannot assure you that our
counterparties will comply with the terms of such agreements or that the assignment of intellectual property rights under such agreements is self-executing.
We may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as
our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to
our senior management and scientific personnel.
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We also cannot assure you that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not
otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized
disclosure of our trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business.
Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient recourse against
third parties for misappropriating the trade secret. Any of the foregoing could significantly harm our business, results of operations and prospects.
Patent reform legislation and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the
enforcement or defense of any issued patents.
Our ability to obtain patents is highly uncertain because, to date, some legal principles remain unsettled, there has not been a consistent policy
regarding the breadth or interpretation of claims allowed in patents in the United States and the specific content of patents and patent applications that are
necessary to support and interpret patent claims is highly uncertain due to the complex nature of the relevant legal, scientific, and factual issues. Changes in
either patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the
scope of our patent protection.
For example, on September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act
includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications will be prosecuted
and may also affect patent litigation. The USPTO has developed new and untested regulations and procedures to govern the full implementation of the
Leahy-Smith Act and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions only
became effective in March 2013. Prior to March 2013, in the United States, the first to invent was entitled to the patent. As of March 2013, assuming the
other requirements for patentability are met, the first to file a patent application is generally entitled to the patent. Publications of discoveries in the
scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published
until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents
or pending patent applications, or that we were the first to file for patent protection of such inventions. The Leahy-Smith Act has also introduced
procedures making it easier for third parties to challenge issued patents, as well as to intervene in the prosecution of patent applications. Finally, the Leahy-
Smith Act contains new statutory provisions that require the USPTO to issue new regulations for their implementation, and it may take the courts years to
interpret the provisions of the new statute. It is too early to tell what, if any, impact the Leahy-Smith Act will have on the operation of our business and the
protection and enforcement of our intellectual property.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications
and the enforcement or defense of our issued patents. Further, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing
the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing
uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents,
once obtained. Depending on actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in
unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have owned or licensed or that we might obtain in the
future. Any inability to obtain, enforce, and defend patents covering our proprietary technologies would materially and adversely affect our business
prospects and financial condition.
Similarly, changes in patent laws and regulations in other countries or jurisdictions or changes in the governmental bodies that enforce them or changes
in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we
own or that we may obtain in the future. Further, the laws of some countries do not protect proprietary rights to the same extent or in the same manner as
the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United
States and abroad. For example, if the issuance to us, in a given country, of a patent covering an invention is not followed by the issuance, in other
countries, of patents covering the same invention, or if any judicial interpretation of the validity, enforceability, or scope of the claims, or the written
description or enablement, in a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country,
our ability to protect our intellectual property in those countries may be limited. Changes in either patent laws or in interpretations of patent laws in the
United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection. Any of the
foregoing could significantly harm our business, results of operations and prospects.
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If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our
business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be
infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by
potential partners or customers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and
trade names, then we may not be able to compete effectively and our business may be adversely affected. If other entities use trademarks similar to ours in
different jurisdictions, or have senior rights to ours, it could interfere with our use of our current trademarks throughout the world.
Intellectual property rights of third parties could adversely affect our ability to commercialize our product candidates, and we might be required to
litigate or obtain licenses from third parties in order to develop or market our product candidate. Such litigation or licenses could be costly or not
available on commercially reasonable terms.
It is inherently difficult to conclusively assess our freedom to operate without infringing on or otherwise violating third-party rights. Our competitive
position may suffer if patents issued to third parties or other third-party intellectual property rights cover our product candidates or elements thereof, or our
manufacturing or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or our product
candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, or enter into a license
agreement with the intellectual property right holder, if available on commercially reasonable terms.
There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by our product candidates. If such
an infringement claim should be brought and be successful, we may be required to pay substantial damages, including treble damages and attorneys’ fees if
we are found to have willfully infringed, we may be forced to cease the development and commercialization of and otherwise abandon our product
candidates, or we may need to seek a license from any patent holders. No assurances can be given that a license will be available on commercially
reasonable terms, if at all. Even if we were able to obtain such a license, it could be granted on non-exclusive terms, thereby providing our competitors and
other third parties access to the same technologies licensed to us.
It is also possible that we have failed to identify relevant third-party patents or applications. For example, U.S. applications filed before November 29,
2000 and certain U.S. applications filed after that date that will not be filed outside the U.S. remain confidential until patents issue. Patent applications in
the U.S. and elsewhere are published approximately 18 months after the earliest filing to which priority is claimed, with such earliest filing date being
commonly referred to as the priority date. Therefore, patent applications covering our product candidates or platform technology could have been filed by
others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in
a manner that could cover our platform technologies, our product candidates or the use of our product candidates. Third-party intellectual property right
holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully defend, settle or otherwise resolve
such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue
costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or
marketing of our product candidates. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently
prohibited from commercializing our product candidates that are held to be infringing. We might, if possible, also be forced to redesign our product
candidates so that we no longer infringe the third-party intellectual property rights, which may not be commercially feasible. Any of these events, even if
we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our
business and otherwise significantly harm our business, results of operations and prospects.
Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
Our commercial success depends in part on our avoiding infringing or otherwise violating the patents and proprietary rights of third parties. There have
been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries,
including patent infringement lawsuits, interferences, oppositions, post grant review, IPR, and reexamination proceedings before the USPTO and
corresponding non-U.S. patent offices. Numerous U.S. and non-U.S. issued patents and pending patent applications, which are owned by third parties, exist
in the fields in which we are developing product candidates. As the pharmaceutical industry expands and more patents are issued, the risk increases that our
product candidates may be subject to claims of infringement of the patent rights of third parties or other intellectual property claims.
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Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent
applications with claims to materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of our product
candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued
patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes
upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product
candidates, any materials formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our
ability to commercialize such product candidates unless we obtain a license under the applicable patents, or until such patents expire or are finally
determined to be invalid or unenforceable.
Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture, or
methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we
obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on
commercially reasonable terms or at all.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and
commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and
would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to
pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one
or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of
hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a
material adverse effect on the price of our ordinary shares. Any of the foregoing could significantly harm our business, results of operations and prospects.
We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
Because our programs may require the use of intellectual property or proprietary rights held by third parties, the growth of our business will likely
depend in part on our ability to acquire, in-license, or use these intellectual property and proprietary rights. In addition, our product candidates may require
specific formulations to work effectively and efficiently and the rights to these formulations may be held by others. We may be unable to acquire or in-
license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that we identify as necessary for our
product candidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established
companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established
companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization
capabilities. In addition, the Indenture governing our Notes contain restrictions that may limit our ability to enter into acquisition or in-licensing
agreements.
For example, we sometimes collaborate with academic institutions to accelerate our preclinical research or development under written agreements with
these institutions, some of which provide that the applicable institution will own certain rights in any technology developed thereunder.
Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the
collaboration. Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If
we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We are also subject to certain restrictions
regarding obtaining licenses of third-party intellectual property pursuant to the terms of the indenture governing the Notes, and we may be unable to license
or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to
successfully obtain rights to required third-party intellectual property rights, we may have to abandon development of that program and our business and
financial condition could suffer.
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We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.
Competitors may infringe, misappropriate or otherwise violate our intellectual property or that of our licensors that we may acquire in the future. To
counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. If we initiate legal
proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our
product or product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or
unenforceability are common, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. In an
infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the
technology at issue on the grounds that our patents do not cover the technology in question. Third parties may also raise similar claims before
administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review,
inter parties review, or IPR, and equivalent proceedings in non-U.S. jurisdictions (e.g., opposition proceedings). Such proceedings could result in
revocation of or amendment to our patents in such a way that they no longer cover our product candidates. The outcome following legal assertions of
invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior
art, of which we, our patent counsel, and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of
invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. An adverse result in any
litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly, could put our patent applications
at risk of not issuing and could have a material adverse impact on our business.
Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patent
applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.
Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference
proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to
prevent misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United
States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of
hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a
material adverse effect on the price of our ordinary shares. Any of the foregoing could significantly harm our business, results of operations and prospects.
We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of
third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or
know-how of others in their work for us, we may be subject to claims that we or our employees, consultants, or independent contractors have inadvertently
or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employees’ former employers or
other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending
against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could
significantly harm our business, results of operations and prospects.
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We may be subject to claims challenging the inventorship of our intellectual property.
We may be subject to claims that former employees, collaborators or other third parties have an interest in or right to compensation with respect to our
current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship
disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to
defend against these and other claims challenging inventorship or claiming the right to compensation. If we fail in defending any such claims, in addition to
paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.
Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in
substantial costs and be a distraction to management and other employees. To the extent that our employees have not effectively waived the right to
compensation with respect to inventions that they helped create, they may be able to assert claims for compensation with respect to our future revenue. As a
result, we may receive less revenue from future products if such claims are successful which in turn could impact our future profitability, business, results
of operations and prospects.
We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation
and adversely affect our business.
A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli
Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee in the course and as a result of or arising from his or her employment with
a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the
employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli
Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to
remuneration for his inventions. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that
in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general
contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined
one specific formula for calculating this remuneration (but rather uses the criteria specified in the Patent Law). Although we generally enter into
assignment-of-invention agreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of
their employment or engagement with us, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such
claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which
could negatively affect our business.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these
requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or applications will be due to be paid to the
USPTO and various government patent agencies outside of the United States over the lifetime of our patents and/or applications and any patent rights we
may own or license in the future. We rely on our outside counsel or third-party service providers to pay these fees due to the USPTO and non-U.S. patent
agencies. The USPTO and various non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other
similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply. In many cases, an
inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which
non-compliance can result in abandonment or lapse of the patents or patent applications, resulting in partial or complete loss of patent rights in the relevant
jurisdiction. In such an event, potential competitors might be able to enter the market and this circumstance could harm our business.
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We may enjoy only limited geographical protection with respect to certain patents and we may not be able to protect our intellectual property rights
throughout the world.
Filing and prosecuting patent applications and defending patents covering our product candidates in all countries throughout the world would be
prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products
and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as that in the
United States. These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or
sufficient to prevent them from competing.
In addition, we may decide to abandon national and regional patent applications before grant. The examination of each national or regional patent
application is an independent proceeding. As a result, patent applications in the same family may issue as patents in some jurisdictions, such as in the
United States, but may issue as patents with claims of different scope or may even be refused in other jurisdictions. It is also quite common that depending
on the country, the scope of patent protection may vary for the same product candidate or technology. The laws of some jurisdictions do not protect
intellectual property rights to the same extent as the laws or rules and regulations in the United States, and many companies have encountered significant
difficulties in protecting and defending such rights in such jurisdictions. The legal systems of certain countries, particularly certain developing countries, do
not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of
our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in other
jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put
our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing as patents, and could provoke third parties
to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially
meaningful.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage
from the intellectual property that we develop or license. Furthermore, while we intend to protect our intellectual property rights in our expected significant
markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product
candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on
our ability to successfully commercialize our product candidates in all our expected significant non-U.S. markets. If we encounter difficulties in protecting,
or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these
rights may be diminished and we may face additional competition from others in those jurisdictions.
Some countries also have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, some
countries limit the enforceability of patents against government agencies or government contractors. In those countries, the patent owner may have limited
remedies, which could materially diminish the value of such patents. If we are forced to grant a license to third parties with respect to any patents relevant
to our business, our competitive position may be impaired.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from
its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if
patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from
competitive medications, including biosimilar and generic medications. Given the amount of time required for the development, testing and regulatory
review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are
commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing product candidates
similar or identical to ours.
Depending upon the timing, duration and conditions of any FDA marketing approval of our product candidates, one or more of our U.S. patents may
be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman
Amendments, and similar legislation in the European Union. The Hatch-Waxman Amendments permit a patent term extension of up to five years for a
patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process.
However, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory review process, fail to apply within
applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the
extension could be less than we request. Only one patent per approved product can be extended, the extension cannot extend the total patent term beyond
14 years from approval and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. If we
are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent
rights for the applicable product candidate will be shortened and our competitors may obtain approval to market competing products sooner. As a result,
our revenue from applicable products could be reduced. Further, if this occurs, our competitors may take advantage of our investment in development and
trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case, and our competitive position,
business, financial condition, results of operations, and prospects could be materially harmed.
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Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may
not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:
● others may be able to make products that are similar to our product candidates but that are not covered by the claims of the patents that we own;
● we might not have been the first to invent the inventions covered by our patents or the first to file patent applications covering our inventions;
● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual
property rights;
● it is possible that our pending patent applications will not lead to issued patents;
● issued patents that we own may be held invalid or unenforceable as a result of legal challenges by our competitors;
● issued patents that we own may not provide coverage for all aspects of our product candidates in all countries;
● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information
learned from such activities to develop competitive products for sale in our major commercial markets;
● we may not develop additional proprietary technologies that are patentable; and
● the patents of others may have an adverse effect on our business.
Should any of these events occur, they could significantly harm our business, results of operations and prospects.
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Risks Related to Our Business Operations
Our future success depends in part on our ability to retain our senior management team and to attract, retain and motivate other qualified personnel.
We are highly dependent on the members of our senior management team. The loss of their services without a proper replacement may adversely
impact the achievement of our objectives. Our employees may leave our employment at any time. Recruiting and retaining other qualified employees,
consultants and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of
skilled personnel in our industry, which is likely to continue for the foreseeable future. This is particularly the case in Israel and Boston, Massachusetts,
where our operations are focused and where there is a “war for talent” between members in our industry. As a result, competition for skilled personnel is
intense, and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous
pharmaceutical companies for individuals with similar skill sets. In addition, failure to succeed in preclinical or clinical studies may make it more
challenging to recruit and retain qualified personnel. The inability to recruit and retain qualified personnel, or the loss of the services of any members of our
senior management team without proper replacement, may impede the progress of our research, development and commercialization objectives.
We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to
effectively manage any future growth. As our development and commercialization plans and strategies develop, we expect to need additional managerial,
operational, sales, marketing, financial and legal personnel. Our management may need to divert a disproportionate amount of its attention away from our
day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion
of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced
productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from
other projects, such as the development of additional product candidates. If our management is unable to effectively manage our growth, our expenses may
increase more than expected, our ability to generate and/or grow revenue could be reduced, and we may not be able to implement our business strategy.
Due to our limited resources and access to capital, we must, and have in the past decided to, prioritize development of certain product candidates over
other potential candidates. These decisions may prove to have been wrong and may adversely affect our revenue.
Because we have limited resources and access to capital to fund our operations, we must decide which product candidates to pursue and the amount of
resources to allocate to each. Our decisions concerning the allocation of research, collaboration, management and financial resources toward particular
product candidates may not lead to the development of viable commercial products and may divert resources away from better opportunities. Similarly, our
decisions to delay, terminate or collaborate with third parties in respect of certain product development programs may also prove not to be optimal and
could cause us to miss valuable opportunities. For instance, we made the decision to prioritize the development of omidubicel for the treatment of
hematologic malignancies over SCD because our hematologic malignancy program is at a more advanced stage of development, while our sickle cell
program remains exploratory. In addition, we are evaluating alternatives for commercialization of omidubicel, if approved, which may include
commercializing omidubicel ourselves or entering into potential strategic alliances or licensing arrangements with pharmaceutical companies and other
partners. If we make the decision to commercialize omidubicel ourselves, we may have to significantly expand our commercial organization in time for
omidubicel approval, which may jeopardize the success of a timely commercial launch and may reduce or delay our anticipated revenue from sales of
omidubicel. Commercializing omidubicel ourselves will also require additional capital to fund an increase in workforce as well as operating expenses and
capital expenses to expand our manufacturing facility in Kiryat Gat, Israel. If we decide to enter into licensing arrangements or other forms of
collaboration, the potential for us to generate revenue from royalties on sales of such out-licensed products depends on the performance of our partners. If
our partners do not perform in the manner we expect, fail to fulfill their responsibilities in a timely manner or at all, if the FDA, EMA or other similar
regulatory authorities decline to grant a marketing authorization to them, or provide them with a restricted authorization, if our agreements with them
terminate, they abandon the collaboration or if the quality or accuracy of the clinical data they obtain is compromised, the clinical development, regulatory
approval and commercialization efforts related to our out-licensed product candidates could be delayed or terminated, and it could become necessary for us
to assume the responsibility at our own expense, or seek new partners on reduced commercial terms, for the clinical development of such product
candidates. If we make incorrect determinations regarding the market potential of our product candidates or misread trends in the pharmaceutical industry,
in particular for our lead product candidate, our business, financial condition and results of operations could be materially adversely affected.
Business disruptions could seriously harm our future revenue and financial condition and increase costs and expenses.
Our operations and those of our third-party suppliers and collaborators could be subject to earthquakes, power shortages, telecommunications failures,
water shortages, floods, hurricanes or other extreme weather conditions, medical epidemics, labor disputes, war or other business interruptions. Although
we have limited business interruption insurance policies in place, any interruption could come with high costs for us, as salaries and loan payments would
usually continue. Moreover, any interruption could seriously harm one or more of our research, development or manufacturing programs, the
commercialization of any approved product or our clinical trial operations. For example, the current COVID-19 pandemic has, at points, caused an
interruption in our ongoing and planned clinical trials activities. In addition, the initial timeline for submission of our BLA for omidubicel was delayed, in
part, as a result of the impact of the COVID-19 pandemic on our operations. Moreover, at the end of 2021 and into 2022, tensions between the United
States and Russia escalated when Russia amassed large numbers of military ground forces and support personnel on the Ukraine-Russia border and, in
February 2022, Russia invaded Ukraine. In response, North Atlantic Treaty Organization, or NATO has deployed additional military forces to Eastern
Europe, including to Lithuania, and the Biden administration implemented certain sanctions against Russia. The invasion of Ukraine and the retaliatory
measures that have been taken, or could be taken in the future, by the United States, NATO, and other countries have created global security concerns that
could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could disrupt our supply chain,
adversely affect our ability to conduct ongoing and future clinical trials of our product candidates or commercialize our products. In addition, the conflict
has had significant ramifications on global financial markets, which may adversely impact our ability to raise capital on favorable terms or at all.
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We may not be successful in our efforts to identify, discover or license additional product candidates.
Although a substantial amount of our effort will focus on the continued clinical testing, potential approval and commercialization of omidubicel and
GDA-201, the success of our business also depends upon our ability to identify, discover or license additional product candidates, including within our NK-
cell pipeline. Our research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons,
including but not limited to the following:
● our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
● we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
● our product candidates may not succeed in preclinical or clinical testing;
● our product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or
unlikely to receive marketing approval;
● competitors may develop alternatives that render our product candidates obsolete or less attractive;
● product candidates we develop may be covered by third parties’ patents or other exclusive rights;
● the market for a product candidate may change during our development program so that such product may become unprofitable to continue to
develop;
● a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
● a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payers.
If any of these events occur, we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify,
license, or discover additional product candidates, which would have a material adverse effect on our business and could potentially cause us to cease
operations. Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts
and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
Our business and operations would suffer in the event of computer system failures, cyber-attacks or a deficiency in our cybersecurity.
Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage
from a variety of causes, including computer viruses, malware, intentional or accidental mistakes or errors by users with authorized access to our computer
systems, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, or attachments to
emails. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, non-U.S.
governments, extra-state actors and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions
from around the world have increased. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of
our drug development programs. For example, the loss or compromise of clinical trial data from completed or ongoing or planned clinical trials could result
in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security
breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur
material legal claims and liability, damage to our reputation, and the further development of our drug candidates could be delayed. Further, any breach, loss
or compromise of clinical study participant personal data may also subject us to civil fines and penalties, including under GDPR and relevant member state
law in the European Union, or, potentially, other relevant state and federal privacy laws in the United States.
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In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-
sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and
in government agencies have increased in recent years, and security industry experts and government officials have warned about the risks of hackers and
cyber-attacks targeting businesses such as ours. Computer hackers and others routinely attempt to breach the security of technology products, services and
systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data. We can
provide no assurance that our current IT systems, software, or third party services, or any updates or upgrades thereto will be fully protected against third-
party intrusions, viruses, hacker attacks, information or data theft or other similar threats.
Legislative or regulatory action in these areas is also evolving, and we may be unable to adapt our IT systems to accommodate these changes. We have
experienced and expect to continue to experience sophisticated attempted cyber-attacks of our IT networks. Although none of these attempted cyber-attacks
has had a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the
future.
We incur significant costs as a result of operating as a public company in the United States, and our management is required to devote substantial time
to compliance initiatives.
As a public company whose ordinary shares are listed in the United States, we are subject to an extensive regulatory regime, requiring us, among other
things, to maintain various internal controls and facilities and to prepare and file periodic and current reports and statements, including reports on the
effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Complying with these
requirements is costly and time consuming. In the event that we are unable to demonstrate compliance with our obligations as a public company in a timely
manner, or are unable to produce timely or accurate financial statements, we may be subject to sanctions or investigations by regulatory authorities, such as
the Securities and Exchange Commission, or the SEC, or The Nasdaq Global Market, and investors may lose confidence in our operating results and the
price of our ordinary shares could decline.
Our independent registered public accounting firm is not engaged to perform an audit of our internal control over financial reporting, and as long as we
remain an emerging growth company, as such term is defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we will be exempt
from the requirement to have an independent registered public accounting firm perform such audit. Accordingly, no such opinion was expressed or will be
expressed any during any such period. Once we cease to qualify as an emerging growth company, our independent registered public accounting firm will be
required to attest to our management’s annual assessment of the effectiveness of our internal controls over financial reporting, which will entail additional
costs and expenses.
In addition, we organize significant management functions in Boston, Massachusetts, where business expenses and salaries exceed the level of such
expenses in Israel.
International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing
business outside of the United States or Israel.
Other than substantial operations in Israel (as further described below), we currently have limited international operations, but our business strategy
incorporates potentially significant international expansion, particularly in anticipation of approval of our product candidates. We plan to retain sales
representatives and third-party distributors and conduct physician, infectious disease specialist, hospital pharmacist and patient association outreach
activities, as well as clinical trials, outside of the United States, EU and Israel. Doing business internationally involves a number of risks, including but not
limited to:
● multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws,
regulatory requirements and other governmental approvals, permits, and licenses;
● failure by us to obtain regulatory approvals for the use of our product candidates in various countries;
● additional potentially relevant third-party patent or other intellectual property rights;
● complexities and difficulties in obtaining protection and enforcing our intellectual property;
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● difficulties in staffing and managing international operations;
● complexities associated with managing multiple payer reimbursement regimes, government payers, price controls or patient self-pay systems;
● limits in our ability to penetrate international markets;
● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on
demand and payment for our products and exposure to foreign currency exchange rate fluctuations;
● natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of
trade, and other business restrictions;
● certain expenses including, among others, expenses for travel, translation and insurance; and
● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the
purview of the U.S. Foreign Corrupt Practices Act its books and records provisions, or its anti-bribery provisions.
Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.
We may be subject to extensive environmental, health and safety, and other laws and regulations in multiple jurisdictions.
Our business involves the controlled use, directly or indirectly through our service providers, of hazardous materials, various biological compounds
and chemicals; therefore, we, our agents and our service providers may be subject to various environmental, health and safety laws and regulations,
including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous, radioactive
and biological materials and wastes and the cleanup of contaminated sites. The risk of accidental contamination or injury from these materials cannot be
eliminated. If an accident, spill or release of any regulated chemicals or substances occurs, we could be held liable for resulting damages, including for
investigation, remediation and monitoring of the contamination, including natural resource damages, the costs of which could be substantial. We are also
subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-
borne pathogens and the handling of biohazardous materials and chemicals. Although we maintain workers’ compensation insurance to cover the costs and
expenses that may be incurred because of injuries to our employees resulting from the use of these materials, this insurance may not provide adequate
coverage against potential liabilities. Additional or more stringent federal, state, local or non-U.S. laws and regulations affecting our operations may be
adopted in the future. We may incur substantial capital costs and operating expenses and may be required to obtain consents to comply with any of these or
certain other laws or regulations and the terms and conditions of any permits or licenses required pursuant to such laws and regulations. For instance, we
have undergone inspections and obtained approvals from various governmental agencies. We hold a general business license from the City of Jerusalem
that is valid until December 31, 2022.
We also hold a toxic substances permit from the Ministry of Environmental Protection (the Hazardous Material Division) and a Certificate of GMP
Compliance of a Manufacturer from the Israeli Ministry of Health - Pharmaceutical Administration. Failure to renew any of the foregoing licenses and
permits may harm our on-going and future operations. In addition, fines and penalties may be imposed for noncompliance with environmental, health and
safety and other laws and regulations or for the failure to have, or comply with the terms and conditions of our business license, or required environmental
or other permits or consents.
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Our employees and independent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements.
We are exposed to the risk of fraud or other misconduct by our employees and independent contractors. Misconduct by these parties could include
intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we may establish,
comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing,
discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee and independent
contractor misconduct could also involve the improper use of information obtained in the course of clinical trials, including individually identifiable
information, creating fraudulent data in our preclinical studies or clinical trials or illegal misappropriation of product candidates. If our operations are found
to be in violation of any of these laws, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines,
exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity
oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, imprisonment, contractual damages, reputational harm,
diminished profits and the curtailment or restructuring of our operations. It is not always possible to identify and deter misconduct by employees and other
third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in
protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions
are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our
business, including the imposition of significant fines or other sanctions.
Under current Israeli law, we may not be able to enforce employees’ covenants not to compete and therefore may be unable to prevent our competitors
from benefiting from the expertise of some of our former employees.
We generally enter into non-competition agreements with our key employees, in most cases within the framework of their employment agreements.
These agreements prohibit our key employees, if they cease working for us, from competing directly with us or working for our competitors for a
limited period. Under applicable Israeli law, we may be unable to enforce these agreements or any part thereof. If we cannot enforce our noncompetition
agreements with our employees, then we may be unable to prevent our competitors from benefiting from the expertise of our former employees, which
could materially adversely affect our business, results of operations and ability to capitalize on our proprietary information.
We are vulnerable to interest rate risk with respect to the grants received from the Israel Innovation Authority
Since our incorporation, we have received grants from the IIA relating to various projects. We were members of Bereshit Consortium, sponsored by
IIA in which certain of our technologies were developed, such program does not require payments of royalties to the IIA, but all other restrictions under the
Innovation Law, such as local manufacturing obligations and know-how transfer limitations, as further detailed hereunder, are applicable to the know how
developed by us with the funding received in such consortium program. No royalties have been paid to the IIA in respect of any grant. Our total
outstanding obligation to the IIA, including the interest accrued through December 31, 2021, amounts to approximately $44.7 million.
The United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate, or LIBOR, announced that it will no longer
persuade or require banks to submit rates for LIBOR after January 1, 2022. The grants received from the IIA bear an annual interest rate based on the 12-
month LIBOR. Accordingly, there is considerable uncertainty regarding the interest accrued to the IIA grants. While it is not currently possible to
determine precisely whether, or to what extent, the withdrawal and replacement of LIBOR would affect us, the implementation of alternative benchmark
rates to LIBOR may increase our financial liabilities to the IIA. Management continues to monitor the status and discussions regarding LIBOR. We are not
yet able to reasonably estimate the expected impact. To date, the IIA has not issued any clarification regarding an alternative interest to be used instead of
the LIBOR.
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Risks Related to Commercialization of Our Product Candidates
We do not have experience producing our product candidates at commercial levels or operating a cGMP manufacturing facility and may not obtain the
necessary regulatory approvals or produce our product candidates at the quality, quantities, locations and timing needed to support commercialization.
The Israeli Ministry of Health issued a GMP certificate for our manufacturing facility at Kiryat Gat, Israel in July 2021 and we are working to establish
cGMP compliance under the FDA’s regulations. We do not have an extensive number of employees with the experience or ability to manufacture our
product candidates at commercial levels. We may encounter technical or scientific issues related to manufacturing or development that we may be unable to
resolve in a timely manner or with available funds. We also have not completed all of the characterization and validation activities necessary for
commercialization and regulatory approval of omidubicel. If we do not conduct all such necessary activities this year, our commercialization efforts will be
delayed.
We also may encounter problems hiring and retaining the experienced specialist scientific, quality control and manufacturing personnel needed to
operate our manufacturing process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory
requirements. Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including larger
pharmaceutical companies, which could limit our access to additional attractive development programs. Problems in our manufacturing process or facilities
also could restrict our ability to meet market demand for our product candidates.
If the market opportunities for our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business
may suffer.
Our projections of the number of people who have the potential to benefit from treatment with our product candidates are based on our beliefs and
estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics and other market research, and
may prove to be incorrect. Our target patient populations may be lower than expected, may not be otherwise amenable to treatment with our product
candidates or patients may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition,
results of operations and prospects. In addition, medical advances may reduce our target markets. For example, new processes and advances in oral
antibiotic medications or new operative procedures may limit the need for localized delivery systems like our product candidates. Further, advances in
treatments in the fields in which we are conducting research programs that reduce side effects and have better deliverability to target organs may limit the
market for our future product candidates.
We currently have limited marketing and sales organization. If we are unable to establish adequate sales and marketing capabilities to support the
potential commercial launch of omidubicel or enter into agreements with third parties to market and sell omidubicel, if approved, we may be unable to
generate any product revenue.
Although we have a chief commercialization officer to lead our efforts to commercialize omidubicel should it receive regulatory approval and we
decide to commercialize omidubicel ourselves, we currently have a limited sales and marketing organization, and we have limited experience selling and
marketing our product candidates. To successfully commercialize any product candidates that may result from our development programs, we will need to
develop these capabilities, either on our own or with others. If omidubicel or any other product candidate receives regulatory approval, we may establish a
sales and marketing organization independently or by utilizing experienced third parties with technical expertise and supporting distribution capabilities to
commercialize our product candidates in major markets, all of which will be expensive, difficult and time consuming. Any failure or delay in the
development of our internal sales, marketing and distribution capabilities or identification of appropriate strategic partnering would adversely impact our
ability to commercialize our product candidates.
Further, our initial estimate of the size of the required sales force may be materially more or less than the size of the sales force actually required to
effectively commercialize our product candidates. As such, we may be required to hire sales representatives and third-party partners to adequately support
the commercialization of our product candidates, or we may incur excess costs if we hire more sales representatives than necessary. With respect to certain
geographical markets, we may enter into collaborations with other entities to utilize their local marketing and distribution capabilities, but we may be
unable to enter into such agreements on favorable terms, if at all. We also may enter into collaborations with large pharmaceutical companies to develop
and commercialize product candidates. If our future collaborators do not commit sufficient resources to develop and commercialize our future products, if
any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our
business. We may compete with companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the
support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.
Our efforts to educate the medical community, including physicians, hospital pharmacists and infectious disease specialists, and third-party payers on
the benefits of our product candidates may require significant resources and may never be successful. If any of our product candidates are approved, but fail
to achieve market acceptance among physicians, patients or third-party payers, we will not be able to generate significant revenue from such product,
which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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Delays in establishing and obtaining regulatory approval of our manufacturing process and facility or disruptions in our manufacturing process may
delay or disrupt our product development and commercialization efforts.
We are working to establish our own cGMP compliant manufacturing facility at Kiryat Gat, Israel. We have completed construction on the facility, and
we are now working to qualify our manufacturing process and facility with the FDA’s cGMP regulations. Before we can begin to commercially
manufacture omidubicel or any product candidate in our facility, we must pass a pre-approval inspection of our manufacturing facility by the FDA before
omidubicel or any product candidate can obtain marketing approval. A manufacturing authorization must also be obtained from the appropriate regulatory
authorities in the European Union, Israel and worldwide. Such manufacturing authorizations must also be obtained for any third-party manufacturing
facility and process. In order to obtain approval, we will need to ensure that all our processes, methods and equipment are compliant with cGMP, and
perform extensive audits of vendors, contract laboratories and suppliers. If any of our vendors, contract laboratories or suppliers is found to be out of
compliance with cGMP, we may experience delays or disruptions in manufacturing while we work with these third parties to remedy the violation or while
we work to identify suitable replacement vendors. If we do not demonstrate to the satisfaction of the applicable regulator that our manufacturing facilities,
or those of our contract manufacturers, are in compliance with applicable requirements, we may be materially delayed in the development of our product
candidates, which would materially harm our business. The cGMP requirements govern quality control of the manufacturing process and documentation
policies and procedures. In complying with cGMP, we will be obligated to expend time, money and effort in production, record keeping and quality control
to assure that the product meets applicable specifications and other requirements. If we fail to comply with these requirements, we would be subject to
possible regulatory action and may not be permitted to sell any product candidate that we may develop. While we continue to work to establish the cGMP
compliance of our manufacturing facility at Kiryat Gat in Israel, we do not have another long-term partner for the manufacturing of omidubicel.
Qualifying our manufacturing facility is subject to other delays, including because of COVID-19 related shortages of labor and governmentally
imposed shut-downs. Unexpected problems in the qualification of our manufacturing facility may adversely impact our ability to provide supply for the
development and commercialization of omidubicel as well as our financial condition.
If we receive marketing approval for our product candidates, sales will be limited unless the product achieves broad market acceptance by physicians,
patients, third-party payers, hospital pharmacists and others in the medical community.
The commercial success of our product candidates will depend upon the acceptance of the product by the medical community, including physicians,
patients, healthcare payers and hospital personnel, including transplant teams and pharmacists. The degree of market acceptance of any approved product
will depend on a number of factors, including:
● the demonstration of clinical safety and efficacy of our product candidates in clinical trials;
● the efficacy, potential and perceived advantages of our product candidates over alternative treatments;
● the prevalence and severity of any adverse side effects;
● product labeling or product insert requirements of the FDA or other regulatory authorities, including any limitations or warnings contained in a
product’s approved labeling;
● distribution and use restrictions imposed by the FDA or agreed to by us as part of a mandatory or voluntary risk management plan;
● our ability to obtain third-party payer coverage and adequate reimbursement for our products;
● the willingness of patients to pay for drugs out of pocket in the absence of third-party coverage;
● the demonstration of the effectiveness of our product candidates in reducing the cost of treatment;
● the strength of marketing and distribution support;
● the timing of market introduction of competitive products;
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● the availability of products and their ability to meet market demand; and
● publicity concerning our product candidates or competing products and treatments.
There are a number of alternatives to our product candidates, including stem cell transplantation using cells from matched related donors, matched
unrelated donors, haploidentical donors or unmodified umbilical cord blood. If our product candidates are approved but do not achieve an adequate level of
acceptance by physicians, patients, healthcare payers and hospital personnel, including transplant teams and pharmacists, we may not generate sufficient
revenue from the product, and we may not become or remain profitable. In addition, our efforts to educate the medical community and third-party payers
on the benefits of our product candidates may require significant resources and may never be successful.
It may be difficult for us to profitably sell our product candidates if coverage and reimbursement for these products is limited by government authorities
and/or third-party payer policies.
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. In the
United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on
the extent to which third-party payers provide coverage, and establish adequate reimbursement levels, for such products. In the United States, third-party
payers include federal and state healthcare programs, private managed care providers, health insurers and other organizations.
The process for determining whether a third-party payer will provide coverage for a product may be separate from the process for setting the price of a
product or for establishing the reimbursement rate that such a payer will pay for the product. Third-party payers may limit coverage to specific products on
an approved list, or also known as a formulary, which might not include all of the FDA-approved products for a particular indication.
Third-party payers are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical products,
therapies and services, in addition to questioning their safety and efficacy.
We may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our products,
in addition to the costs required to obtain the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. Payer’s
decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, the determination of one payer to
provide coverage for a product does not assure that other payers will also provide such coverage for the product. Adequate third-party reimbursement may
not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.
Different pricing and reimbursement schemes exist in other countries. In the EU, governments influence the price of pharmaceutical products through
their pricing and reimbursement rules and control of national health care systems that in some countries subsidize a large part of the cost of those products
for consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has
been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-
effectiveness of a particular product candidate to then available therapies. Other EU member states allow companies to fix their own prices for medicines,
but monitor and control company profits. The downward pressure on health care costs has become very intense. As a result, increasingly high barriers are
being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on
pricing within a country.
The marketability of any of our product candidates for which we receive regulatory approval for commercial sale may suffer if the government and
third-party payers fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care in the United States has increased and we
expect will continue to increase the pressure on healthcare pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if
favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage
policies and reimbursement rates may be implemented in the future.
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In addition to any healthcare reform measures that may affect reimbursement, market acceptance and sales of our product candidates, if approved, will
depend on, in part, the extent to which the procedures utilizing our product candidates, performed by health care providers, will be covered by third-party
payers, such as government health care programs, commercial insurance and managed care organizations. In the event health care providers and patients
accept our product candidates as medically useful, cost effective and safe, there is uncertainty on how exactly our products will be reimbursed. Third-party
payers determine the extent to which new products will be covered as a benefit under their plans and the level of reimbursement for any covered product or
procedure that may utilize a covered product. Coverage will be dependent on FDA-approval and other factors; reimbursement may vary across payers
which is a risk for our product candidates. Establishment of reimbursement guidelines for products is difficult to predict at this time what third-party payers
will decide with respect to the coverage and reimbursement for our product candidates.
A primary trend in the U.S. healthcare industry and elsewhere has been cost containment, including price controls, restrictions on coverage and
reimbursement and requirements for substitution of less expensive products. Third-party payers decide which products and procedures they will pay for and
establish reimbursement and co-payment levels. Government and other third-party payers are increasingly challenging the prices charged for health care
products and procedures, examining the cost effectiveness of procedures, and the products used in such procedures, in addition to their safety and efficacy,
and payers limit coverage and reimbursement to the appropriate patient per a products label. We cannot be sure that coverage will be available for our
product candidates, if approved, or, if coverage is available, the level of direct or indirect reimbursement.
We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the
increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general,
particularly prescription drugs and other treatments, has become increasingly intense. As a result, high barriers exist to the successful commercialization of
new products. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in
additional downward pressure on the price that we may receive for any approved product.
Reimbursement by a third-party payer may depend upon a number of factors including the third-party payer’s determination that use of a product is:
● a covered benefit or part of a covered benefit under its health plan;
● safe, effective and medically necessary;
● appropriate for the specific patient;
● cost-effective; and
● neither experimental nor investigational.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal
decisions about reimbursement are typically made by The Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of
Health and Human Services, as CMS decides whether and to what extent products, and the procedures that utilize such products, will be covered and
reimbursed under Medicare. Private payers may follow CMS, but have their own methods and approval processes for determining reimbursement for new
products and the procedures that utilize such products. It is difficult to predict what CMS as well as other payers will decide with respect to reimbursement
for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products.
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In addition, under current Medicare hospital inpatient reimbursement policies CMS offers a process whereby manufacturers may apply for the
temporary New Technology Add-on Payment or NTAP program for a new medical technology when the applicable Diagnosis-Related Group, or DRG,
based inpatient prospective payment rate is inadequate to cover the cost of a new product. As part of our commercialization efforts, we are evaluating the
potential application for omidubicel to be eligible under the NTAP program. To obtain add-on payment, a technology must be considered “new,” represent
an advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare
beneficiaries, and data reflecting the cost of the new technology must not yet be available in the data used to recalibrate the DRGs and the sponsor much
show that admissions involving the furnishing of the technology exceed cost thresholds established by CMS for each applicable DRG. If an application is
approved, new technology add-on payments are made to hospitals for no less than two years and no more than three years. We must demonstrate the safety
and effectiveness of our technology to the FDA in addition to meeting CMS’s requirements for the NTAP program before add-on payments can be made,
and we cannot assure that CMS will agree to provide such incremental payments for omidubicel or any of our other product candidates.
Obtaining coverage and reimbursement approval for a product from a government or other third-party payer is a time-consuming and costly process
that could require us to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payer. We may not be able to
provide data sufficient to gain acceptance with respect to coverage and reimbursement. Further, no uniform policy requirement for coverage and
reimbursement exists among third-party payers in the United States. Similarly, health care providers enter into participation agreements with third-party
payers wherein reimbursement rates are negotiated. Therefore, coverage and reimbursement can differ significantly from payer to payer and health care
provider to health care provider. As a result, we cannot be sure that coverage or adequate reimbursement will be available for our product candidates, if
approved or procedures utilizing such products. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our
future products. If reimbursement is not available, or is available only to limited levels, we may not be able to commercialize our product candidates, or
achieve profitably at all, even if approved.
Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could have a material effect on our
business, financial condition, results of operations or prospects.
Our business exposes us to significant product liability risks inherent in the development, testing, manufacturing and marketing of therapeutic
treatments. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, such claims
could result in an FDA investigation of the safety and effectiveness of our products, our manufacturing processes and facilities or our marketing programs
and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used or
suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products,
injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources, substantial monetary awards to trial
participants or patients and a decline in our share price. We do not currently have product liability insurance and do not anticipate obtaining product
liability insurance until such time as we have received FDA or other comparable authority approval for a product and there is a product that is being
provided to patients outside of clinical trials. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities.
Furthermore, product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable
cost to protect us against losses caused by product liability claims that could have a material adverse effect on our business.
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Risks Related to Ownership of our Ordinary Shares
Our executive officers, directors and principal shareholders maintain the ability to exert significant control over matters submitted to our shareholders
for approval.
Certain of our executive officers, directors and holders of more than 5% of our voting securities beneficially owned as of December 31, 2021 hold
shares representing approximately 38.8% of our share capital. As a result, if these shareholders were to act together, they would be able to control all
matters submitted to our shareholders for approval, as well as our management and affairs. For example, these persons, if they act together, would control
the election of directors and approval of any merger, consolidation or sale of all or substantially all our assets. This concentration of voting power could
delay or prevent an acquisition of our company on terms that other shareholders may desire or result in management of our company that our public
shareholders disagree with.
The market price of our ordinary shares may fluctuate significantly, which could result in substantial losses by our investors.
The stock market in general, and the market for pharmaceutical companies in particular, has experienced extreme volatility that has often been
unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your ordinary shares at or above
the initial public offering price. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market
price of our ordinary shares:
● inability to obtain the approvals necessary to commence marketing of omidubicel or initiate further clinical trials of GDA-201;
● unsatisfactory results of clinical trials;
● announcements of regulatory approvals or the failure to obtain them, or specific label indications or patient populations for their use, or changes or
delays in the regulatory review process;
● announcements of therapeutic innovations or new products by us or our competitors;
● adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;
● changes or developments in laws or regulations, and payer reimbursement requirements applicable to any candidate product in any of our
platforms;
● any adverse changes to our relationship with manufacturers or suppliers, especially manufacturers of candidate products;
● any intellectual property infringement, misappropriation or other actions in which we may become involved;
● announcements concerning our competitors or the pharmaceutical industry in general;
● achievement of expected product sales and profitability or our failure to meet expectations;
● our commencement of, or involvement in, litigation;
● any changes in our board of directors or management; and
● the other factors described in this “Risk Factors” section.
If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our ordinary shares could decline
substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our shares to fluctuate substantially. We
believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future
performance.
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Further, the stock market in general, the Nasdaq Global Market and the market for biotechnology companies in particular, have experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like ours, including due to
coordinate buying and selling activities and market manipulation. Broad market and industry factors may negatively affect the market price of our ordinary
shares regardless of our actual operating performance. In addition, a systemic decline in the financial markets and related factors beyond our control may
cause our share price to decline rapidly and unexpectedly. Price volatility of our ordinary shares might be worse if the trading volume of our ordinary
shares is low. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation. If we were involved in
securities litigation, it could have a substantial cost and divert resources and attention of management from our business, even if we are successful.
Sales of a substantial number of shares of our ordinary shares in the public market, or the perception that these sales might occur, could depress the
market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the
effect that sales may have on the prevailing market price of our ordinary shares. In addition, we have registered all ordinary shares that we may issue under
our equity compensation plans, and, as such, these shares can be freely sold in the public market upon issuance.
Moreover, the liquidity of our ordinary shares may be limited, not only in terms of the number of ordinary shares that can be bought and sold at a given
price, but by potential delays in the timing of executing transactions in our ordinary shares and a reduction in security analyst and media’s coverage of our
company, if any. These factors may result in lower prices for our ordinary shares than might otherwise be obtained and could also result in a larger spread
between the bid and ask prices for our ordinary shares. In addition, without a large float, our ordinary shares will be less liquid than the stock of companies
with broader public ownership and, as a result, the trading prices of our ordinary shares may be more volatile. In the absence of an active public trading
market, an investor may be unable to liquidate its investment in our ordinary shares. Trading of a relatively small volume of our ordinary shares may have a
greater impact on the trading price of our ordinary shares than would be the case if our public float were larger. We cannot predict the prices at which our
ordinary shares will trade in the future.
If we are or become classified as a passive foreign investment company, our U.S. shareholders may suffer adverse tax consequences as a result.
Generally, for any taxable year, if at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets
that produce passive income or are held for the production of passive income, including cash, we would be characterized as a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes. For purposes of these tests, passive income includes dividends, interest gains from commodities
and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income (including amounts derived by
reason of the temporary investment of funds raised in offerings of our shares) and rents and royalties other than rents and royalties which are received from
unrelated parties in connection with the active conduct of a trade or business. If we are characterized as a PFIC, our U.S. shareholders may suffer adverse
tax consequences, including having gains realized on the sale of our ordinary shares treated as ordinary income, rather than capital gain, the loss of the
preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S. holders, and having interest charges apply to
distributions by us and gains from the sales of our shares.
Our status as a PFIC will depend on the nature and composition of our income and the nature, composition and value of our assets (which may be
determined based on the fair market value of each asset, with the value of goodwill and going concern value determined in large part by reference to the
market value of our common shares, which may be volatile). Based upon the value of our assets, including any goodwill, and the nature and composition of
our income and assets, we do not believe that we were classified as a PFIC for the taxable year ending December 31, 2021. Because the determination of
whether we are a PFIC for any taxable year is a factual determination made annually after the end of each taxable year, there can be no assurance that we
will not be considered a PFIC in any taxable year. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status for our taxable year
ended December 31, 2021, and also expresses no opinion with regard to our expectations regarding our PFIC status in the future.
The tax consequences that would apply if we are classified as a PFIC would also be different from those described above if a U.S. shareholder were
able to make a valid qualified electing fund, or QEF, election. At this time, we do not expect to provide U.S. shareholders with the information necessary
for a U.S. shareholder to make a QEF election. Prospective investors should assume that a QEF election will not be available.
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If a United States person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a United States person is treated as owning (directly, indirectly or constructively through the application of attribution rules) at least 10% of the
value or voting power of our shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in
our group (if any). Because our group includes one or more U.S. subsidiaries, certain of our current or future non-U.S. subsidiaries could be treated as
controlled foreign corporations (regardless of whether we are or are not treated as a controlled foreign corporation). A United States shareholder of a
controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of the controlled foreign
corporation’s “Subpart F income”, “global intangible low-taxed income” and investments in U.S. property, whether or not such controlled foreign
corporation makes any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not
be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. A failure to comply
with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S.
federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in
determining whether any of our current or future non-U.S. subsidiaries are treated as a controlled foreign corporation or whether such investor is treated as
a United States shareholder with respect to any of such controlled foreign corporations or furnish to any United States shareholders information that may be
necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult their own advisors regarding
the potential application of these rules to its investment in the shares.
The intended tax effects of our corporate structure and intercompany arrangements depend on the application of the tax laws of various jurisdictions
and on how we operate our business.
Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of
business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rates could be
adversely affected by changes in foreign currency exchange rates or by changes in the relevant tax, accounting and other laws, regulations, principles and
interpretations. As we intend to operate in numerous countries and taxing jurisdictions, the application of tax laws can be subject to diverging and
sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have
conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes,
or with respect to the valuation of intellectual property.
If tax authorities in any of the countries in which we operate were to successfully challenge our transfer prices as not reflecting arms’ length
transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result
in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax
the same income, potentially resulting in double taxation. If tax authorities were to allocate income to a higher tax jurisdiction, subject our income to
double taxation or assess interest and penalties, it would increase our consolidated tax liability, which could adversely affect our financial condition, results
of operations and cash flows. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a
taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful could increase our
expected tax liability in one or more jurisdictions.
Future changes to tax laws could materially adversely affect our company and reduce net return to our shareholders
Tax laws are dynamic and subject to change as new laws are passed and interpretations of the law are issued or applied. Such changes may include (but
are not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid.
We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such
changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax
rates in the future in countries where we have operations, reduce post-tax returns to our shareholder, and increase the complexity, burden and cost of tax
compliance.
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The tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced in the future, which could
increase our costs and taxes.
Some of our operations in Israel may entitle us to certain tax benefits under the Law for the Encouragement of Capital Investments, 5719-1959, or the
Investment Law, once we begin to produce revenue. If we do not meet the requirements for maintaining these benefits, they may be reduced or cancelled
and the relevant operations would be subject to Israeli corporate tax at the standard rate, which is set at 23% in 2021 and thereafter. In addition to being
subject to the standard corporate tax rate, we could be required to refund any tax benefits that we will receive, plus interest and penalties thereon. Even if
we continue to meet the relevant requirements, the tax benefits that our current “Preferred Enterprise” is entitled to may not be continued in the future at
their current levels or at all. If these tax benefits were reduced or eliminated, the amount of taxes that we will pay would likely increase, as all our
operations would consequently be subject to corporate tax at the standard rate, which could adversely affect our results of operations. Additionally, if we
increase our activities outside of Israel, for example, by way of acquisitions, our increased activities may not be eligible for inclusion in Israeli tax benefits
programs.
We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid cash dividends on our ordinary shares. We currently anticipate that we will retain future earnings for the development,
operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. As a result, capital
appreciation, if any, of our ordinary shares will be investors’ sole source of gain for the foreseeable future. In addition, Israeli law limits our ability to
declare and pay dividends, and may subject our dividends to Israeli withholding taxes.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely
change their recommendations or publish negative reports regarding our business or our ordinary shares, our share price and trading volume could be
negatively impacted.
The trading market for our ordinary shares is influenced by the research and reports that industry or securities analysts publish about us, our business,
our market or our competitors. We do not have any control over these analysts, and we cannot provide any assurance that analysts will continue to cover us
or provide favorable coverage. If any of the analysts who cover us adversely change their recommendation regarding our shares, or provide more favorable
relative recommendations about our competitors, our share price would likely decline. If any analyst who cover us were to cease coverage of our company
or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to
decline.
We are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary
shares less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements that
are applicable to other public companies that are not emerging growth companies. For as long as we remain an emerging growth company, which we
expect to continue until we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public
companies that are not “emerging growth companies.” These exemptions include:
● being permitted to provide only two years of audited financial statements, in addition to any required unaudited condensed consolidated interim
financial statements, with correspondingly;
● not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory
audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
● reduced disclosure obligations regarding executive compensation; and
● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.
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We may take advantage of these provisions until such time that we are no longer an emerging growth company. We will cease to be an emerging
growth company upon the earlier to occur of: (1) the last day of our fiscal year following the fifth anniversary of the date of our October 2018 initial public
offering; (2) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (2) the date on which we have issued more
than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the
rules of the SEC. We may choose to take advantage of some but not all of these reduced burdens, and therefore the information that we provide holders of
our ordinary shares may be different than the information you might receive from other public companies in which you hold equity. In addition, Section
107 of the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or
revised accounting standards applicable to public companies. However, given that we currently report and expect to continue to report under IFRS as issued
by the IASB, the extended transition period available to emerging growth companies that report under GAAP is inapplicable to us.
When we are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed
above. We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some
investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be
more volatile.
We must meet the Nasdaq Global Market’s continued listing requirements and comply with the other Nasdaq rules, or we may risk delisting. Delisting
could negatively affect the price of our ordinary shares, which could make it more difficult for us to sell securities in a financing and for you to sell
your ordinary shares.
We are required to meet the continued listing requirements of the Nasdaq Global Market and comply with the other Nasdaq rules, including those
regarding director independence and independent committee requirements, minimum shareholders’ equity, minimum share price and certain other corporate
governance requirements. If we do not meet these continued listing requirements, our ordinary shares could be delisted. Delisting of our ordinary shares
from the Nasdaq Global Market would cause us to pursue eligibility for trading on other markets or exchanges, or on the pink sheets. In such case, our
shareholders’ ability to trade, or obtain quotations of the market value of, our ordinary shares would be severely limited because of lower trading volumes
and transaction delays. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our securities. There can be no
assurance that our ordinary shares, if delisted from the Nasdaq Global Market in the future, would be listed on a national securities exchange or quoted on a
national quotation service, the OTCBB or the pink sheets. Delisting from the Nasdaq Global Market, or even the issuance of a notice of potential delisting,
would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our ordinary shares,
reduce security analysts’ coverage of us and diminish investor, supplier and employee confidence. In addition, as a consequence of any such delisting, our
share price could be negatively affected and our shareholders would likely find it more difficult to sell, or to obtain accurate quotations as to the prices of,
our ordinary shares.
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Risks Related to Israeli Law and Our Operations in Israel
Significant parts of our operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military
conditions in Israel.
We have substantial operations in Israel, including our research and development facilities and our manufacturing facilities, that may be influenced by
regional instability and extreme military tension. Accordingly, political, economic and military conditions in Israel and the surrounding region could
directly affect our business. Any armed conflicts, political instability, terrorism, cyberattacks or any other hostilities involving Israel or the interruption or
curtailment of trade between Israel and its present trading partners could affect adversely our operations.
Ongoing and revived hostilities or other Israeli political or economic factors, could prevent or delay shipments of our products, harm our operations
and product development and cause any future sales to decrease. In the event that hostilities disrupt the ongoing operation of our facilities or the airports
and seaports on which we depend to import and export our supplies and products, our operations may be materially adverse affected.
Our operations may be disrupted as a result of the obligation of management or key personnel or consultants to perform military service.
Many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age
of 40 (or older, for reservists who are military officers or who have 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. It is possible that there will be military
reserve duty call-ups in the future. Our operations could be disrupted by such call-ups, which may include the call-up of members of our management.
Such disruption could materially adversely affect our business, financial condition and results of operations.
Because we incur a portion of our expenses in currencies other than the U.S. dollar, our financial condition and results of operations may be harmed
by currency fluctuations and inflation.
While our reporting and functional currency is the U.S. dollar, we pay a meaningful portion of our expenses in NIS, Euros and other currencies. All of
the salaries of our employees, our general and administrative expenses (including rent for our real property facility in Israel), and the fees that we pay to
certain of our partners, are denominated in NIS. Certain of our suppliers are located in Europe and are paid in Euros. As a result, we are exposed to the
currency fluctuation risks relating to the denomination of our future expenses in U.S. dollars. More specifically, if the U.S. dollar becomes devalued against
the NIS or the Euro, our NIS- or Euro- denominated expenses will be greater than anticipated when reported in U.S. dollars. Inflation in Israel compounds
the adverse impact of such devaluation by further increasing the amount of our Israeli expenses. Israeli inflation may also (in the future) outweigh the
positive effect of any appreciation of the U.S. dollar relative to the NIS, if, and to the extent that, it outpaces such appreciation or precedes such
appreciation. The Israeli rate of inflation has not had a material adverse effect on our financial condition during 2020 or 2021. Given our general lack of
currency hedging arrangements to protect us from fluctuations in the exchange rates of the NIS or the Euro and other non-U.S. currencies in relation to the
U.S. dollar (and/or from inflation of such non-U.S. currencies), we may be exposed to material adverse effects from such movements. We cannot predict
any future trends in the rate of inflation in Israel or in Europe or the rate of devaluation (if any) of the U.S. dollar against the NIS or the Euro.
Provisions of Israeli law and our amended and restated articles of association may delay, prevent or make undesirable an acquisition of all or a
significant portion of our shares or assets.
Certain provisions of Israeli law and our amended and restated articles of association could have the effect of delaying or preventing a change in
control and may make it more difficult for a third-party to acquire us or for our shareholders to elect different individuals to our board of directors, even if
doing so would be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. For
example, our amended and restated articles of association provide that our directors are elected on a staggered basis, such that a potential acquirer cannot
readily replace our entire board of directors at a single annual general shareholder meeting. In addition, Israeli corporate law regulates mergers and requires
that a tender offer be affected when more than a specified percentage of shares in a company are purchased.
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Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does
not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. With respect to certain mergers, Israeli tax law may impose certain
restrictions on future transactions, including with respect to dispositions of shares received as consideration, for a period of two years from the date of the
merger.
Furthermore, under the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984 (formerly known as
the Law for the Encouragement of Research and Development in Industry 5744-1984), and the regulations and guidelines promulgated thereunder, or the
Innovation Law, to which we are subject due to our receipt of grants from the Israel Innovation Authority, or IIA (formerly known as the Office of the
Chief Scientist of the Ministry of Economy and Industry, or the OCS), a recipient of IIA grants such as us must report to IIA regarding any change of
control of our company or regarding any change in the holding of the means of control of our company which results in any non- Israeli citizen or resident
becoming an “interested party”, as defined in the Innovation Law, in our company, and in the latter event, the non-Israeli citizen or resident will be required
to execute an undertaking in favor of IIA, in a form prescribed by IIA, acknowledging the restrictions imposed by such law and agreeing to abide by its
terms.
Investors may have difficulties enforcing a U.S. judgment, including judgments based upon the civil liability provisions of the U.S. federal securities
laws against us, or our executive officers and directors or asserting U.S. securities laws claims in Israel.
Not all our directors or officers are residents of the United States and most of their and our assets are located outside the United States. Service of
process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S.
directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be
difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S.
federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors
because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine
that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact,
which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in
Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on
judgments rendered against us or our non-U.S. officers and directors.
Moreover, among other reasons, including but not limited to, fraud or absence of due process, or the existence of a judgment which is at variance with
another judgment that was given in the same matter if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an
Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts
(subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel.
Your liabilities and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the U.S. law that
governs the liabilities and responsibilities of shareholders of U.S. corporations.
We are incorporated under Israeli law. The rights and responsibilities of holders of our ordinary shares are governed by our amended and restated
articles of association and the Israeli Companies Law 5759-1999, or Companies Law. These rights and responsibilities differ in some respects from the
rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli
company has to act in good faith in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders and to
refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and class meetings,
on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers, and transactions requiring shareholders’
approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to
determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the company, or has
other powers toward the company, has a duty of fairness toward the company. However, Israeli law does not define the substance of this duty of fairness.
Because Israeli corporate law has undergone extensive revision in recent years, there is little case law available to assist in understanding the
implications of these provisions that govern shareholder behavior.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our principal executive offices are located at 116 Huntington Avenue, Boston, Massachusetts 02116. We also maintain an office at 5 Nahum Heftsadie
Street, Givaat Shaul, Jerusalem 91340, Israel, where we lease an approximately 1,300 square foot facility. This facility houses our administrative
headquarters, research and development laboratories and pilot manufacturing facility. Additionally, we maintain an office at 673 Boylston Street, Boston,
Massachusetts.
We believe that our existing facilities are adequate to meet our current needs, and that suitable additional or alternative spaces will be available in the
future on commercially reasonable terms.
We also have a lease agreement for an approximately 52,000 square foot facility in Kiryat Gat, Israel, where we recently completed construction for a
planned commercial-grade manufacturing facility. The Israeli Ministry of Health issued a GMP certificate and we are working to establish cGMP
compliance under the FDA’s regulations for this facility.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become party to litigation or other legal proceedings that we consider to be part of the ordinary course of business. We are
not currently party to any material legal proceedings.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information and Holders
Our ordinary shares have been listed on the Nasdaq Global Market under the symbol “GMDA” since October 26, 2018.
As of March 24, 2022, we had 10,724 shareholders of record.
Material Israeli Tax Considerations
The following is a summary of the material Israeli tax laws applicable to us, and some Israeli Government programs benefiting us. This section also
contains a discussion of some Israeli tax consequences to persons owning our ordinary shares. This summary does not discuss all the aspects of Israeli tax
law that may be relevant to a 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 traders in securities or persons that own, directly or indirectly, 10% or more of our
outstanding voting capital, all of whom are subject to special tax regimes not covered in this discussion. Some parts of this discussion are based on a new
tax legislation which has not been subject to judicial or administrative interpretation. The discussion should not be construed as legal or professional tax
advice and does not cover all possible tax considerations.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER TAX CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY
NON-U.S., STATE OR LOCAL TAXES.
General Corporate Tax Structure in Israel
Israeli resident companies are generally subject to corporate tax on their taxable income at the rate of 23% in 2021 tax year and thereafter. However,
the effective tax rate payable by a company that derives income from a Preferred Enterprise or a Technology Enterprise (as discussed below) may be
considerably less. Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate.
Law for the Encouragement of Industry (Taxes), 1969
The Law for the Encouragement of Industry (Taxes), 1969, or the Industry Encouragement Law, provides certain tax benefits for an “Industrial
Company”. The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident company incorporated in Israel, of which 90% or
more of its income in any tax year, other than income from certain government loans, is derived from an “Industrial Enterprise” owned by it and located in
Israel or in the “Area”, in accordance with the definition in the section 3A of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance. An
“Industrial Enterprise” is defined as an enterprise which is held by an Industrial Company whose principal activity in any given tax year is industrial
production.
The following tax benefits, among others, are available to Industrial Companies:
● amortization over an eight-year period of the cost of patents and rights to use a patent and know-how that were purchased in good faith and are
used for the development or advancement of the Industrial Enterprise, commencing from the tax year where the Industrial Enterprise began to use
them;
● under certain conditions, the right to elect to file consolidated tax returns with Israeli Industrial Companies controlled by it; and
● expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the initial public offering.
We believe that we qualify as an “Industrial Company” within the meaning of the Industry Encouragement Law. There can be no assurance that we
will continue to qualify as an Industrial Company or that the benefits described above will be available to us in the future.
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Tax Benefits under the Law for the Encouragement of Capital Investments, 1959
The Law for the Encouragement of Capital Investments, 1959, generally referred to as the “Investment Law”, provides certain incentives for capital
investments in production facilities (or other eligible assets).
The Investment Law was significantly amended several times over the recent years, with the three most significant changes effective as of April 1,
2005, referred to in this annual report on Form 20-F as the 2005 Amendment, as of January 1, 2011, referred to in this annual report on Form 20-F as the
2011 Amendment, and as of January 1, 2017, referred to in this annual report on Form 20-F as the 2017 Amendment. Pursuant to the 2005 Amendment, tax
benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits
granted subsequently are subject to the provisions of the amended Investment Law. Similarly, the 2011 Amendment introduced new benefits to replace
those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to benefits
under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certain conditions
are met, or elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment apply. The 2017 Amendment introduces new
benefits for Technology Enterprises, alongside the existing tax benefits. We did not utilize any of the benefits for which we were eligible under the
Investment Law prior to the 2011 Amendment, and starting in the 2017 tax year we elected to apply for the new benefits under the 2011 Amendment.
Tax benefits under the 2011 Amendment
On December 29, 2010, the Israeli Parliament approved the 2011 Amendment. The 2011 Amendment significantly revised the tax incentive regime in
Israel and commenced on January 1, 2011.
The 2011 Amendment introduced new tax benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms
are defined in the Investment Law) as of January 1, 2011. The definition of a Preferred Company includes a company incorporated in Israel that is not fully
owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed from Israel.
A Preferred Company is entitled to a reduced corporate tax rate with respect to the income attributed to the Preferred Enterprise, at the following rates:
Tax Year
2011-2012
2013
2014-2016
2017 onwards(1)
Development
Region “A”
Other Areas
within Israel
10%
7%
9%
7.5%
15%
12.5%
16%
16%
(1) In December 2016, the Israeli Parliament (the Knesset) approved an amendment to the Investments Law pursuant to which the tax rate applicable to
Preferred Enterprises in Development Region “A” would be reduced to 7.5% as of January 1, 2017.
The classification of income generated from the provision of usage rights in know-how or software that were developed in the Preferred Enterprise, as
well as royalty income received with respect to such usage, as preferred income is subject to the issuance if a pre-ruling from the Israel Tax Authority
stipulates that such income is associated with the productive activity of the Preferred Enterprise in Israel.
Dividends distributed from income which is attributed to a “Preferred Enterprise” will be subject to withholding tax at source at the following rates: (i)
Israeli resident corporations – 0%, (although, if such dividends are subsequently distributed to individuals or a non-Israeli company, the below will apply)
(ii) Israeli resident individuals – 20% (iii) non-Israeli residents (individuals and corporations) - 20%(subject to the receipt in advance of a valid certificate
from the Israel Tax Authority allowing for a reduced tax rate, 20%, or such lower rate as may be provided in an applicable tax treaty).
The 2011 Amendment also revised the grant track to apply only to the approved programs located in Development Region “A” and shall provide not
only cash grants (as prior to the 2011 Amendment) but also the granting of loans. The rates for grants and loans shall not be fixed but up to 20% of the
amount of the approved investment (may be increased with additional 4%). In addition, a company owning a Preferred Enterprise under the grant track may
be entitled also to the tax benefits which are prescribed for a Preferred Enterprise.
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New Tax Benefits under the 2017 Amendment that became Effective on January 1, 2017.
The 2017 Amendment was enacted as part of the Economic Efficiency Law that was published on December 29, 2016, and is effective as of January 1,
2017. The 2017 Amendment provides new tax benefits for two types of “Technology Enterprises”, as described below, and is in addition to the other
existing tax beneficial programs under the Investment Law.
The 2017 Amendment provides that a technology company satisfying certain conditions will qualify as a “Preferred Technology Enterprise” and will
thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technology Income”, as defined in the Investment Law. The tax
rate is further reduced to 7.5% for a Preferred Technology Enterprise located in Development Region “A”. In addition, a Preferred Technology Company
will enjoy a reduced corporate tax rate of 12% on capital gain derived from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment
Law) to a related foreign company if the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS
200 million, and the sale receives prior approval from IIA.
The 2017 Amendment further provides that a technology company satisfying certain conditions will qualify as a “Special Preferred Technology
Enterprise” (an enterprise for which, among others, total consolidated revenues of its parent company and all subsidiaries is at least NIS 10 billion) and will
thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technology Income” regardless of the company’s geographic location within Israel. In
addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate of 6% on capital gain derived from the sale of certain
“Benefitted Intangible Assets” to a related foreign company if the Benefitted Intangible Assets were either developed by the Special Preferred Technology
Enterprise or acquired from a foreign company on or after January 1, 2017, and the sale received prior approval from IIA. A Special Preferred Technology
Enterprise that acquires Benefitted Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least
ten years, subject to certain approvals as specified in the Investment Law.
Dividends distributed by a Preferred Technology Enterprise or a Special Preferred Technology Enterprise to Israeli shareholders, paid out of Preferred
Technology Income, are generally subject to withholding tax at source at the rate of 20% (in the case of non-Israeli shareholders - subject to the receipt in
advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate, 20%, or such lower rate as may be provided in an applicable tax
treaty). However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if such dividends are subsequently
distributed to individuals or a non-Israeli company, the aforesaid will apply). If such dividends are distributed to a foreign company and other conditions
are met, the withholding tax rate will be 4% (or a lower rate under a tax treaty, if applicable, subject to the receipt in advance of a valid certificate from the
Israel Tax Authority allowing for a reduced tax rate).
We are examining the impact of the 2017 Amendment and the degree to which we will qualify as a Preferred Technology Enterprise or Special
Preferred Technology Enterprise, and the amount of Preferred Technology Income that we may have, or other benefits that we may receive from the 2017
Amendment.
Taxation of the Company Shareholders
Capital Gains
Capital gain tax is imposed on the disposal of capital assets by an Israeli resident, and on the disposal of such assets by a non-Israel resident if those
assets are either (i) located in Israel, (ii) are shares or a right to a share in an Israeli resident corporation, or (iii) represent, directly or indirectly, rights to
assets located in Israel, unless a tax treaty between Israel and the seller’s country of residence provides otherwise. The Ordinance distinguishes between
“Real Capital Gain” and the “Inflationary Surplus”. Real Capital Gain is the excess of the total capital gain over Inflationary Surplus computed generally
on the basis of the increase in the Israeli Consumer Price Index (“CPI”) between the date of purchase and the date of disposal.
The Real Capital Gain accrued by individuals on the sale of our ordinary shares (that were purchased after January 1, 2012, whether listed on a stock
exchange or not) will be taxed at the rate of 25%. However, if such shareholder is a “Controlling Shareholder” (i.e., a person who holds, directly or
indirectly, alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, 10% or more of one of
the Israeli resident company’s means of control) at the time of sale or at any time during the preceding twelve (12) months period and/or claims a deduction
for interest and linkage differences expenses in connection with the purchase and holding of such shares, such gain will be taxed at the rate of 30%.
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The Real Capital Gain derived by corporations will be generally subject to the ordinary corporate tax (23% in 2021 and thereafter).
Individual shareholders dealing in securities, or to whom such income is otherwise taxable as ordinary business income are taxed in Israel at their
marginal tax rates applicable to business income (up to 47% in 2021 and thereafter).
Notwithstanding the foregoing, capital gain derived from the sale of our ordinary shares by a non-Israeli resident (whether an individual or a
corporation) shareholder generally should be exempt under the Ordinance from Israeli taxation provided, among other things, that the following conditions
are met: (i) the shares were purchased upon or after the Company was listed for trading on Nasdaq; (ii) such gains were not derived from a permanent
business or business activity that the non-Israeli resident maintains in Israel, and (iii) neither such shareholders nor the particular gain are not subject to the
Israeli Income Tax Law (Inflationary Adjustments) 5745-1985. These provisions dealing with capital gain are not applicable to a person whose gains from
selling or otherwise disposing of the shares are deemed to be business income. In addition, non-Israeli corporations will not be entitled to the foregoing
exemptions if an Israeli resident (i) has a controlling interest of more than 25% in such non-Israeli corporation or (ii) is the beneficiary of or is entitled to
25% or more of the revenue or profits of such non-Israeli corporation, whether directly or indirectly.
In addition, the sale of shares may be exempt from Israeli capital gain tax under the provisions of an applicable tax treaty (subject to the receipt in
advance of a valid certificate from the Israel Tax Authority allowing for an exemption). For example, the U.S.-Israel Double Tax Treaty generally exempts
U.S. resident holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the U.S.-Israel Double Tax Treaty, or a
Treaty U.S. Resident, from Israeli capital gain tax in connection with such sale, provided that (i) the U.S. resident owned, directly or indirectly, less than
10% of an Israeli resident company’s voting power at any time within the 12 month period preceding such sale, subject to certain conditions; (ii) the seller,
being an individual, is present in Israel for a period or periods of less than 183 days in the aggregate at the taxable year; and (iii) the capital gain from the
sale, exchange or disposition was not derived through a permanent establishment that the U.S. resident maintains in Israel, (iv) the capital gains arising
from such sale, exchange or disposition is not attributed to real estate located in Israel; or (v) the capital gains arising from such sale, exchange or
disposition is not attributed to royalties. If any such case occurs, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to
the extent applicable. However, under the U.S.-Israel Tax Treaty, such Treaty U.S. Resident would be permitted to claim a credit for such taxes against U.S.
federal income tax imposed on any gain from such sale, exchange or disposition, under the circumstances and subject to the limitations specified in the
U.S.-Israel Double Tax Treaty.
In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be
subject to withholding of Israeli tax at source. 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 time of sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form
of a merger or otherwise, the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by
this authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli resident, and, in the absence of such
declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.
Either the purchaser, the Israeli stockbrokers or financial institution through which the shares are held is obliged, subject to the above mentioned
exemptions, to withhold tax upon the sale of securities on the amount of the consideration paid upon the sale of the securities at the rate of 25% in respect
of an individual, or at a rate of corporate tax, in respect of a corporation (23% in 2021 and thereafter).
At the sale of securities traded on a stock exchange a detailed return, including a computation of the tax due, must be filed and an advanced payment
must be paid on January 31 and July 31 of every tax year in respect of sales of securities made within the previous six months. However, if all tax due was
withheld at source according to applicable provisions of the Ordinance and regulations promulgated thereunder the aforementioned return need not be filed
provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income
in Israel with respect to which a tax return is required to be filed and (iii) the taxpayer is not obliged to pay excess tax (as further explained below); and no
advance payment must be paid. Capital gain is also reportable on the annual income tax return.
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Dividend Policy
We have never declared or paid any cash dividends to our shareholders of our ordinary shares, and we do not anticipate or intend to pay cash dividends
in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors in compliance with applicable
legal requirements and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual restrictions,
capital requirements, business prospects, our strategic goals and plans to expand our business, applicable law and other factors that our board of directors
may deem relevant.
The Israeli Companies Law imposes further restrictions on our ability to declare and pay dividends. Payment of dividends may be subject to Israeli
withholding taxes.
The Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance, generally provides that a non-Israeli resident (either individual or
corporation) is subject to an Israeli income tax on the receipt of dividends at the rate of 25% (30% if the dividends recipient is a “Controlling Shareholder”
(as defined above), at the time of distribution or at any time during the preceding 12 months period) or 20% if the dividend is distributed from income
attributed to Preferred Enterprise. Such dividends are generally subject to Israeli withholding tax at a rate of 25% so long as the shares are registered with a
Nominee Company (whether the recipient is a Controlling Shareholder or not), and 20% if the dividend is distributed from income attributed to a Preferred
Enterprise (in the case of non-Israeli shareholders - subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate, 20%,
or such lower rate as may be provided in an applicable tax treaty); If the dividend is attributable partly to income derived from a Preferred Enterprise, and
partly from other sources of income, the income tax rate will be a blended rate reflecting the relative portions of the types of income. We cannot assure you
that we will designate the profits that we may distribute in a way that will reduce shareholders tax liability.
For example, under the U.S.-Israel Double Tax Treaty the following rates will apply in respect of dividends distributed by an Israeli resident company
to a Treaty U.S. Resident: (i) if the Treaty U.S. Resident is a corporation which holds during that portion of the taxable year which precedes the date of
payment of the dividend and during the whole of its prior taxable year (if any), at least 10% of the outstanding shares of the voting shares of the Israeli
resident paying corporation and not more than 25% of the gross income of the Israeli resident paying corporation for such prior taxable year (if any)
consists of certain type of interest or dividends – the maximum tax rate of withholding is 12.5%, and (ii) in all other cases, the tax rate is 25%, or the
domestic rate (if such is lower). The aforementioned rates under the Israel U.S. Double Tax Treaty will not apply if the dividend income was derived
through a permanent establishment that the Treaty U.S. Resident maintains in Israel. U.S. residents who are subject to Israeli withholding tax on a dividend
may be entitled to a credit or deduction for United States federal income tax purposes in the amount of the taxes withheld, subject to detailed rules
contained in U.S. tax legislation.
A non-Israeli resident who receives dividend income derived from or accrued from Israel, from which the full amount of tax was withheld at source, is
generally exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from
business conducted in Israel by the taxpayer, and (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is
required to be filed and (iii) the taxpayer is not obliged to pay excess tax (as further explained below).
Payers of dividends on our shares, including the Israeli shareholder effectuating the transaction, or the financial institution through which the securities
are held, are generally required, subject to any of the foregoing exemption, reduced tax rates and the demonstration of a shareholder of his, her or its
foreign residency, to withhold taxes upon the distribution of dividends at a rate of 25% provided that the shares are registered with a Nominee Company
(for corporations and individuals).
Excess Tax
Individuals who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject to an additional
tax at a rate of 3% on annual income exceeding NIS 647,640 for 2021, which amount is linked to the annual change in the Israeli consumer price index,
including, but not limited to, dividends, interest and capital gain.
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Foreign Exchange Regulations
Non-residents of Israel who hold our ordinary shares are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and
winding up of our affairs, repayable in non-Israeli currency at the rate of exchange prevailing at the time of conversion. However, Israeli income tax is
generally required to have been paid or withheld on these amounts. In addition, the statutory framework for the potential imposition of currency exchange
control has not been eliminated, and may be restored at any time by administrative action.
Estate and Gift Tax
Israeli law presently does not impose estate or gift taxes.
Recent Sales of Unregistered Securities
On February 16, 2021, Gamida Cell Inc. sold $75 million of 5.875% convertible senior notes due in 2026 (the “notes”) to certain funds managed
by Highbridge Capital Management, LLC, which funds were accredited investors and qualified institutional buyers. The notes were sold at 100% of the
principal amount thereof, are senior unsecured obligations of ours and will accrue interest at a rate of 5.875% per year. Subject to certain limitations, the
holders of the notes can elect to exchange the notes for our ordinary shares at an initial exchange rate of 56.3063 shares per $1,000 principal amount of
notes (equivalent to an exchange price of $17.76 per share). The sale was made in reliance on the exemption from registration afforded by Section 4(a)(2)
of the Securities Act.
At-the-Market Ordinary Shares Offering
On September 10, 2021, we entered into an Open Market Sale Agreement under which we have the option to offer and sell our ordinary shares having
an aggregate gross sales price of up to $50 million from time to time through Jefferies LLC. Pursuant to the Open Market Sales Agreement and upon
delivery of notice by the Company, Jefferies may sell our ordinary shares under an “at the market offering.” From inception through to December 31, 2021
we did not sell any shares under this facility.
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ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in
conjunction with (i) our audited consolidated financial statements as at December 31, 2021 and December 31, 2020 and (ii) the section entitled “Business”
included in this annual report. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may
differ materially from those anticipated in these forward-looking statements as a result of many factors.
Company Overview
We are an advanced cell therapy company committed to cures for blood cancers and serious hematologic diseases. We harness our cell expansion
platform to create therapies with the potential to redefine standards of care in areas of serious medical need. While cell therapies have the potential to
address a variety of diseases, they are limited by availability of donor cells, matching a donor to the patient, and the decline in donor cell functionality
when expanding the cells to achieve a therapeutic dose. We have leveraged our NAM platform, or nicotinamide cell expansion technology platform to
develop a pipeline of product candidates designed to address the limitations of other cell therapies. Our proprietary technology allows for the proliferation
and enhancement of donor cells, which allows for maintaining the cells’ functional therapeutic characteristics, providing a treatment alternative for patients.
Omidubicel, our lead product candidate, is designed to address the limitations of hematopoietic stem cell transplantation. Omidubicel consists of
NAM-expanded and enhanced hematopoietic stem cells and differentiated immune cells, including T cells. The final cell therapy product is cryopreserved
until the patient is ready to begin the transplant, when it is thawed and infused. Omidubicel has the potential to be a universal stem cell graft in two broad
patient groups: (i) patients with high-risk leukemias and lymphomas who require HSCT but who lack access to an appropriate matched related donor; and
(ii) patients with severe hematologic disorders such as severe aplastic anemia.
In October 2021, the complete results from our pivotal Phase 3 clinical study of omidubicel in 125 patients with various hematologic malignancies
were published in the peer-reviewed medical journal Blood. The trial achieved its primary endpoint of time to neutrophil engraftment as well as all three of
the prespecified secondary endpoints. These secondary endpoints were the proportion of patients who achieved platelet engraftment by day 42, the
proportion of patients with grade 2 or grade 3 bacterial or invasive fungal infections in the first 100 days following transplant, and the number of days alive
and out of the hospital in the first 100 days following transplant. All three secondary endpoints demonstrated statistical significance in an intent-to-treat
analysis.
In December 2021, we also reported data from an analysis of a subset of 37 patients from the Phase 3 randomized trial of omidubicel at Annual
Meeting of the American Society of Hematology, or ASH. The analysis was aimed at investigating the reduced infection rates observed in the study and
showed that the omidubicel-treated patients had more rapid recovery of a wide variety of immune cells including CD4+ T cells, B cells, NK cells and
dendritic cell subtypes. The robust recovery of the immune system provides rationale for fewer severe bacterial, fungal and viral infections in patients
treated with omidubicel. Additional analyses are ongoing to further characterize the immune recovery following omidubicel transplantation. In early 2022,
the FDA agreed that the initiation of our rolling BLA submission for omidubicel was appropriate and we initiated the rolling submission process. We plan
to submit the full BLA for omidubicel to the FDA in the first half of 2022.
In addition, we have applied our NAM cell expansion technology to natural killer, or NK, cells, to develop our initial NK product candidate, GDA-
201, an investigational, NK cell-based immunotherapy for the treatment of hematologic and solid tumors in combination with standard of care antibody
therapies. GDA-201 is currently being evaluated in a Phase 1/2 investigator-sponsored trial for the treatment of relapsed or refractory non-Hodgkin
lymphoma, or NHL, and multiple myeloma, or MM. Data from the trial demonstrate that GDA-201 was well-tolerated and no dose-limiting toxicities were
observed in 19 patients with NHL and 16 patients with MM. The data show that therapy using GDA-201 with monoclonal antibodies demonstrated
significant clinical activity in heavily pretreated patients with advanced NHL. Of the 19 patients with NHL, 13 complete responses and one partial response
were observed, with an overall response rate of 74% and a complete response rate of 68%. At the December 2021 Annual Meeting of ASH, we reported
two-year follow-up data from this clinical trial and reported on two-year outcomes and cytokine biomarkers associated with survival. The data
demonstrated a median duration of response of 16 months (range 5-36 months), an overall survival at two years of 78% (95% CI, 51%–91%) and a safety
profile similar to that reported previously.
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In September 2021, we submitted an investigational new drug application, or IND, for a Phase 1/2 clinical trial of GDA-201 in patients with follicular
and diffuse large B-cell lymphomas. The FDA placed this IND on clinical hold prior to the initiation of patient dosing. The FDA has requested
modifications in donor eligibility procedures and sterility assay qualification. We are in active communication with the FDA with the objective to promptly
address these requests to enable the requirements for IND acceptance and study initiation. We expect to initiate our Phase 1/2 study of GDA-201 in patients
with follicular and diffuse large B-cell lymphomas in 2022.
We have incurred significant net losses since our formation in 1998. Our net losses were $89.8 million and $61.6 million for the years ended December
31, 2021 and 2020, respectively. As of December 31, 2021, our accumulated deficit was $337.5 million. We expect to continue to incur losses for the
foreseeable future, and our losses may fluctuate significantly from year to year. We expect that our expenses will increase substantially in connection with
our ongoing activities as we:
● submit our BLA on a rolling basis to seek regulatory approval for omidubicel;
● establish a sales, marketing and distribution infrastructure, if we do not pursue a strategic partnership for commercialization, and scale up
manufacturing capabilities to commercialize omidubicel upon obtaining regulatory approval;
● initiate our planned Phase 1/2 clinical trial of GDA-201 in patients with NHL;
● continue the preclinical development of our other product candidates;
● maintain, expand and protect our intellectual property portfolio;
● add equipment and physical infrastructure to support our research and development and commercialization efforts;
● hire additional clinical development, regulatory, commercial, quality control and manufacturing personnel; and
● add operational, financial and management information systems and personnel, including personnel to support our product development and
planned future commercialization.
Although we completed two equity financing transactions in 2020 and a convertible debt financing in 2021, we will need substantial additional funding
to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval and prepare for and, if any
of our product candidates are approved, proceed to commercialization. Adequate funding may not be available to us on acceptable terms, or at all.
To continue to fund our operations, we expect to continue to raise capital. We may obtain additional financing in the future through the issuance of our
ordinary shares, through other equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise
additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our
business plan. Although it is difficult to predict future liquidity requirements, we believe that our current total existing funds will be sufficient to fund our
operations into mid-2023. However, our ability to successfully transition to profitability will be dependent upon achieving a level of revenue adequate to
support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.
Components of Results of Operations
Revenue
We do not currently have any products approved for sale and, to date, we have not recognized any revenue. In the future, we may generate revenue
from a combination of product sales, reimbursements, up-front payments and future collaborations. If we fail to achieve clinical success or obtain
regulatory approval of any of our product candidates in a timely manner, our ability to generate future revenue will be impaired.
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Research and development expenses, net
The largest component of our total operating expenses has historically been, and we expect will continue to be, research and development. Our
research and development expenses, net of IIA grants, consist primarily of:
● salaries and related costs, including share-based compensation expense, for our personnel in research and development functions;
● expenses incurred under agreements with third parties, including CROs, subcontractors, suppliers and consultants, for the conduct of our
preclinical studies and clinical trials;
● expenses incurred to acquire, develop and manufacture preclinical study and clinical trial materials; and
● facility and equipment costs, including depreciation expense, maintenance and allocated direct and indirect overhead costs.
Research and development expenses (net of grants) are recognized in the consolidated statements of operations when incurred.
Through December 31, 2021, we have received an aggregate of approximately $37.3 million in grants from the Israeli Innovation Authority, or the IIA,
including from the Bereshit Consortium sponsored by the IIA, of which $34.7 million is royalty-bearing grants, and $2.6 million is non-royalty-bearing
grants, and all of which was awarded for research and development funding. Pursuant to the terms of the royalty-bearing grants, we are obligated to pay the
IIA royalties at the rate of between 3% to 3.5% on all our revenue, up to a limit of 100% of the amounts of the U.S. dollar-linked grants received, plus
annual interest calculated at a rate based on the 12-month LIBOR. We have not paid any royalties to the IIA to date. The Bereshit Consortium program
does not require payments of royalties to the IIA, but all other restrictions under the Innovation Law, such as local manufacturing obligations and know-
how transfer limitations, as further detailed hereunder, are applicable to the know how developed by us with the funding received in such consortium
program.
The United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate, or LIBOR, announced in July 2017 that it
will no longer persuade or require banks to submit rates for LIBOR after 2021. The grants received from the IIA bear an annual interest rate based on the
12-month LIBOR. Accordingly, there is considerable uncertainty regarding the publication of LIBOR beyond the end of 2021. While it is not currently
possible to determine precisely whether, or to what extent, the withdrawal and replacement of LIBOR would affect us, the implementation of alternative
benchmark rates to LIBOR may increase our financial liabilities to the IIA.
In addition to paying any royalties due, we must abide by other restrictions associated with receiving such grants under the Encouragement of
Research, Development and Technological Innovation in the Industry Law 5744-1984, which will also continue to apply to us following the repayment in
full of the amounts due to the IIA. The Innovation Law restricts our ability to manufacture products and transfer technologies outside of Israel, and may
impair our ability to enter into agreements that involve IIA-funded products or know-how without the approval of the IIA. Any approval, if given, will
generally be subject to additional financial obligations by us. Failure to comply with the requirements under the Innovation Law may subject us to
mandatory repayment of grants received by us, together with interest and penalties, as well as expose us to criminal proceedings.
In June 2017, new rules, or the Licensing Rules, were published by the IIA allowing a grant recipient to enter into licensing arrangements or grant
other rights in know-how developed under IIA programs outside of Israel, subject to the prior consent of the IIA and payment of license fees, calculated in
accordance with the Licensing Rules. The amount of the license fees is based on various factors, including the consideration received by the licensor in
connection with the license, and shall not exceed six times the amount of the grants received by the grant recipient (plus accrued interest) for the applicable
know-how being licensed. In certain cases, such as when the license consideration includes nonmonetary compensation or when a “special relationship”
exists between the licensor and licensee (e.g. when a party controls the other party or is the other party’s exclusive distributor), or when the agreed upon
consideration does not reflect, in the IIA’s opinion, the market value of the license, the IIA may base the value of the transaction on an economic
assessment that it obtains for such purpose.
95
We are currently focused on advancing our product candidates, and our future research and development expenses will depend on their clinical
success. Research and development expenses will continue to be significant and will increase over at least the next several years as we continue to develop
our product candidates and conduct preclinical studies and clinical trials of our product candidates. Government grants received from the IIA are
recognized as a reduction of the related research and development expenses.
We do not believe that it is possible at this time to accurately project total expenses required for us to reach commercialization of omidubicel or any of
our other product candidates. However, with the objective of extending our cash runway into mid-2023, consistent with the anticipated timeline for
potential U.S. approval of omidubicel, we are reducing operating expenses primarily by implementing a workforce reduction of approximately 10% and
delaying other hiring and planned spending in 2022. A majority of the anticipated savings is in research and development expenses.
Commercial expenses
Commercial expenses consist primarily of personnel costs, including share-based compensation, related to executive and commercial functions, and
external consulting service fees.
General and administrative expenses
General and administrative expenses consist primarily of personnel costs, including share-based compensation, related to directors, executive, finance,
and administrative functions, facility costs and external professional service costs, including legal, accounting and audit services and other consulting fees.
We anticipate that we will incur increased expenses related to audit, legal, regulatory and tax-related services associated with additional reporting
requirements as a result of losing our status as a foreign private issuer at the end of the 2021 fiscal year, and maintaining compliance with the Nasdaq and
SEC requirements, director and officer insurance premiums, executive compensation, and other customary costs associated with being a public company
subject to US domestic issuer listing requirements.
Financial expenses, net
Financial expenses, net, is our financing expenses from convertible senior notes after deducting financing income from deposits and marketable
securities.
Income taxes
We have yet to generate taxable income in Israel, as we have historically incurred operating losses resulting in carry forward tax losses totaling
approximately $237.4 million (including capital losses of $0.5 million) as of December 31, 2021. In addition, the US subsidiary has net operating losses
carryforward of $33.1 million for federal tax purposes as of December 31, 2021. We anticipate that we will continue to generate tax losses for the
foreseeable future and that we will be able to carry forward these tax losses indefinitely to future taxable years. Accordingly, we do not expect to pay taxes
in Israel until we have taxable income after the full utilization of our carry forward tax losses. We provided a full valuation allowance, to reduce deferred
tax assets to their estimated realizable value, since it is more likely than not that all of the deferred tax assets will not be realized.
96
Analysis of Results of Operations
Comparison of the years ended December 31, 2021 and 2020
The following table summarizes our results of operations for the years ended December 31, 2021 and 2020:
Operating Expenses
Research and development expenses, net(1)
Commercial expenses(1)
General and administrative expenses(1)
Operating loss
Financial expenses, net
Net loss
(1) Includes share-based compensation expense as follows:
Research and development expenses, net
Commercial expenses
General and administrative expenses
Total share-based compensation
Research and development expenses, net
Year ended
December 31,
2021
2020
(in thousands)
50,177
20,013
16,977
87,167
2,626
89,793
38,873
8,894
13,158
60,925
648
61,573
Year ended
December 31,
2021
2020
(in thousands)
1,384
947
1,902
4,233
1,099
376
1,893
3,368
$
$
$
Research and development expenses, net, increased by approximately $11.3 million to $50.2 million in the year ended December 31, 2021 from $38.9
million in the year ended December 31, 2020. The increase was attributable mainly to a $5.4 million increase in clinical activities relating to the conclusion
of our Phase 3 clinical trial and advancing our GDA 201 clinical program and an increase of $5.9 million in salaries and benefits, consisting primarily of
additional headcount focused on clinical development.
Commercial expenses
Our commercial expenses increased by approximately $11.1 million to $20.0 million in the year ended December 31, 2021 from $8.9 million in the
year ended December 31, 2020. The increase was attributable mainly to an approximate $6.5 million increase in professional services and a $4.6 million
increase in salaries and benefits resulting from increased headcount within our commercial organization.
General and administrative expenses
General and administrative expenses increased by approximately $3.8 million to $17.0 million in the year ended December 31, 2021, up from $13.2
million in the year ended December 31, 2020. The increase was attributable to a $2.6 million increase in professional services expenses related to general
company growth and of $1.2 million increase in salaries and benefits resulting from increased headcount.
Financial expenses, net
Financial expenses, net, increased by approximately $2.0 million to $2.6 million in the year ended December 31, 2021, compared to $0.6 million in the
year ended December 31, 2020. The increase was primarily due to $4.4 million in financing expenses from our convertible senior notes, which was offset
by $1.7 million in non-cash capitalization of finance costs, non-cash expenses related to leasing liability of $0.4 million and a $0.3 million increase in
interest income from cash management.
97
Critical Accounting Policies and Estimates
This discussion and analysis of our consolidated financial statements has been prepared in accordance with generally accepted accounting principles in
the United States, or U.S. GAAP, as set forth in the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC.
Prior to 2021, we prepared our financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the
International Accounting Standards Board, or IASB, as permitted in the United States, based on our status as a foreign private issuer. At the end of the 2021
fiscal year, we lost our status as a foreign private issuer, and became subject to the U.S. domestic filer requirements, one of which requires us to prepare our
consolidated financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.
We are devoting substantially all of our efforts toward research and development activities. In the course of such activities, we have sustained
operating losses and we expect such losses to continue in the foreseeable future. Our accumulated deficit as of December 31, 2021 was $337.5 million and
negative cash flows from operating activities during the year ended December 31, 2021 was $81.8 million. We are planning to finance our operations from
our existing and potential future working capital resources and we continue to evaluate additional sources of capital and financing. However, there is no
assurance that additional capital and/or financing will be available to us, and even if available, whether it will be on acceptable terms or in the amounts
required. Based on our assessment of our financial position at the date of issuance of our consolidated financial statements for the year ended December 31,
2021, we believe that our existing capital resources will be adequate to satisfy our expected liquidity requirements for at least twelve months from the
issuance of the consolidated financial statements.
While our significant accounting policies are more fully described in the notes to our consolidated financial statements appearing elsewhere in this
annual report on Form 10-K, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past
and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an
accounting estimate to be critical if: (i) it requires us to make assumptions because information was not available at the time or it included matters that were
highly uncertain at the time we were making our estimate; and (ii) changes in the estimate could have a material impact on our financial condition or results
of operations.
Convertible senior notes
On February 15, 2021, we entered into a Note Purchase Agreement, pursuant to which Gamida Cell Ltd.’s wholly owned U.S. subsidiary, Gamida Cell
Inc., issued convertible senior notes with an aggregate original principal amount of $75.0 million in a private placement. The notes are guaranteed by
Gamida Cell Ltd. pursuant to an Indenture, dated February 16, 2021, between Gamida Cell Inc., Gamida Cell Ltd., and Wilmington Savings Fund Society,
FSB, which is filed as exhibit to this annual report on Form 10-K.
The notes were issued on a senior unsecured basis, have a maturity date of February 15, 2026, bear 5.875% interest, and may be exchanged, at the
election of the holder, for ordinary shares of Gamida Cell Ltd. at an initial per share price of $17.76, subject to adjustments. The net proceeds from the
private placement were approximately $70.8 million after deducting placement agent fees, escrowed amounts and other expenses, and the transaction
closed on February 16, 2021.
We account for our convertible senior notes in accordance with ASC 470-20 “Debt with Conversion and Other Options.” We early adopted ASU 2020-
06 using the modified retrospective approach. The convertible senior notes are accounted for as a single liability measured at its amortized cost, as no other
embedded features require bifurcation and recognition as derivatives according to ASC 815-40.
Our convertible senior notes are included in the calculation of diluted earnings per share, or EPS, if the assumed conversion into ordinary shares is
dilutive, using the “if-converted” method. This involves adding back the periodic interest expense net of taxes associated with the convertible senior notes
to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the
money) to the denominator for the purposes of calculating diluted EPS. Since the effect of the convertible senior notes on the diluted EPS was antidilutive,
we did not include them in our calculation of the diluted EPS.
Share-based compensation
We account for share-based compensation in accordance with ASC No. 718 “Compensation - Stock Compensation,” or ASC No. 718, which requires
companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the award is
recognized as an expense over the requisite service periods, which is the vesting period of the respective award, on a straight-line basis when the only
condition to vesting is continued service. We selected the binominal option-pricing model as the most appropriate fair value method for our option awards.
The fair value of restricted shares, is based on the closing market value of the underlying shares at the date of grant. Since our initial public offering, the
fair value of our ordinary shares has been determined based on the closing price of our ordinary shares on the Nasdaq Global Market. We recognize
forfeitures of equity-based awards as they occur.
98
Recent Accounting Pronouncements
See note 2 of the accompanying audited consolidated financial statements for the year ended December 31, 2021.
Internal Control over Financial Reporting
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, could
have a material adverse effect on our business, results of operation or financial condition. In addition, current and potential shareholders could lose
confidence in our financial reporting, which could have a material adverse effect on the price of our ordinary shares. Pursuant to Section 404 and the
related rules adopted by the SEC and the Public Company Accounting Oversight Board, our management is required to report on the effectiveness of our
internal control over financial reporting. In addition, once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability
to rely on the exemptions related thereto discussed above, our independent registered public accounting firm will also need to attest to the effectiveness of
our internal control over financial reporting under Section 404. We have completed the process of determining whether our existing internal controls over
financial reporting systems are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in our existing
internal controls. Based on this process, our management concluded that our internal controls over financial reporting were effective as of December 31,
2021.
Liquidity and Capital Resources.
Sources of Liquidity
Since our inception, we have incurred losses and negative cash flows from our operations. For the years ended December 31, 2021 and December 31,
2020, we incurred a net loss of $89.8 million and $61.6 million, respectively, and net cash of $81.8 million and $50.2 million, respectively, was used in our
operating activities. As of December 31, 2021 and December 31, 2020 we had working capital of $73.2 million and $108.8 million, respectively, and an
accumulated deficit of $337.5 million and $247.7 million, respectively. Our principal sources of liquidity as of December 31, 2021 and December 31, 2020
consisted of cash and cash equivalents and trading financial assets of $95.9 million and $127.2 million, respectively.
Capital Resources
Overview
Through December 31, 2021, we have financed our operations primarily through private placements and public offerings of equity securities and
through the grants received from the IIA.
Cash flows
The following table summarizes our statement of cash flows for the years ended December 31, 2021 and 2020:
Net cash provided by (used in)
Operating activities
Investing activities
Financing activities
99
Year ended
December 31,
2021
2020
(in thousands)
$
(81,760)
(60,921)
71,403
(50,219)
1,589
133,962
Net cash used in operating activities
The cash used in operating activities during the aforementioned periods resulted primarily from our net losses incurred during such periods, as adjusted
for non-cash charges and measurements and changes in components of working capital. Adjustments to net losses for non-cash items mainly share based
compensation.
Net cash used in operating activities was $81.8 million during the year ended December 31, 2021, compared to $50.2 million used in operating
activities during the year ended December 31, 2020. The $31.6 million increase in cash used was attributable primarily due to an increase in our spend
related to research and development activities, including with respect to completion of our Kiryat Gat manufacturing facility and conclusion of our pivotal
Phase 3 clinical trial of omidubicel.
Net cash provided by (used in) investing activities
Net cash used in investing activities was $60.9 million during the year ended December 31, 2021, compared to $1.6 million provided by investing
activities during the year ended December 31, 2020. The $62.5 million increase is primarily related to increase of $59.2 million of proceeds from maturity
and purchase of marketable securities and changes in bank deposits, and, by an increase of $3.3 million from the purchase of property and equipment.
Net cash provided by financing activities
Net cash provided by financing activities was $71.4 million during the year ended December 31, 2021, compared to $134.0 million during the year
ended December 31, 2020. The $62.6 million decrease is primarily related to net proceeds of $70.8 million received from the 2021 issuance of our
convertible senior notes compared to $133.3 million in net proceeds received from the issuance of our ordinary shares in public offerings in 2020.
Funding Requirements
We believe that our existing funds will enable us to fund our operating expenses and capital expenditure requirements through mid-2023. We have
based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Our present and future funding requirements will depend on many factors, including, among other things:
● the progress of the rolling submission of our BLA for omidubicel;
● the progress, timing and completion of preclinical studies and clinical trials for GDA-201 or any of our other product candidates;
● the costs related to obtaining regulatory approval for omidubicel and any of our other product candidates, and any delays we may encounter as a
result of regulatory requirements or adverse clinical trial results with respect to any of these product candidates;
● selling, marketing and patent-related activities undertaken in connection with the commercialization of omidubicel, if we determine to internally
commercialize the product, if approved;
● the costs involved in filing and prosecuting patent applications and obtaining, maintaining and enforcing patents or defending against claims or
infringements raised by third parties, and license royalties or other amounts we may be required to pay to obtain rights to third-party intellectual
property rights; and
● establishing a sales, marketing and distribution infrastructure and scaling up manufacturing capabilities to commercialize any products for which
we obtain regulatory approval and determine to commercialize internally.
100
We have annual operating lease obligations related to our Haddasah production facility of approximately $1.0 million, which is included in research
and development expense. We additionally have annual operating lease obligations related to our Boston and Kiryat Gat facilities in aggregate of $1.1
million, which is included in general and administrative expense.
Furthermore, we expect to continue to incur additional costs associated with operating as a public company subject to US domestic filer regulations.
Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when
needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.
Until such time, if ever, as we can generate substantial product revenue, we may finance our cash needs through a combination of equity offerings,
debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or
convertible debt securities, your ownership interest will be diluted, and the terms of any additional securities may include liquidation or other preferences
that adversely affect your rights as a shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our
ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional
collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue
streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
Additional financing may not be available when we need it or may not be available on terms that are favorable to us. If we are unable to raise
additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. For
more information as to the risks associated with our future funding needs, see “Item 1A. Risk Factors—Principal Risk Factors.”
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited consolidated financial statements for the years ended December 31, 2021 and 2020 are incorporated herein by reference to pages F-1 to F-
28 at the end of this report and the supplementary data is not applicable.
101
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes in, or disagreements with our principal independent accountants.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Under
the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as
of December 31, 2021 to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file
or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and
principal financial officer as appropriate, to allow timely decisions regarding required disclosure. Our management, with participation of our principal
executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based
on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of
December 31, 2021 to provide reasonable assurance that the information required to be disclosed by us in this annual report was (a) reported within the
time periods specified by SEC rules and regulations and (b) communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, to allow timely decisions regarding any required disclosure.
Management’s 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 Exchange
Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our principal executive, financial and
accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the
framework in Internal Control—Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm due to the Company’s emerging growth company
status which provides an exemption.
Cybersecurity
We utilize information technology for internal and external communications with vendors, clinical sites, banks, investors and shareholders. Loss,
disruption or compromise of these systems could significantly impact operations and results.
We are not aware of any material cybersecurity violation or occurrence. We believe our efforts toward prevention of such violation or occurrence,
including system design and controls, processes and procedures, training and monitoring of system access, limit, but may not prevent unauthorized access
to our systems.
Other than temporary disruption to operations that may be caused by a cybersecurity breach, we consider cash transactions to be the primary risk for
potential loss. We and our financial institution take steps to minimize the risk by requiring multiple levels of authorization and other controls.
102
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the fiscal
quarter ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Internal Controls
In designing and evaluating the disclosure controls and procedures, management does not expect that our internal control over financial reporting will
prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. The design of any disclosure controls and procedures also is based in part upon
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and
procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the
reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial
reporting will prevent all errors and all fraud.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS
Not applicable.
103
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers.
PART III
The table below sets forth our directors and executive officers as of March 15, 2022. The business address for each of our executive officers and
directors is c/o 116 Huntington Avenue, Boston, Massachusetts 02116.
Name
Dr. Julian Adams
Shai Lankry
Michele Korfin
Josh Patterson
Robert I. Blum
Anat Cohen-Dayag
Ofer Gonen
Naama Halevi Davidov
Kenneth I. Moch
Shawn C. Tomasello
Stephen T. Wills
Executive Officers
Age
67
45
51
46
58
55
48
50
67
63
65
Position
Director and Chief Executive Officer
Chief Financial Officer
Chief Operating and Chief Commercial Officer
General Counsel and Chief Compliance Officer
Chairman of the Board of Directors
Director
Director
Director
Director
Director
Director
Julian Adams, Ph.D., joined our board of directors in August 2016 and has served as our Chief Executive Officer since November 2017. Dr. Adams
has more than 35 years of experience in drug discovery and development. From 2003 to 2016, Dr. Adams held roles of increasing responsibility at Infinity
Pharmaceuticals, Inc. (Nasdaq: INFI), where he built and led the company’s R&D efforts which ultimately led to the approval of duvelisib, also known as
Copiktra®, for the treatment of certain leukemias and lymphomas. From 1999 to 2003, Dr. Adams served as a Senior Vice President at Millenium
Pharmaceuticals, Inc., a subsidiary of the biopharmaceutical company Takeda Pharmaceutical Company Limited since 2008, where he led the development
of bortezomib, also known as Velcade®, for the treatment of multiple myeloma. He has served on the boards of directors of numerous biotechnology
companies, and currently serves as the Chairman of the board of directors of Elicio Therapeutics Inc. Dr. Adams received a B.S. from McGill University
and a Ph.D. from the Massachusetts Institute of Technology in the field of synthetic organic chemistry.
Shai Lankry has served as our Chief Financial Officer since April 2018. Mr. Lankry has more than 15 years of senior management experience in
finance. Prior to joining Gamida Cell, from 2016 to 2018, Mr. Lankry served as a Finance Director at West Pharmaceutical Services Inc., leading the R&D
and operations financials for the Israeli subsidiary. From 2013 to 2017, Mr. Lankry was the Chief Financial Officer and Israeli Site Manager of Macrocure
Ltd. where he played an integral role in the company’s 2014 US initial public offering and its 2017 acquisition by Leap Therapeutics Inc. Mr. Lankry is a
licensed Israeli CPA and holds an M.B.A. in Finance from Tel-Aviv University.
Michele Korfin has served as our Chief Operating and Chief Commercial Officer since August 2020. Prior to joining Gamida Cell, Ms. Korfin served
as Chief Operating Officer at TYME Technologies, Inc. (Nasdaq: TYME), a biotechnology company focused on therapeutic candidates that target cancer
metabolism, from 2018 until 2020. From 2016 until 2018, she was Vice President of Market Access at Kite Pharma, Inc., or Kite, a biotechnology company
engaged in the development of cancer immunotherapy products that is now part of Gilead Sciences. At Kite, she oversaw the market access strategy,
including payer relations, reimbursement and government affairs for Yescarta®, the first approved CAR-T therapy in lymphoma. She also worked closely
with the manufacturing and supply chain teams at Kite to prepare for FDA approval and commercialization. Before joining Kite, Ms. Korfin spent more
than a decade at Celgene Corporation (now part of Bristol Myers Squibb) in a variety of key strategic and operational roles, including overseeing the global
development programs for Revlimid® in lymphoma and chronic lymphocytic leukemia. She also led Celgene Corporation’s oncology sales force of over
120 representatives responsible for Abraxane®, which is now a standard of care in pancreatic cancer. Ms. Korfin holds an M.B.A. from Harvard Business
School and a B.S. in Pharmacy from Rutgers University. She is a Registered Pharmacist in New Jersey. She is also on the Board of Trustees of BioNJ, the
organization that represents the biotechnology industry for New Jersey.
104
Josh Patterson has served as our General Counsel and Chief Compliance officer since August 2021. Prior to joining Gamida Cell, Mr. Patterson served
as General Counsel between March 2020 and August 2021 and as Vice President, Legal and Corporate Secretary between March 2018 and March 2020 for
Akcea Therapeutics, Inc., a biotechnology company that merged with Ionis Pharmaceuticals, Inc. in 2020. Between December 2006 and March 2018, Mr.
Patterson served in various leadership positions at Ionis Pharmaceuticals, Inc. (Nasdaq: IONS), a biotechnology company that specializes in discovering
and developing RNA-targeted therapeutics, including as Executive Director and Deputy General Counsel. Mr. Patterson holds a B.A. from Carthage
College and a J.D. from the Syracuse University College of Law.
Non-Employee Directors
Robert I. Blum joined our board of directors as Chairman in September 2018. Since January 2007, Mr. Blum has served as the President and Chief
Executive Officer of Cytokinetics, Inc. (Nasdaq: CYTK), a late stage biopharmaceutical company that develops potential treatments for people with
diseases characterized by impaired muscle function which Mr. Blum helped to found. Prior to Cytokinetics, Mr. Blum served in senior business
development and marketing positions at COR Therapeutics, Inc. (which was acquired by Millennium Pharmaceuticals, Inc.) and in various commercial and
business planning roles at Marion Laboratories, Inc. (now part of Sanofi S.A.) and Syntex Corporation (now part of Roche Holding AG). Mr. Blum
received B.A. degrees in Human Biology and Economics from Stanford University and an M.B.A. from Harvard Business School.
Anat Cohen-Dayag, Ph.D., has served on our board of directors since January 2022. Dr. Cohen-Dayag has over 25 years of experience in the biotech
industry, both in R&D and executive leadership roles. Since 2010, Dr. Cohen-Dayag has served as President and Chief Executive Officer and a member of
the Board of Directors of Compugen Ltd. (Nasdaq: CGEN). Under her leadership, Compugen transformed from a service provider in the field of
computational biology to a therapeutic discovery and development company advancing an innovative immuno-oncology pipeline originating from the
company’s computational discovery platforms. Prior to Compugen, Dr. Cohen-Dayag served as Head of R&D and was a member of the executive
management team of Mindsense Biosystems Ltd., a biotechnology company engaged in the development of biomarkers for mental disorders. She also
serves on the board of Pyxis Diagnostics Ltd., an Israeli biotechnology company focused on developing a unique platform to identify predictive biomarkers
in the field of immuno-oncology. Dr. Cohen-Dayag holds a B.Sc. in Biology from Ben-Gurion University, an M.Sc. in Chemical Immunology and a Ph.D.
in Cellular Biology, both from the Weizmann Institute of Science.
Ofer Gonen joined our board of directors as a director in February 2015. Mr. Gonen currently serves as Chief Executive Officer at Call Biotechnology
Industries, or CBI, (TASE: CBI). Mr. Gonen has more than 20 years of experience in managing life science investments and business collaborations in both
the United States and Israel. Mr. Gonen serves as a board member of several private and publicly-traded portfolio companies of CBI, including
MediWound (Nasdaq: MDWD) and Cactus (Nasdaq: CCTS), as well as a managing partner at the Anatomy Medical Fund. Before joining CBI, Mr. Gonen
was the General Manager of Biomedical Investments Ltd., a Partner at Arte Venture Group, as well as a technology consultant to various Israeli venture
capital funds. Mr. Gonen gained extensive experience in R&D and management of defense-oriented projects within the prestigious “Talpiot” program of
the Israeli Defence Forces. Mr. Gonen holds a B.Sc. in Physics, Mathematics and Chemistry from the Hebrew University of Jerusalem, and an M.A. in
Economics and Finance from Tel Aviv University, with distinction.
Naama Halevi Davidov, Ph.D., has served on our board of directors since January 2022. Dr. Halevi Davidov has served as strategic financial advisor to
Joytunes Ltd., a business-to-consumer wellbeing education app, since April 2021. She also served as a strategic financial advisor to Gloat Pty Ltd., a global
talent marketplace platform, from March 2020 through November 2021, and to Healthy IO Ltd., a manufacturer and marketer of medical equipment from
March 2019 through April 2021. Prior to that, Dr. Halevi Davidov was Chief Financial Officer of Kaltura, Inc. (Nasdaq: KLTR), a global software
company, from November 2012 to August 2017. Dr. Halevi Davidov has served on the board of directors of Kaltura, Inc. since July 2021. Dr. Halevi
Davidov is a Certified Public Accountant in Israel. She received a Ph.D. in Strategy, an M.B.A. and a B.A. in Accounting and Economics, all from Tel Aviv
University.
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Kenneth I. Moch has served on our board of directors since July 2016. Mr. Moch has more than 35 years of experience in managing and financing
biomedical technologies, and has played a key role in building five life science companies. He currently serves as president of Euclidean Life Science
Advisors, LLC, where he provides management and advisory services for early-stage biotechnology companies. From 2016 to 2020, Mr. Moch served as
the president and chief executive officer of Cognition Therapeutics, Inc., a company developing therapies for Alzheimer’s disease. He previously was the
managing partner of The Salutramed Group, LLC, and serves as the chief executive officer of several life sciences companies, including of Chimerix, Inc.,
an antiviral therapeutics company focused on stem cell transplantation, and Biocyte Corporation, which pioneered the use of cord blood stem cell storage
and transplantation. He began his career in biotech as a co-founder of The Liposome Company, the first lipid nanoparticle company. Mr. Moch also serves
as a director of Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE). In the public policy arena, Mr. Moch served for over 15 years as a member of the
governing board of the Biotechnology Innovation Organization, or BIO, including serving as Chair of BIO’s Bioethics Committee and is a previous
Chairman of BioNJ. He is a Founding Member of the New York University Working Group on Compassionate Use and Pre-Approval Access, and a
Faculty Affiliate of the Division of Medical Ethics, Department of Population Health, NYU School of Medicine. Mr. Moch holds an A.B. in Biochemistry
from Princeton University and an M.B.A. with emphasis in Finance and Marketing from the Stanford Graduate School of Business.
Shawn C. Tomasello has served on our board of directors since June 2019. From 2015 to 2018, Ms. Tomasello as the Chief Commercial Officer of Kite
Pharma. Prior to joining Kite Pharma, from 2014 to 2015, Ms. Tomasello served as the Chief Commercial Officer of Pharmacyclics Inc. (Nasdaq: PCYC),
a pharmaceutical manufacturer acquired by Abbvie, Inc. From April 2005 to August 2014, Ms. Tomasello was employed at Celgene Corporation, most
recently as President of the Americas, Hematology and Oncology, where she was responsible for all aspects of the commercial organization encompassing
multiple brands spanning 11 indications. Ms. Tomasello serves on the board of directors of Urogen Pharma Ltd. (NASDAQ: URGN), Mesoblast Limited
(ASX: MSB), Centrexion Therapeutics, TCR2, and 4DMT. Ms. Tomasello earned her B.S. in Marketing from the University of Cincinnati and her M.B.A.
from Murray State University, Kentucky.
Stephen T. Wills has served on our board of directors since June 2019. Mr. Wills currently serves as the Chief Financial Officer (since 1997), and Chief
Operating Officer (since 2011), of Palatin Technologies, Inc. (NYSE: PTN), a biopharmaceutical company developing targeted, receptor-specific peptide
therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Mr. Wills has served on the boards of directors of
MediWound Ltd. (Nasdaq: MDWD), since April 2017, and as Chairman since January 2018, and of Amryt Pharma, plc (Nasdaq: AMYT), a
biopharmaceutical company focused on developing and delivering treatments to help improve the lives of patients with rare and orphan diseases, since
September 2019 (Chairman of audit committee and member of the finance committee). Mr. Wills also serves on the board of trustees and executive
committee of The Hun School of Princeton, a college preparatory day and boarding school, since 2013, and its Chairman since June 2018. Mr. Wills served
on the board of directors of Caliper Corporation, a psychological assessment and talent development company, since March 2016, and as Chairman from
December 2016 to December 2019, when Caliper was acquired by PSI Corporation. Mr. Wills, a certified public accountant, earned a B.S. in accounting
from West Chester University, and an M.S. in taxation from Temple University.
Diversity of the Board of Directors.
Total Number of Directors
8
Board Diversity Matrix (As of March 15, 2022)
Part I: Gender Identity
Directors
Part II: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
Female
Male
Non-Binary
3
-
-
-
-
3
-
-
-
5
-
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
Did Not
Disclose
Gender
-
-
-
-
-
-
-
-
-
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Delinquent Section 16(a) Reports
Not applicable.
Code of Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive
officer, principal financial and accounting officer or controller, or persons performing similar functions, known as the Code of Ethics and Business
Conduct. The Code of Ethics and Business Conduct is available on our website at https://www.gamida-cell.com under the Corporate Governance section of
our Investors & Media page. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer
or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
Material Changes to Procedures by which Shareholders may Recommend Nominees
Not applicable.
Board Practices
Our amended and restated articles of association provide that we may have between 5 and 11 directors. Our board of directors currently consists of
eight directors. Our directors are divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-
third of the total number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-
election of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on the
third annual general meeting following such election or re-election, such that from 2019 and after, at each annual general meeting the term of office of only
one class of directors will expire. Each director will hold office until the annual general meeting of our shareholders in which his or her term expires, unless
they are removed by a vote of 60% of the total voting power of our shareholders at a general meeting of our shareholders or upon the occurrence of certain
events, in accordance with the Israeli Companies Law and our amended and restated articles of association.
Our directors are divided among the three classes as follows:
(i) the Class I directors are Shawn C. Tomasello and Stephen T. Wills, and their terms will expire at the annual general meeting of the shareholders to
be held in 2022 and when their successors are elected and qualified;
(ii) the Class II directors are Kenneth I. Moch, Anat Cohen-Dayag and Naama Halevi Davidov, and their term will expire at the annual general meeting
of the shareholders to be held in 2023 and when his successors are elected and qualified; and
(iii) the Class III directors are Robert I. Blum, Julian Adams and Ofer Gonen, and their terms will expire at the annual general meeting of the
shareholders to be held in 2024 and when their successors are elected and qualified.
Because our ordinary shares do not have cumulative voting rights in the election of directors, the holders of a majority of the voting power represented
at a shareholders meeting have the power to elect all our directors up for election or re-election.
In addition, if a director’s office becomes vacant, the remaining serving directors may continue to act in any manner, provided that their number is not
less than the minimum number specified in our amended and restated articles of association. If the number of serving directors is lower than five, then our
board of directors may only act in an emergency or to fill the office of director which has become vacant up to a number equal to the minimum number
provided for in our amended and restated articles of association, or in order to call a general meeting of the Company’s shareholders for the purpose of
electing directors to fill any of our vacancies. In addition, the directors may appoint, immediately or of a future date, additional director(s) to serve until the
annual general meeting of our shareholders at which the term of the applicable class to which such director was assigned expires, provided that the total
number of directors in office shall not exceed 11 directors. The office of a director that was appointed by our board of directors to fill any vacancy shall
only be for the remaining period of time during which the director whose service has ended and so filled would have held office.
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Pursuant to the Companies Law and our amended and restated articles of association, a resolution proposed at any meeting of our board of directors at
which a quorum is present is adopted if approved by a vote of a majority of the directors present and eligible to vote. A quorum of the board of directors
requires at least a majority of the directors then in office who are lawfully entitled to participate in the meeting.
Under the Companies Law, the chief executive officer of a public company may not serve as the chairman of the board of directors of the company
unless approved by the holders of a majority of the shares of the company represented at the meeting in person or by proxy or written ballot, for a period
that shall not exceed three years for each shareholder approval, provided that:
● at least a majority of the shares of non-controlling shareholders or shareholders that do not have a personal interest in the approval voted at the
meeting are voted in favor (disregarding abstentions); or
● the total number of shares of non-controlling shareholders or shareholders that do not have a personal interest in the approval voted against the
proposal does not exceed 2% of the aggregate voting rights in the company.
In addition, under the Companies Law, our board of directors must determine the minimum number of directors who are required to have financial and
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 she
must be able to thoroughly comprehend the financial statements of the listed company and initiate debate regarding the manner in which financial
information is presented. In determining the number of directors required to have such expertise, the board of directors must consider, among other things,
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 one director
with the requisite financial and accounting expertise. Robert Blum has such financial and accounting expertise.
Observers
Novartis Pharma A.G., or Novartis, has the right to appoint a non-voting observer to our board of directors, subject to them holding at least 4% of the
total voting power of our shareholders.
Alternate directors
Our amended and restated articles of association provide, as allowed by the Companies Law, that any director may, by written notice to us, appoint
another person who is qualified to serve as a director to serve as an alternate director. The alternate director will be regarded as a director. Under the
Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving
as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may
be appointed as an alternate director for a member of a committee of the board of directors as long as he or she is not already serving as a member of such
committee. The term of appointment of an alternate director may be for one meeting of the board of directors or until notice is given of the cancellation of
the he appointment.
External directors
Under the Companies Law, companies incorporated under the laws of the State of Israel that are “public companies,” including companies with shares
listed on The Nasdaq Global Market, are required to appoint at least two external directors.
Pursuant to regulations promulgated under the Companies Law, companies with shares traded on a U.S. stock exchange, including The Nasdaq Global
Market, may, subject to certain conditions, “opt out” from the Companies Law requirements to appoint external directors and related Companies Law rules
concerning the composition of the audit committee and compensation committee of the board of directors. In accordance with these regulations, we elected
to “opt out” from the Companies Law requirement to appoint external directors and related Companies Law rules concerning the composition of the audit
committee and compensation committee of the board of directors.
Under these regulations, the exemptions from such Companies Law requirements will continue to be available to us so long as: (i) we do not have a
“controlling shareholder” (as such term is defined under the Companies Law), (ii) our shares are traded on a U.S. stock exchange, including The Nasdaq
Global Market, and (iii) we comply with the director independence requirements, the audit committee and the compensation committee composition
requirements, under U.S. laws (including applicable Nasdaq Rules) applicable to U.S. domestic issuers.
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Compensation and talent committee
Under the Companies Law, the board of directors of any public company must appoint a compensation committee. Our compensation and talent
committee, which consists of Ofer Gonen, Stephen T. Wills, Kenneth I. Moch and Shawn C. Tomasello, assists our board of directors in determining
compensation for our directors and officers. Mr. Moch serves as chairperson of the committee. Our board of directors has determined that each member of
our compensation committee is independent under the Nasdaq Rules, including the additional independence requirements applicable to the members of a
compensation committee.
The function of the compensation and talent committee is described in the approved charter of the committee and includes, among other things, (a)
assisting the board in fulfilling its oversight responsibilities with respect to our compensation policies, plans and programs, and to review and recommend
to the board for approval the compensation to be paid to our executive officers and directors; (b) assisting the board in fulfilling its responsibilities to
ensure processes and programs are in place to attract, motivate, reward and retain top talent to the our executive officer ranks; (c) preparing and reviewing,
as applicable, certain reports and disclosures as required by applicable rules and regulations in effect from time to time; (d) assisting the board in fulfilling
its responsibilities related to the compensation of directors, the chief executive officer and other “office holders” (as defined under the Companies Law); (e)
assisting the Board in administering the Company’s equity incentive plans; and (f) making such other determinations in respect of compensation,
compensation practices and related matters as may be required by a compensation committee under the rules of Nasdaq Stock Market or the Companies
Law.
A copy of the compensation and talent committee charter is available on the “Investors & Media – Corporate Governance – Documents & Charters”
page of our website www.gamida-cell.com.
Nominating and corporate governance committee
Our nominating and corporate governance committee consists of Robert Blum and Ofer Gonen. Mr. Blum serves as chairperson of the committee. The
function of the nominating and corporate governance committee is described in the approved charter of the committee and includes, among other things, (a)
identifying, reviewing and evaluating candidates to serve as members of the board of directors, (b) recommending nominees for election as directors, and
reviewing and evaluation of incumbent members of the board of directors; (b) making recommendations to the board of directors regarding corporate
governance guidelines and matters; and (c) overseeing all aspects of the Company’s corporate governance functions and ethical conduct.
A copy of the nominating and corporate governance committee charter is available on the “Investors & Media – Corporate Governance –
Documents & Charters” page of our website www.gamida-cell.com.
Science and technology committee
In July 2020, the board of directors formed a science and technology committee, which initially consisted of Michael S. Perry and Julian Adams. Dr.
Perry served as chairperson of the committee until his resignation. Anat Cohen-Dayag was appointed to serve as chairperson of the science and technology
committee in January 2022. The function of the science and technology committee is described in the approved charter of the committee, and includes the
review of Company matters relating to scientific and technologic capabilities and programs, reporting to the board of directors regarding such review to
help facilitate the board of director’s oversight of the Company’s scientific strategic direction and investment in R&D and technology. The committee also
discusses significant emerging trends and issues in science and technology and considers the potential impact thereof on the Company.
Compliance committee
In August 2021, the board of directors formed a compliance committee, which consists of Shawn C. Tomasello and Robert Blum. Ms. Tomasello
serves as chairperson of the committee. The function of the compliance committee is described in the approved charter of the committee and includes
assisting the board of directors in overseeing the Company’s development, operation and monitoring of a compliance program consistent with the Office of
Inspector General’s compliance program guidance for pharmaceutical manufacturers (and any foreign equivalent guidance provided by relevant authorities
outside the United States), as well as the identification and evaluation of the Company’s principal legal and regulatory compliance risks attendant to
operating in the health care and life sciences industry.
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Audit committee
Under the Companies Law, the board of directors of any public company must appoint an audit committee. Our audit committee consists of Stephen
Wills, Kenneth I. Moch and Naama Halevi Davidov. Mr. Wills serves as chairperson of the committee. Our board of directors affirmatively determined that
Stephen Wills is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq Stock
Market Listing Rules.
The function of the audit committee is described in the approved charter of the committee and includes, among other things, (a) overseeing our
accounting and financial reporting processes, the audit of our financial statements, the effectiveness of our internal control over financial reporting, systems
of disclosure controls and procedures, the quality and integrity of our financial statements and reports, and prepare such reports as may be required of an
audit committee under applicable rules and regulations, and the pre-approval of all audit, audit-related and all permitted non-audit services, if any, by our
independent auditor, and the compensation therefor; (b) deciding whether to approve certain acts and transactions requiring the approval of the committee
under the Companies Law; (c) assisting the board of directors in its oversight of (i) the integrity of our financial statements and other published financial
information, (ii) our compliance with applicable financial and accounting related standards, rules and regulations and (iii) the selection, retention (subject to
shareholder approval), and termination of our independent auditor; (d) determining whether there are delinquencies in our business management practices,
inter alia, by consulting with our internal auditor or independent auditor, and to suggesting corrective measures to the board of directors; and (e) fulfilling
any other duties of the committee as shall be required under the Companies Law, the applicable rules and regulations promulgated under the Exchange Act
or applicable Nasdaq rules.
A copy of the audit committee charter is available on the “Investors & Media – Corporate Governance – Documents & Charters” page of our website
www.gamida-cell.com.
Approval of transactions with related parties
Under the Companies Law, the approval of the audit committee is required to effect specified actions and transactions with office holders and
controlling shareholders and their relatives, or in which they have a personal interest. See “Fiduciary duties and approval of specified related party
transactions under Israeli law” below. The term “controlling shareholder” means any shareholder with the ability to direct the activities of the company,
other than 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
rights in a company or has the right to appoint 50% or more of the directors of the company or its chief executive officer. For the purpose of approving
transactions with controlling shareholders, the term “controlling shareholder” also includes any shareholder that holds 25% or more of the voting rights of
the company if no other shareholder holds more than 50% of the voting rights in the company. For purposes of determining the holding percentage stated
above, two or more shareholders who have a personal interest in a transaction that is brought for the company’s approval are deemed as joint holders. As of
the date of this annual report on Form 20-F, we do not have a controlling shareholder as defined under the Companies Law.
Internal auditor
Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit
committee. The role of the internal auditor is, among other things, to examine whether a company’s actions comply with applicable law and orderly
business procedure. Under the Companies Law, the internal auditor cannot be an interested party or an office holder or a relative of an interested party or an
office holder, nor may the internal auditor be the company’s independent auditor or its representative. An “interested party” is defined in the Companies
Law as: (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or
more directors or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as a chief executive officer of the
company. Our internal auditor is Yisrael Gewirtz, who serves as a partner at Fahn Kanne Control Management Ltd.
110
Fiduciary duties and approval of specified 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 on the duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance
(New Version), 5728-1968. The duty of care requires an office 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, among others, 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, among others, 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 duties or
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 benefit for himself or herself or for others;
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 or her
position as an office holder.
We may approve an act specified above that would otherwise constitute a breach of the duty of loyalty of an office holder, provided, that the office
holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses his or her personal interest, including any
related material information or document, a sufficient time before the approval of such act. Any such approval is subject to the terms of the Companies
Law, setting forth, among other things, the stakeholders of the company entitled to provide such approval, and the methods of obtaining such approval.
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 related
material information or documents relating to any existing or proposed transaction with the company. An interested office holder’s disclosure must be made
promptly 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 to
make such disclosure if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not
considered as an extraordinary transaction.
Under the Companies Law, once an office holder has complied with the above disclosure requirements, a company may approve a transaction 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 office holder that would
otherwise be deemed a breach of duty of loyalty; however, a company may not approve a transaction or action that is not performed by the office holder in
good faith or unless it is in the company’s interest.
Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder or a transaction with a
third 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 loyalty,
which is not an extraordinary transaction, requires approval of the board of directors. Our amended and restated articles of association do not provide
otherwise.
111
Under the Companies Law, an extraordinary transaction in which an office holder has a personal interest requires approval first by the company’s audit
committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify or insure, an office holder who is not a director
requires approval first by the company’s compensation committee, then by the company’s board of directors, and, if such compensation arrangement or an
undertaking to indemnify or insure is inconsistent with the company’s stated compensation policy or if the office holder is the chief executive officer
(subject to a number of exceptions), then such arrangement is subject to a Special Approval for Compensation. Arrangements regarding the compensation,
indemnification or insurance of a director or the chief executive officer of the company require the approval of the compensation committee, board of
directors and, subject to certain exceptions, shareholders by an ordinary majority, in that order, and in the case of the chief executive officer or under certain
circumstances, a Special Approval for Compensation.
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 not be
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 is
subject 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.
Under the Companies Law, the definition of a “personal interest” includes the personal interest of a person in an action or a transaction of a company,
including the personal interest of such person’s relative or the interest of any corporation in which the person and/or such person’s relative is a director or
chief executive officer, a 5% or more shareholder or holds 5% or more of the voting rights, or has the right to appoint at least one director or the chief
executive officer, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest also includes (1) a
personal interest of a person who votes according to a proxy of another person, including in the event that the other person has no personal interest, and (2)
a personal interest of a person who gave the proxy to another person to vote on his or her behalf, regardless of whether the proxy holder has discretion how
to vote on the matter.
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.
An extraordinary transaction in which an office holder has a personal interest requires approval of the company’s audit committee followed by the
approval of the board of directors.
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
“Item 10. Directors, Executive Officers and Corporate Governance—Board Practices — Audit committee—Approval of transactions with related parties”
for a definition of controlling shareholder. Unless exempted under the Companies Law, extraordinary transactions with a controlling shareholder or in
which a controlling shareholder has a personal interest, which includes transactions for the provision of services by a controlling shareholder or his or her
relative, whether directly or indirectly, including through a company controlled by such controlling shareholder, and if such controlling shareholder or
relative thereof is an office holder in the company, any transactions regarding his or her terms of office, require the approval of the audit committee, the
board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders’ meeting.
In addition, the shareholder approval must fulfill one of the following requirements, which we refer to as a Special Majority:
● at least a majority of the shares held by shareholders who do not have a personal interest in the transaction and are voting at the meeting must be
voted in favor of approving the transaction, excluding abstentions; or
● the shares voted by shareholders who do not have a personal interest in the transaction who vote against the transaction represent no more than 2%
of the voting rights in the company.
112
In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of
more than three years requires approval once every three years, unless, with respect to certain transactions that are not related to provision of services or
terms of office, the audit committee determines that the longer duration of the transaction is reasonable given the circumstances related thereto.
Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity as an office holder require
the approval of the compensation committee, board of directors and shareholders by a Special Majority and the terms thereof may not be inconsistent with
the company’s stated compensation policy.
Pursuant to regulations promulgated under the Companies Law, certain transactions and arrangements with a controlling shareholder or his or her
relative, or with directors or office holders, which would otherwise require approval of a company’s shareholders, may be exempt from shareholder
approval under certain conditions.
Compensation of Directors and Executive Officers
Directors. Under the Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent
approval of the board of directors and, unless exempted under regulations promulgated under the Companies Law, the approval of the shareholders at a
general meeting. If the compensation of our directors is inconsistent with our stated compensation policy, then, those provisions that must be included in
the compensation policy according to the Companies Law must have been considered by the compensation committee and board of directors, and
shareholder approval will also be required, provided that:
● at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter,
present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or
● the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the
compensation package does not exceed 2% of the aggregate voting rights in the company.
Executive officers other than the chief executive officer. The Companies Law requires the approval of the compensation of a public company’s
executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and
(iii) if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders (by a special majority
vote as discussed above with respect to the approval of director compensation). However, if the shareholders of the company do not approve a
compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and
board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for
their decision.
An amendment to an existing arrangement with an office holder who is not the chief executive officer or a director requires only the approval of the
compensation committee, if the compensation committee determines that the amendment is not material in comparison to the existing arrangement.
However, according to regulations promulgated under the Israeli Companies Law, an amendment to an existing arrangement with an office holder who is
subordinate to the chief executive officer (and who is not a director) shall not require the approval of the compensation committee, if (i) the amendment is
approved by the chief executive officer and the company’s compensation policy determines that a non-material amendment to the terms of service of an
office holder (other than the chief executive officer) may be approved by the chief executive officer and (ii) the engagement terms are consistent with the
company’s compensation policy.
Chief executive officer. Under the Companies Law, the compensation of a public company’s chief executive officer is required to be approved by: (i)
the company’s compensation committee; (ii) the company’s board of directors, and (iii) the company’s shareholders (by a special majority vote as discussed
above with respect to the approval of director compensation). However, if the shareholders of the company do not approve the compensation arrangement
with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation
committee and the board of directors provide a detailed report for their decision. The approval of each of the compensation committee and the board of
directors should be in accordance with the company’s stated compensation policy; however, in special circumstances, they may approve compensation
terms of a chief executive officer that are inconsistent with such policy provided that they have considered those provisions that must be included in the
compensation policy according to the Companies Law and that shareholder approval was obtained (by a special majority vote as discussed above with
respect to the approval of director compensation). In addition, the compensation committee may waive the shareholder approval requirement with regards
to the approval of the engagement terms of a candidate for the chief executive officer position, if they determine that the compensation arrangement is
consistent with the company’s stated compensation policy, and that the chief executive officer did not have a prior business relationship with the company
or a controlling shareholder of the company and that subjecting the approval of the engagement to a shareholder vote would impede the company’s ability
to employ the chief executive officer candidate.
113
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 acceptable
manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, when voting at general
meetings 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 shareholder duties, and in the event of
discrimination 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 any shareholder
that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or any other power with respect to
the company, has a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty, except to 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 the shareholder’s
position in the company into account.
Approval of Private Placements
Under the Companies Law and the regulations promulgated thereunder, a private placement of securities does not require approval at a general meeting
of the shareholders of a company; provided however, that in special circumstances, such as a private placement completed in lieu of a special tender offer
or a private placement which qualifies as a related party transaction (see “Item 10. Directors, Executive Officers and Corporate Governance—Board
Practices—Fiduciary duties and approval of specified related party transactions under Israeli law”), approval at a general meeting of the shareholders of a
company is required.
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. A company may exculpate
an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of the duty of care
but only if a provision authorizing such exculpation is included in its articles of association. Our amended and restated articles of association include such a
provision. An Israeli company may not exculpate a director from liability arising out of a breach of the duty of care with respect to a dividend or
distribution to shareholders.
Under the Companies Law and the Securities Law, 5738—1968, or the Securities Law, a company may indemnify an office holder in respect of the
following liabilities, payments and expenses incurred for acts performed as an office holder, either pursuant to an undertaking made in advance of an event
or following an event, provided a provision authorizing such indemnification is contained in its articles of association:
● a monetary liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s
award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then
such undertaking must be limited to certain events which, in the opinion of the board of directors, can be foreseen based on the company’s
activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable
under the circumstances, and such undertaking shall detail the foreseen events and described above amount or criteria;
114
● reasonable litigation expenses, including reasonable attorneys’ fees, incurred by the office holder as (1) a result of an investigation or proceeding
instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed
against such office holder as a result of such investigation or proceeding; and (ii) no financial liability was imposed upon him or her as a substitute
for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect
to an offense that does not require proof of criminal intent; or (2) in connection with a monetary sanction; a monetary liability imposed on him or
her in favor of an injured party at an Administrative Procedure (as defined below) pursuant to Section 52(54)(a)(1)(a) of the Securities Law;
● expenses incurred by an office holder or certain compensation payments made to an injured party that were instituted against an office holder in
connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees;
and
● reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him
or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the office holder was acquitted or as a
result of a conviction for an offense that does not require proof of criminal intent.
“Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4
(Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of
procedures subject to conditions) to the Securities Law.
Under the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed
by him or her as an office holder if and to the extent provided in the company’s articles of association:
● a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder;
● a breach of duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act
would not harm the company;
● a monetary liability imposed on the office holder in favor of a third party;
● a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of
the Securities Law; and
● expenses incurred by an office holder in connection with an Administrative Procedure instituted against him or her, including reasonable litigation
expenses and reasonable attorneys’ fees.
Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:
● a breach of duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office
holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
● a breach of the 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, monetary sanction or forfeit levied against the office holder.
115
Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the
board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders. See “Item 10. Directors, Executive
Officers and Corporate Governance—Board Practices—Fiduciary duties and approval of specified related party transactions under Israeli law.”
Our amended and restated articles of association permit us to, exculpate, indemnify and insure our office holders as permitted under the Companies
Law. Our office holders are currently covered by a directors and officers’ liability insurance policy. As of the date of this registration statement, no claims
for directors’ and officers’ liability insurance have been filed under this policy, we are not aware of any pending or threatened litigation or proceeding
involving any of our directors or officers in which indemnification is sought, nor are we aware of any pending or threatened litigation that may result in
claims for indemnification by any director or officer.
We have entered into agreements with each of our directors and executive officers exculpating them, to the fullest extent permitted by law, from
liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by law. The
insurance is subject to our discretion depending on its availability, effectiveness and cost. Effective as November 17, 2021, the maximum amount set forth
in such agreements is (1) with respect to indemnification in connection with a public offering by the Company of our securities, the gross proceeds raised
by us and/or any selling shareholder in such public offering, and (2) with respect to all other permitted indemnification, the greater of (i) an amount equal to
25% of our shareholders’ equity on a consolidated basis, according to the Company’s most recent financial statements as of the time of the actual payment
of indemnification; (ii) $150 million and (iii) 40% of the Company Total Market Cap, which means the average closing price of the Company’s ordinary
shares over the 30 trading days prior to the actual payment of indemnification multiplied by the total number of issued and outstanding shares of the
Company as of the date of actual payment). In the opinion of the SEC, indemnification of directors and executive officers for liabilities arising under the
Securities Act however, is against public policy and therefore unenforceable.
116
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The table below provides information with respect to the fiscal years ended December 31, 2021 and 2020 regarding the compensation of the principal
executive officer, the two most highly paid executive officers, and two additional individuals for whom disclosure would have been provided but for the
fact that they were not serving as an executive officer at the end of fiscal year 2021. In addition, the table below reflects the compensation granted to our
five most highly compensated office holders (as defined in the Companies Law) during or with respect to the year ended December 31, 2020 and 2021, or
the Covered Executives:
Name and Principal Position(1)
Dr. Julian Adams –
Chief Executive Officer
Shai Lankry –
Chief Financial Officer
Michele Korfin –
Chief Operating and Commercial
Officer(4)
Jas Uppal –
Chief Regulatory and Quality Officer(5)
Dr. Ronit Simantov –
Chief Medical and Chief Scientific
Officer
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Non-Equity
Incentive Plan
Compensation
Salary
Share
Awards(2)
In thousands USD
Option
Awards(2)
All Other
Compensation(3)
Total
547
532
321
253
429
159
409
453
434
390
125
155
132
53
296
—
234
—
1,049
804
350
313
48
250
106
—
65
—
—
267
176
—
163
163
35
31
111
19
33
12
2
34
2,053
1,522
1,148
638
866
438
815
650
113
300
305
34
1,186
120
—
269
50
829
(1) All Covered Executives were employed on a full time (100%) basis during their term of employment in 2021.
(2) For further information about the assumption used for the valuation of the Share Awards and Option awards, see note 11 – Share-based Compensation
in the financial statements included elsewhere in this annual report.
(3) Includes leased car expenses, relocation related expenses, medical and other insurance, and 401(k) contributions made by the Company.
(4) Ms. Korfin joined us as Chief Commercial and Chief Operating Officer in August 2020.
(5) Ms. Uppal joined us as Chief Regulatory and Quality Officer in January 2020.
Narrative Disclosure to Summary Compensation Table
Our executive compensation program is designed to attract, motivate and retain highly experienced leaders who will contribute to our success and
enhance shareholder value, while demonstrating professionalism in a highly achievement-oriented culture. Our program is based on merit and rewards
excellent performance in the long term, and it aims to embed our core values within our leadership team’s behavior.
To that end, our program is designed:
● To closely align the interests of the executive officers with those of our shareholders in order to enhance shareholder value;
● To align a significant portion of the executive officers’ compensation with our short and long-term goals and performance;
● To provide the executive officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity
incentive programs and benefits;
117
● To strengthen the retention and the motivation of executive officers in the long term, and to be able to present to each executive officer an
opportunity to advance in a growing organization;
● To provide appropriate awards in order to incentivize superior individual performance; and
● To maintain consistency in the way executive officers are compensated.
Our executive compensation program was prepared taking into account our size and business and financial characteristics.
Role of the Compensation Committee and Executive Officers in Setting Executive Compensation
The compensation committee of our board of directors is responsible for determining our executives’ compensation. During the past fiscal year, after
taking into consideration the six factors described above, the compensation committee engaged Radford, which is part of Aon plc, as its compensation
consultant. Our compensation committee selected Radford based on Radford’s general reputation in the industry. The compensation committee requested
that Radford:
● evaluate the efficacy of our existing compensation strategy and practices in supporting and reinforcing our long-term strategic goals; and
● assist in refining our compensation strategy and in developing and implementing an executive compensation program to execute that strategy.
As part of its engagement, the compensation committee also requested that Radford develop a group of comparator companies and to perform analyses
of competitive performance and compensation levels for that group, and finally, to develop recommendations for our executive compensation program that
were presented to the compensation committee for its consideration. Following an active dialogue with Radford, the compensation committee approved the
recommendations.
Historically, the compensation committee has made significant adjustments to annual compensation, determined bonus and equity awards and
established new performance objectives at one or more meetings held during the first quarter of the year. However, the compensation committee also
considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the
efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings
throughout the year. Generally, the compensation committee’s process comprises two related elements: the determination of compensation levels and the
establishment of performance objectives for the current year. For all executives other than the chief executive officer, our compensation committee
typically reviews and discusses each executive’s performance and his or her proposed compensation with our chief executive officer. Based on those
discussions and at its discretion, the compensation committee then determines the compensation of each executive officer for approval by the board of
directors. The chief executive officer may not participate in, or be present during, any deliberations or determinations of the compensation committee
regarding his compensation and his compensation is subjected to shareholder approval. The compensation committee evaluates the chief executive officer
and makes recommendations to the board of directors regarding the chief executive officer’s compensation, which is then approved by the full board of
directors in its discretion. In determining the performance and compensation of all executives and directors, as part of its deliberations, the compensation
committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information,
tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock
ownership information, company stock performance data, analyses of historical executive compensation levels and current company-wide compensation
levels, as well as recommendations from the committee’s compensation consultant, including analyses of executive and director compensation paid at other
companies identified by the consultant.
The compensation committee also evaluates our executive compensation program in light of our shareholders’ views and our transforming business
needs and expects to continue to consider the outcome of our “say on pay” votes and our shareholders’ views when making future executive compensation
decisions. The compensation programs for our executives are also subject to the approval of our board of directors and in the case of our chief executive
officer and directors, and certain other cases, the approval of our shareholders. For additional information regarding our executive compensation program,
see “Item 10. Directors, Executive Officers and Corporate Governance—Compensation of Directors and Executive Officers.”
118
Executive Compensation Program
The annual compensation arrangements for our named executive officers consist of an annual base salary and long-term incentive compensation in the
form of equity awards. Our named executive officers are also eligible to receive short-term incentive compensation in the form of annual incentive awards,
which may be paid in cash or equity-based awards. We have historically emphasized the use of equity to provide incentives for our named executive
officers, to focus on the growth of our overall enterprise value and, correspondingly, to create sustainable value for our shareholders.
Annual Base Salary
We have entered into agreements with each of our named executive officers that establish annual base salaries, which are generally reviewed and
approved in the first quarter of the fiscal year by our compensation committee. Annual base salaries are intended to provide a fixed component of
compensation to our named executive officers, in order to compensate our named executive officers for the satisfactory performance of their duties,
reflecting their experience, expertise, roles and responsibilities.
Base salaries for our named executive officers have generally been set at levels deemed necessary to attract and retain individuals with superior talent.
Merit-based increases to salaries are based on our chief executive officer’s assessment of the individual executive’s performance, the recommendations
made by the chief executive officer and the competitive market in which the Company operates for talent.
The following table presents the annual base salaries for each of our named executive officers for 2021 and 2020, as determined by the board of
directors or compensation committee, as applicable:
Name
Dr. Julian Adams – Chief Executive Officer
Shai Lankry – Chief Financial Officer
Michele Korfin – Chief Operating and Commercial Officer
Jas Uppal – Chief Regulatory and Quality Officer
Dr. Ronit Simantov – Chief Medical and Chief Scientific Officer
Annual Incentive Compensation
2021 Base
Salary
($)
550,020
315,000
429,781
380,800
442,960
2020 Base
Salary
($)
534,000
243,810
425,000
374,000
392,000
Our named executive officers are eligible to receive annual incentive compensation based on the satisfaction of individual and corporate performance
objectives established by the board of directors. Each named executive office has a target annual incentive opportunity, calculated as a percentage of annual
base salary, and may earn more or less than the target amount based on our company’s and his or her individual performance.
For 2021, the target annual incentive opportunities as a percentage of base salary for our named executive officers were 50% for Dr. Julian Adams,
40% for Michele Korfin, 35% for Shai Lankry, 35% for Dr. Ronit Simantov and 25% for Jas Uppal. The amounts of any annual incentives earned are
determined after the end of the year, based on the achievement of the designated corporate and individual performance objectives, and may be paid in cash
or equity.
For 2021 and 2020, annual incentives were earned based on the compensation committee’s assessment of each executive’s respective performance. The
amounts of such annual incentives, which are set forth in the “Summary Compensation Table” above, were recommended by the compensation committee
and approved by the board of directors in January 2022 and February 2021 based on each executive’s and our corporate performance in 2021 and 2020,
respectively.
The board of directors determined that we attained our corporate goals for 2021 and 2020 at the levels of 25% and 50%, respectively, and approved
individual performance incentives for each named executive officer for each such year. The annual incentives paid to the named executive officers for
performance in 2021 and 2020 are included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.
119
Equity-Based Awards
Our equity-based incentive awards granted to our named executive officers are designed to align the interests of our named executive officers with
those of our shareholders. Vesting of equity awards is generally tied to each officer’s continuous service with us and serves as an additional retention
measure. Our executives generally are awarded an initial new hire grant upon commencement of employment and thereafter on an annual basis, subject to
the discretion of the Board or Compensation Committee, as applicable. The equity awards described in this section are included in the “Option Awards”
column of the Summary Compensation Table above.
Retirement Benefits and Other Compensation
Our named executive officers did not participate in, or otherwise receive any benefits under, any pension, retirement or deferred compensation plan
sponsored by us during 2021 or 2020, except for customary 401K matching contribution for our U.S. based named executive officers. Our named executive
officers are eligible to participate in our benefit programs on the same basis as all employees of our company. We generally do not provide perquisites or
personal benefits to our named executive officers except in limited circumstances, and we did not provide any perquisites or personal benefits to our named
executive officers in 2021 or 2020.
Agreements with Our Named Executive Officers and Potential Payments upon Termination or Change in Control
We have entered into an employment agreement or a consulting with each of our named executive officers that provide for the basic terms of their
employment, including base salary, annual incentive opportunity and equity grants, as well as certain severance and change of control benefits. Each of our
named executive officers other than Shai Lankry is employed at will and may be terminated at any time for any reason.
Dr. Julian Adams
We entered into an at-will employment agreement with Dr. Julian Adams in November 2017, which agreement has been amended from time to time.
Under the terms of his amended employment agreement, Dr. Adams is eligible to receive a base salary of $550,000 with an annual target incentive
opportunity of up to 50% of his annual base salary. In connection with his employment agreement, Dr. Adams entered into a covenant not to disclose our
confidential information during his employment term and an assignment of intellectual property rights. Subject to certain conditions, Dr. Adams is also
subject to non-competition and non-solicitation provisions during his employment term and for a period of 12 months thereafter.
Potential Payments Upon Termination or Change in Control
Upon termination of his employment, subject to certain conditions, Dr. Adams is entitled to (i) for a period of eight months following the date on
which his employment is terminated, if such termination is by the company without cause, or if he resigns for good reason (each, as defined in his amended
employment agreement); and (ii) for a period of three months following the date termination if he resigns or is terminated for any other reason: (a) a lump-
sum payment of his annual cash incentive target gross bonus (pro-rated for the portion of that year until his last day of employment), and (b) monthly
payments equal to Dr. Adams’s monthly base salary as well as health insurance and disability benefit premiums.
In the event of a change in control of the company, if Dr. Adams’s employment is terminated by the company without cause, or if he resigns on
account of good reason (each, as defined in Dr. Adams’s employment agreement), in each case within 12 months following such change in control, Dr.
Adams will be entitled to a payment equal to his annual target bonus, as well as to acceleration of the vesting of all of his outstanding equity.
Shai Lankry
We entered into an employment agreement with Mr. Shai Lankry in April 2018 and following Mr. Lankry’s relocation to the United States on
November 1, 2021, he signed a new employment agreement dated December 15, 2021, or the US Agreement. Under the terms of his US Agreement,
Mr. Lankry is eligible to receive a base salary of $315,000 and an annual target incentive opportunity of 35% of his annual base salary. In addition, Mr.
Lankry is entitled to reimbursement of the expenses and fees associated with Mr. Lankry’s obtaining authorization to work in the United States and
relocation expenses of up to $100,000. In connection with his employment agreement, Mr. Lankry entered into a covenant not to disclose our confidential
information during his employment term and an assignment of intellectual property rights.
120
Potential Payments Upon Termination or Change in Control
Mr. Lankry’s employment may be terminated (i) by us at any time for cause (as defined in Mr. Lankry’s employment agreement), or (ii) following
November 1, 2022, by us or Mr. Lankry for any reason. In the event of a termination by the company for any reason other than for cause, the company will
give Mr. Lankry six months’ notice of such termination, and in the event of Mr. Lankry’s resignation for any reason, he shall give the company one month’s
notice. In addition, in the event that the Mr. Lankry is terminated by the company or a successor entity without cause prior to the six-month anniversary of
a change in control of the company, Mr. Lankry will be entitled to accelerated vesting of any then unvested outstanding equity he holds.
Michele Korfin
We entered into an employment agreement with Ms. Korfin in August 2020 for an unspecified time period, with a notice period of one month. Under
the terms of her employment agreement, Mrs. Korfin is eligible to receive a base salary of $429,781 and an annual target incentive opportunity of 40% of
her annual base salary. In connection with her employment agreement, Mrs. Korfin entered into a covenant not to disclose our confidential information
during her employment term and an assignment of intellectual property rights. Ms. Korfin is also subject to a non-competition provision for 18 months
following a termination for cause or resignation for good reason, and for 12 months following a termination for any other reason.
Potential Payments Upon Termination or Change in Control
If Ms. Korfin’s employment is terminated by the company at any time without cause, or if she resigns on account of good reason (each, as defined in
Ms. Korfin’s employment agreement), subject to certain conditions, Ms. Korfin will be entitled to a lump sum severance payment equal to six months’ base
salary, as well as additional monthly payments of her base salary and COBRA coverage for six months following the date of her termination.
In the event of a change in control of the company, 50% of Ms. Korfin’s unvested equity awards will vest as of immediately prior to such change in
control, and if Ms. Korfin is terminated by the company without cause or she resigns for good reason, in either case, within twelve months following a
change in control of the company, all of her equity awards shall fully vest as of immediately prior to such termination.
Jas Uppal
We entered into a consulting agreement with Ms. Jas Uppal in January 2020. Under the terms of the consulting agreement, Ms. Juppal is paid a
consulting fee of £1,150 per day. She is also eligible to receive a discretionary success fee under such conditions as the Company may determine. The
consulting agreement includes covenants not to disclose our confidential information during her employment term and an assignment of intellectual
property rights.
Dr. Ronit Simantov
We entered into an employment agreement with Dr. Ronit Simantov in April 2017 for an unspecified time period, with a notice period of one month.
Under the terms of her employment agreement, Dr. Simantov is eligible to receive a base salary of $442,960 and an annual target incentive opportunity of
35% of her annual base salary, as well as a one-time signing bonus of $50,000. In connection with her employment agreement, Dr. Simantov entered into a
covenant not to disclose our confidential information during her employment term and an assignment of intellectual property rights.
Potential Payments Upon Termination or Change in Control
If Dr. Simantov’s employment is terminated by the company at any time without cause, or if she resigns for good reason (each, as defined in Dr.
Simantov’s employment agreement), Dr. Simatov will be entitled to six months of severance payments equal to her monthly base salary as well as health
insurance and disability benefit premiums, in each case as in effect on the date of Dr. Simantov’s termination of employment.
In addition, in the event that the Dr. Simantov is terminated by the company or a successor entity without cause prior to the 12-month anniversary of a
change in control of the company, Dr. Simantov will be entitled to accelerated vesting of any then unvested outstanding equity she holds.
121
Outstanding Equity Awards at Fiscal Year End 2021
Option Awards
Number of
securities
underlying
unexercised
options (#)
exercisable
Number of
securities
underlying
unexercised
options (#)
unexercisable
Option
exercise price
($)
Option expiration date
Stock Awards
Number of
shares
or units of
stock
that have not
vested (#)
Market value
of shares of
units of stock
that have not
vested ($)
60,000
596,574
94,875
43,125
—
—
163,118
26,125
16,625
—
—
—
156,250
—
—
—
37,187
—
—
—
186,574
33,962
21,437
—
—
—
— $
— $
43,125 $
94,875 $
—
186,000 $
23,303 $
11,875 $
21,375 $
62,052 $
—
—
343,750 $
—
20,147 $
—
47,813 $
29,000 $
—
—
— $
15,438 $
27,563 $
54,000 $
—
—
7.50
4.90
11.01
4.70
—
9.51
4.90
11.01
4.70
9.51
—
—
4.36
—
9.51
—
4.75
9.51
—
—
4.90
11.01
4.70
9.51
—
—
March 2, 2027
December 28, 2027
March 11, 2029
September 10, 2030
—
February 25, 2031
May 14, 2028
March 14, 2029
February 24, 2030
February 25, 2031
—
—
August 31, 2030
—
February 25, 2031
—
January 12, 2030
February 25, 2031
—
—
November 16, 2027
March 11, 2029
February 24, 2030
February 25, 2031
—
—
—
—
—
—
31,150 $
—
—
—
—
—
10,344 $
35,601 $
—
3,358 $
—
62,514 $
—
—
4,400 $
35,207 $
—
—
—
—
9,000 $
56,377 $
—
—
—
—
296,237
—
—
—
—
—
98,371
135,284
—
30,130
—
220,285
—
—
41,844
133,787
—
—
—
—
85,590
214,233
Name
Julian Adams
Julian Adams
Julian Adams(1)
Julian Adams(2)
Julian Adams(3)
Julian Adams(4)
Shai Lankry(5)
Shai Lankry(6)
Shai Lankry(7)
Shai Lankry(4)
Shai Lankry(3)
Shai Lankry(8)
Michele Korfin(9)
Michele Korfin(3)
Michele Korfin(4)
Michele Korfin(8)
Jas Uppal(10)
Jas Uppal(4)
Jas Uppal(3)
Jas Uppal(8)
Dr. Ronit Simantov
Dr. Ronit Simantov(11)
Dr. Ronit Simantov(7)
Dr. Ronit Simantov(4)
Dr. Ronit Simantov(3)
Dr. Ronit Simantov(8)
(1) One fourth (1/4th) of the shares subject to the option award vested on June 4, 2020, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(2) One fourth (1/4th) of the shares subject to the option award vested on September 10, 2021, and one twelfth (1/12th) of the remaining shares subject to
the option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(3) The restricted shares shall vest in three equal annual installments on February 25, 2022, February 25, 2023, and February 25, 2024, subject to the
officer’s continuous service through such vesting date.
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(4) One fourth (1/4th) of the shares subject to the option award shall vest on February 25, 2022, and one twelfth (1/12th) of the remaining shares subject to
the option award shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(5) One fourth (1/4th) of the shares subject to the option award vested on April 15, 2019, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(6) One fourth (1/4th) of the shares subject to the option award vested on March 13, 2020, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(7) One fourth (1/4th) of the shares subject to the option award vested on February 24, 2021, and one twelfth (1/12th) of the remaining shares subject to
the option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(8) 20% of the restricted shares shall vest upon the omidubicel BLA acceptance, an additional 30% of the Restricted Shares shall vest upon BLA
Approval, and the remaining 50% shall vest on the one-year anniversary of the BLA Approval; provided, in each case, that such applicable vesting
event actually occurs (which is uncertain and not assured) and subject to the officer’s continuous service through such vesting date.
(9) One fourth (1/4th) of the shares subject to the option award vested on August 15, 2021, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(10) One fourth (1/4th) of the shares subject to the option award vested on January 12, 2021, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
(11) One fourth (1/4th) of the shares subject to the option award vested on March 14, 2020, and one twelfth (1/12th) of the remaining shares subject to the
option award vested or shall vest in equal quarterly installments thereafter, subject to the officer’s continuous service through such vesting date.
Additional Narrative Disclosure
Employee Share and Option Plan (1998)
In 1998, our board of directors adopted our Employee Share and Option Plan (1998), or the 1998 Plan. There are currently no options outstanding or
options available for issuance under the 1998 Plan. There are currently 180,329 ordinary shares, which resulted from the exercise of certain options granted
under the 1998 Plan, held in trust in favor of the employees who exercised such options. The 1998 Plan remains in effect in order to allow our employees to
enjoy certain tax benefits under Israeli tax law.
Stock Option Plan (1999)
In 1999, our board of directors adopted our Stock Option Plan (1999), or the 1999 Plan. There are currently no options outstanding or options available
for issuance under the 1999 Plan. There are currently 5,000 ordinary shares, which resulted from the exercise of certain options granted under the 1999
Plan, held in trust in favor of the employees who exercised such options. The 1999 Plan remains in effect in order to allow our employees to enjoy certain
tax benefits under Israeli tax law.
2003 Israeli Share Option Plan
In July 2003, our board of directors adopted our 2003 Israeli Share Option Plan, or the 2003 Plan. There are currently no options outstanding or
options available for issuance under the 2003 Plan. There are currently 54,569 ordinary shares, which resulted from the exercise of certain options granted
under the 2003 Plan, held in trust in favor of the employees who exercised such options. The 2003 Plan remains in effect in order to allow our employees to
enjoy certain tax benefits under Israeli tax law.
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2014 Israeli Share Incentive Plan
In November 2014 and December 2014, respectively, our board of directors adopted and our shareholders approved our 2014 Israeli Share Incentive
Plan, or the 2014 Plan. The 2014 Plan replaced our 2003 Plan. We are no longer granting options under the 2014 Plan because it was superseded by our
2017 Share Incentive Plan, or the 2017 Plan, although previously granted awards remain outstanding. As of December 31, 2021, we had options to
purchase 17,282 Ordinary Shares outstanding under the 2014 Plan with a weighted-average exercise price of $0.25.
The 2014 Plan provides for the grant of options to the Company’s and affiliates’ directors, employees, officers, consultants, advisors and service
providers, and any other person whose services are considered valuable to us or our affiliates, to encourage a sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase
shares in the Company.
The 2014 Plan is administered by our board of directors directly or upon recommendation of a committee designated by the board of directors, which
determines, subject to Israeli law, the grantees of awards and the terms of the grant, including, exercise prices, vesting schedules, acceleration of vesting
and the other matters necessary in the administration of the 2014 Plan. The 2014 Plan enables us to issue awards under various tax regimes, including,
without limitation, pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance, and under Section 3(i) of the
Ordinance.
Section 102 of the Ordinance allows employees, directors and officers, who are not controlling shareholders, to receive favorable tax treatment for
compensation in the form of shares or options. Section 102 of the Ordinance includes two alternatives for tax treatment involving the issuance of options or
shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee.
Section 102(b)(2) of the Ordinance, which provides the most favorable tax treatment for grantees, permits the issuance to a trustee under the “capital gain
track.” Note however, that according to Section 102(b)(3) of the Ordinance, if the company granting the shares or options is a publicly traded company or
is listed for trading on any stock exchange within a period of 90 days from the date of grant, any difference between the exercise price of the Awards (if
any) and the average closing price of the company’s shares at the 30 trading days preceding the grant date (when the company is listed on a stock
exchange) or 30 trading days following the listing of the company, as applicable, will be taxed as “ordinary income” at the grantee’s marginal tax rate. In
order to comply with the terms of the capital gain track, all securities granted under a specific plan and subject to the provisions of Section 102 of the
Ordinance, as well as the shares issued upon exercise of such securities and other shares received following any realization of rights with respect to such
securities, such as share dividends and share splits, must be registered in the name of a trustee selected by the board of directors and held in trust for the
benefit of the relevant grantee. The trustee may not release these securities to the relevant grantee before 24 months from the date of grant and deposit of
such securities with the trustee. However, under this track, we are not allowed to deduct an expense with respect to the issuance of the options or shares.
The 2014 Plan provides that options granted to our employees, directors and officers who are not controlling shareholders and who are considered
Israeli residents may be intended to qualify for special tax treatment under the “capital gain track” provisions of Section 102(b) of the Ordinance as detailed
above. Our Israeli non-employee service providers and controlling shareholders may only be granted options under Section 3(i) of the Ordinance, which
does not provide for similar tax benefits.
The options granted under the 2014 Plan are currently fully vested.
Options expiry is determined by the specific option agreement or at the end of an extended period following the termination of the grantee’s
employment or service. In the event of the death of a grantee while employed by or performing service for us or a subsidiary, or in the event of termination
of a grantee’s employment or services for reasons of disability, the grantee, or in the case of death, his or her legal successor, may exercise options that have
vested prior to termination within the twelve (12) month period from the date of disability or death. If a grantee’s employment or service is terminated by
reason of retirement in accordance with applicable law, the grantee may exercise his or her vested options within the twelve (12) month period after the
date of such retirement. If we terminate a grantee’s employment or service for cause, all of the grantee’s vested and unvested options will expire on the date
of termination. If a grantee’s employment or service is terminated for any other reason, the grantee may generally exercise his or her vested options within
90 days of the date of termination.
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Options may not be assigned, transferred or given as collateral nor may any right with respect to the options be given to a third party. As long as
options and/or shares are held by the Section 102 trustee, all rights of the grantee over the shares may not be transferred, assigned, pledged or mortgaged,
except by will or the laws of descent and distribution.
In the event of a merger, acquisition or reorganization of our company, or a sale of all, or substantially all, of our shares or assets or other transaction
having a similar effect on us, then without the consent of the option holder, our board of directors or its designated committee, as applicable, may but is not
required to (i) cause any outstanding options to be assumed or an equivalent award to be substituted by such successor corporation, or (ii) in case the
successor corporation does not assume or substitute the award (a) if provided for in the relevant option agreement – all unvested options of the applicable
grantee shall become vested and such grantee shall have the right to exercise such options in connection with such transaction or (b) cancel the options and
substitute for any other type of asset or property determined by the board of directors or the committee as fair under the circumstances.
2017 Share Incentive Plan
In January 2017 and February 2017, respectively, our board of directors adopted and our shareholders approved our 2017 Plan. The 2017 Plan replaced
our 2014 Plan. We are no longer granting options under the 2014 Plan because it was superseded by the 2017 Plan, although previously granted awards
remain outstanding. As of December 31, 2021, we had options to purchase 4,925,619 ordinary shares outstanding under the 2017 Plan with a weighted-
average exercise price of $5.38. On February 25, 2021 and November 17, 2021, the board and shareholders, respectively, approved an amendment and
restatement of the 2017 Plan.
As of December 31, 2021, our 2017 Plan, as amended, has up to 1,520,066 ordinary shares available for issuance. The 2017 Plan, as amended, also
contains an “evergreen” provision, which provides for an automatic allotment of ordinary shares to be added every year to the pool of ordinary shares
available for grant under the 2017 Plan. Under the evergreen provision, on January 1 of each year (beginning January 1, 2022), the number of ordinary
shares available under the 2017 Plan automatically increases by the lesser of the following: (i) 4% of our outstanding ordinary shares on the last day of the
immediately preceding year; and (ii) an amount determined in advance of January 1 by the board.
The 2017 Plan provides for the grant of awards, including options, restricted shares and RSUs, to the Company’s and affiliates’ directors, employees,
officers, consultants, advisors, and any other person whose services are considered valuable to us or our affiliates, to increase their efforts on our and our
affiliates’ behalf, and to promote the success of the Company’s business by providing them with opportunities to acquire a proprietary interest in the
Company.
The 2017 Plan is administered by a committee designated by the board of directors, which determines, subject to Israeli law, the grantees of awards
and the terms of the grant, including, exercise prices, vesting schedules, acceleration of vesting and conditions and restrictions applicable to an award, as
well other matters necessary in the administration of the 2017 Plan. In the event that the Board does not appoint or establish a committee, the 2017 Plan
shall be administered by the Board. The 2017 Plan enables us to issue awards under various tax regimes, including, without limitation, pursuant to Section
102 of the Ordinance as discussed under “2014 Israeli Share Option Plan” above, and under Section 3(i) of the Ordinance and Section 422 of the United
States Internal Revenue Code of 1986, as amended, or the Code.
The 2017 Plan provides that awards granted to our employees, directors and officers who are not controlling shareholders and who are considered
Israeli residents are intended to qualify for special tax treatment under the “capital gain track” provisions of Section 102(b) of the Ordinance as detailed
above. Our Israeli non-employee service providers and controlling shareholders may only be granted awards under Section 3(i) of the Ordinance, which
does not provide for similar tax benefits.
Awards granted under the 2017 Plan to U.S. residents may qualify as “incentive stock options” within the meaning of Section 422 of the Code, or may
be non-qualified. The exercise price for “incentive stock options” must not be less than the fair market value on the date on which an option is granted, or
110% of the fair market value if the option holder holds more than 10% of our share capital.
The vesting schedule of options granted under the 2017 Plan is set forth in each grantee’s grant letter.
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Awards terminate upon the date set out in the grantee’s specific award agreement or at the end of an extended period following the termination of the
grantee’s employment or service. In the event of the death of a grantee while employed by or performing service for us or an affiliate, or within the three
(3) month period after the termination, or in the event of termination of a grantee’s employment or services for reasons of disability, the grantee (or his or
her estate or legal successor (in the case of death) or the person who acquired legal rights to exercise such awards (in the case of death or disability)), may
exercise awards that have vested prior to termination within a period of one (1) year from the date of disability or death but in any event no later than the
expiration date of the awards. If a grantee’s employment or service is terminated by reason of retirement in accordance with applicable law, the grantee may
exercise his or her vested awards within the three (3) month period after the date of such retirement. If we terminate a grantee’s employment or service for
cause, all of the grantee’s vested and unvested awards will expire on the date of termination. If a grantee’s employment or service is terminated for any
other reason, all unvested awards shall expire and the grantee may exercise his or her vested awards within three (3) months after the date of termination.
Any expired or unvested awards return to the pool and become available for reissuance.
Options may not be assigned or transferred other than by will or laws of descent, unless otherwise determined by the committee.
In the event of a merger or consolidation of our company, or a sale of all, or substantially all, of our shares or assets or other transaction having a
similar effect on us, or liquidation or dissolution, or such other transaction or circumstances that the Board determines to be a relevant transaction, then
without the consent of the grantee, our board of directors or its designated committee, as applicable, may but is not required to (i) cause any outstanding
award to be assumed or substituted by such successor corporation, or (ii) regardless of whether or not the successor corporation assumes or substitutes the
award (a) provide the grantee with the option to exercise the award as to all or part of the shares, and may provide for an acceleration of vesting of unvested
awards, or (b) cancel the award and pay in cash, shares of the company, the acquirer or other corporation which is a party to such transaction or other
property as determined by the board of directors or the committee as fair in the circumstances. Notwithstanding the foregoing, our board of directors or its
designated committee may upon such event amend, modify or terminate the terms of any award as the board of directors or the committee shall deem, in
good faith, appropriate.
As of December 31, 2021, outstanding awards under our Equity Incentive Plans totaled 4,942,901 ordinary shares and 1,524,255 ordinary shares
remained available for grant. Of the 531,477 outstanding restricted share awards, none of the restricted ordinary shares were vested as of December 31,
2021. Of the 4,441,424 outstanding options, options to purchase 2,171,616 ordinary shares were vested as of December 31, 2021, with a weighted average
exercise price of $5.57 per share, and will expire between January 18, 2022 and November 17, 2030.
Non-Employee Director Compensation
Director Compensation Table
The following table shows for the fiscal year ended December 31, 2021 certain information with respect to the compensation of our non-employee
directors:
Name
Robert I. Blum(1)
Nurit Benjamini(2)
Anat Cohen-Dayag(3)
David Fox(4)
Ofer Gonen(5)
Naama Halevi Davidov(6)
Kenneth I. Moch(7)
Michael S. Perry(8)
Shawn C. Tomasello(9)
Stephen T. Wills(10)
Fees Earned
or
Paid in Cash
($)
Share Awards
($)
Option
Awards
($)
Total
($)
67,500
48,503
—
44,000
55,181
—
65,000
25,495
50,000
61,250
5,040
—
—
—
5,040
—
5,040
—
5,040
5,040
20,014
—
—
—
15,210
—
15,210
—
15,210
15,210
92,554
48,502
—
44,000
75,432
—
85,250
25,495
70,250
81,500
(1) Mr. Blum was awarded (i) 2,000 restricted shares and (ii) options to purchase 12,500 ordinary shares. This option vests in equal quarterly installments
over a twelve-month period commencing on November 1, 2021, subject to the continued service as of the applicable vesting date. In aggregate, Mr.
Blum had 2,000 restricted shares and options to purchase 72,500 ordinary shares outstanding as of December 31, 2021.
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(2) Ms. Benjamini resigned from the board in August 2021 and did not exercise her options to purchase ordinary shares that had been awarded to her. The
options have been expired.
(3) Ms. Cohen-Dayag was appointed to the board of directors on January 28, 2022 and received no compensation for the fiscal year ended December 31,
2021.
(4) Mr. Fox resigned from the board in November 2021 and did not exercise his options to purchase ordinary shares that had been awarded to him. The
options have expired.
(5) The restricted shares and options to purchase ordinary shares reflected in this line were awarded directly to Clal Biotechnology Industries Ltd. Mr.
Gonen disclaims ownership in these shares and options.
(6) Ms. Halevi Davidov was appointed to the board of directors on January 27, 2022 and received no compensation for the fiscal year ended December 31,
2021.
(7) Mr. Moch was awarded (i) 2,000 restricted shares and (ii) options to purchase 9,500 ordinary shares. This option vests in equal quarterly installments
over a twelve-month period commencing on November 1, 2021, subject to the continued service as of the applicable vesting date. In aggregate, Mr.
Moch had 2,000 restricted shares and options to purchase 57,500 ordinary shares outstanding as of December 31, 2021.
(8) Mr. Perry resigned from the board in May 2021 and did not exercise his options to purchase ordinary shares that had been awarded to him. The options
have expired.
(9) Mr. Tomasello was awarded (i) 2,000 restricted shares and (ii) options to purchase 9,500 ordinary shares. This option vests in equal quarterly
installments over a twelve-month period commencing on November 1, 2021, subject to the continued service as of the applicable vesting date. In
aggregate, Ms. Tomasello had 2,000 restricted shares and options to purchase 39,500 ordinary shares outstanding as of December 31, 2021.
(10) Mr. Wills was awarded (i) 2,000 restricted shares and (ii) options to purchase 9,500 ordinary shares. This option vests in equal quarterly installments
over a twelve-month period commencing on November 1, 2021, subject to the continued service as of the applicable vesting date. In aggregate, Mr.
Wills had 2,000 restricted shares and options to purchase 39,500 ordinary shares outstanding as of December 31, 2021.
Narrative Disclosure to Director Compensation Table
Each of the Company’s non-executive directors is entitled to the following payments, which are paid in arrears, in quarterly installments: (i) an annual
fee of $40,000 plus VAT, if applicable, (ii) for audit committee or compensation committee membership, an additional annual fee of $10,000 plus VAT, if
applicable, (iii) for nominating and corporate governance committee members, an additional annual fee of $4,000 plus VAT, if applicable, (iv) for
chairmanship of the board of directors an additional annual fee of $20,000 plus VAT, if applicable, (v) for each chairmanship of the audit committee and the
compensation committee, an additional annual fee of $5,000 plus VAT, if applicable and (vi) for chairmanship of the nominating and corporate governance
committee, an additional annual fee of $3,500 plus VAT, if applicable. In addition, each of the Company’s non-executive directors, other than the current
chairman of the board of directors, shall be entitled to receive an initial grant (upon his or her first appointment to election to the Board) of 4,000 restricted
ordinary shares of the Company and options to purchase 19,000 ordinary shares of the Company, and an annual grant of 2,000 restricted ordinary shares of
the Company and options to purchase 9,500 ordinary shares of the Company, and the current chairman of the board of directors shall be entitled to receive
an annual grant of 2,000 restricted ordinary shares of the Company and options to purchase 12,500 ordinary shares of the Company.
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Compensation and Talent Committee
Compensation Committee Interlocks and Insider Participation
Under the Companies Law, the board of directors of any public company must appoint a compensation committee. Our compensation and talent
committee, which consists of Ofer Gonen, Stephen T. Wills, Kenneth I. Moch and Shawn C. Tomasello, assists our board of directors in determining
compensation for our directors and officers. Mr. Moch serves as Chairman of the committee. Our board of directors has determined that each member of
our compensation committee is independent under the Nasdaq Rules, including the additional independence requirements applicable to the members of a
compensation committee.
In accordance with the Companies Law, the roles of the compensation and talent committee are, among others, as follows:
● making recommendations to the board of directors with respect to the approval of the compensation policy for office holders and, once every three
years, regarding any extensions to a compensation policy that was adopted for a period of more than three years;
● reviewing the implementation of the compensation policy and periodically making recommendations to the board of directors with respect to any
amendments or updates to the compensation policy;
● resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and
● exempting, under certain circumstances, a transaction with our chief executive officer from the approval of the general meeting of our
shareholders.
Our board of directors has adopted a compensation committee charter setting forth the responsibilities of the committee consistent with the Nasdaq
Rules, which include among others:
● recommending a compensation policy to our board of directors for its approval, in accordance with the requirements of the Companies Law, as
well as making recommendations to the board of directors with respect to other compensation policies, incentive-based compensation plans and
share-based compensation plans, overseeing the development and implementation of such policies and recommending to our board of directors
any amendments or modifications that the committee deems appropriate, including as required under the Companies Law;
● reviewing and approving the granting of options and other incentive awards to the chief executive officer and other executive officers, including
reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and other executive officers,
and evaluating their performance in light of such goals and objectives;
● approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and
● administering our share-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting
such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and determining the
terms of such awards.
Compensation Committee Report
Gamida Cell’s compensation committee has reviewed and discussed the compensation discussion and analysis with the management of the company
and, based on the review and discussions recommended the board of directors that the compensation discussion and analysis be included in this annual
report.
The compensation and talent committee consists of Ofer Gonen, Stephen T. Wills, Kenneth I. Moch and Shawn C. Tomasello.
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In general, under the Companies Law, a public company must have a compensation policy approved by the board of directors after receiving and
considering the recommendations of the compensation committee. In addition, our compensation policy must be approved at least once every three years,
first, by our board of directors, upon recommendation of our compensation and talent committee, and second, by a simple majority of the ordinary shares
present, in person or by proxy, and voting at a shareholders meeting, provided that either:
● such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders who do not
have a personal interest in such compensation arrangement and who are present and voting (excluding abstentions); or
● the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation arrangement
and who vote against the arrangement, does not exceed 2% of the company’s aggregate voting rights.
We refer to this as the Special Approval for Compensation. Under the Companies Law, subject to certain conditions, the board of directors may ratify
the compensation policy even if it is not ratified by the shareholders.
Pursuant to the Companies Law, under special circumstances, the board of directors may approve the compensation policy despite the objection of the
shareholders on the condition that the compensation committee and then the board of directors decide, on the basis of detailed grounds and after discussing
again the compensation policy, that approval of the compensation policy, despite the objection of the shareholders, is for the benefit of the company.
If a company that initially offers its securities to the public adopts a compensation policy in advance of its initial public offering and describes it in its
prospectus for such offering, as in the case of our company, then such compensation policy shall be deemed a validly adopted policy in accordance with the
Companies Law requirements described above. Furthermore, if the compensation policy is established in accordance with the aforementioned relief, then it
will remain in effect for term of five years from the date such company becomes a public company. We have adopted our compensation policy pursuant to
the foregoing relief.
The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders,
including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The
compensation policy must be determined and later reevaluated according to certain factors, including: the advancement of the company’s objectives,
business plan and long-term strategy; the creation of appropriate incentives for office holders, while considering, among other things, the company’s size,
the nature of its operations and risk management policy; and, with respect to variable compensation, the contribution of the office holder towards the
achievement of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according to the position of the office
holder. The compensation policy must furthermore consider the following additional factors:
● the education, skills, experience, expertise and accomplishments of the relevant office holder;
● the office holder’s position, responsibilities and prior compensation agreements with him or her;
● the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company,
including employees employed through contractors who provide services to the company, in particular the ratio between such cost to the average
and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in the company;
● if the terms of employment include variable components—the possibility of reducing variable components at the discretion of the board of
directors and the possibility of setting a limit on the value of non-cash variable share-based components; and
● if the terms of employment include severance compensation—the term of employment or office of the office holder, the terms of his or her
compensation during such period, the company’s performance during such period, his or her individual contribution to the achievement of the
company goals and the maximization of its profits and the circumstances under which he or she is leaving the company.
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The compensation policy must also include, inter alia, with regards to variable components:
● with the exception of office holders who report directly to the chief executive officer, determining the variable components on long-term
performance basis and on measurable criteria; however, the company may determine that an immaterial part of the variable components of an
office holder’s compensation package shall be awarded based on non-measurable criteria, if such amount is not higher than three months’ salary
per annum, while taking into account such office holder’s contribution to the company;
● the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment, or in the
case of share-based compensation, at the time of grant;
● a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any
amounts paid as part of his or her terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and
such information was restated in the company’s financial statements;
● the minimum holding or vesting period of variable share-based components to be set in the terms of office or employment, as applicable, while
taking into consideration long-term incentives; and
● a limit to retirement grants.
Our compensation policy, which was amended on September 10, 2020, is designed to promote retention and motivation of directors and executive
officers, incentivize individual excellence, align the interests of our directors and executive officers with our long-term performance and provide a risk
management tool. To that end, a portion of an executive officer compensation package is targeted to reflect our short and long-term goals, as well as the
executive officer’s individual performance. On the other hand, our compensation policy includes measures designed to reduce the executive officer’s
incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and share-based compensation, limitations
on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for share-based compensation.
Our compensation policy also addresses our executive officers’ individual characteristics (such as their respective positions, education, scope of
responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the
internal ratios between compensation of our executive officers and directors and other employees. Pursuant to our compensation policy, the compensation
that may be granted to an executive officer may include: base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses
with respect to any special achievements, such as outstanding personal achievement, outstanding personal effort or outstanding company performance),
share-based compensation, benefits, retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the
executive officer’s base salary. In addition, the total variable compensation components (cash bonuses and shared-based compensation) may not exceed
90% of each executive officer’s total compensation package with respect to any given calendar year.
An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash
bonus that may be granted to our executive officers other than our chief executive officer will be based on performance objectives and a discretionary
evaluation of the executive officer’s overall performance by our chief executive officer and subject to minimum thresholds. The annual cash bonus that
may be granted to executive officers other than our chief executive officer may be based entirely on a discretionary evaluation. Furthermore, our chief
executive officer will be entitled to recommend performance objectives, and such performance objectives will be approved by our compensation committee
(and, if required by law, by our board of directors).
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The measurable performance objectives of our chief executive officer will be determined annually by our compensation committee and board of
directors, will include the weight to be assigned to each achievement in the overall evaluation. A non-material portion of the chief executive officer’s
annual cash bonus may be based on a discretionary evaluation of the chief executive officer’s overall performance by the compensation committee and the
board of directors based on quantitative and qualitative criteria.
The share-based compensation under our compensation policy for our executive officers (including members of our board of directors) is designed in a
manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the
alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the
motivation of executive officers in the long term. Our compensation policy provides for executive officer compensation in the form of share options or
other share-based awards, such as restricted shares and restricted share units, in accordance with our share incentive plan then in place. All share-based
incentives granted to executive officers shall be subject to vesting periods in order to promote long-term retention of the awarded executive officers. The
share-based compensation shall be granted from time to time and shall be individually determined and awarded according to the performance, educational
background, prior business experience, qualifications, role and personal responsibilities of each executive officer.
In addition, our compensation policy contains compensation recovery provisions which allow us under certain conditions to recover bonuses paid in
excess, enables our chief executive officer to approve an immaterial change in the terms of employment of an executive officer who reports directly to the
chief executive officer (provided that the changes of the terms of employment are in accordance with our compensation policy) and allows us to exculpate,
indemnify and insure our executive officers and directors to the maximum extent permitted by Israeli law, subject to certain limitations set forth therein.
Our compensation policy also provides for compensation to the members of our board of directors either (i) in accordance with the amounts provided
in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies
Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time, or
(ii) in accordance with the amounts determined in our compensation policy.
131
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
Security ownership of certain beneficial owners and management
The following table sets forth certain information regarding the ownership of the Company’s ordinary shares as of March 15, 2022 by: (i) each director
and nominee for director; (ii) each named executive officer; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by
the Company to be beneficial owners of more than five percent of its ordinary shares. Beneficial ownership, for purposes of this table, includes options and
warrants to purchase ordinary shares that are either currently exercisable or will be exercisable within 60 days of March 15, 2022.
Unless otherwise noted below, the address of each shareholder, director and executive officer is c/o Gamida Cell Ltd., 116 Huntington Avenue, Boston,
Massachusetts 02116.
Holders of more than 5% of our voting securities:
Access Industries(2)
Novartis Pharma A.G.(3)
Fidelity Management & Research(4)
Federated Global Investment Management Corp.(5)
Directors and executive officers who are not 5% holders:
Dr. Julian Adams
Shai Lankry
Michele Korfin
Josh Patterson
Robert I. Blum
Anat Cohen-Dayag
Ofer Gonen
Naama Halevi Davidov
Kenneth I. Moch
Shawn Tomasello
Stephen Wills
All directors and executive officers as a group (11 persons)(6)
As of
March 15,
2022(1)
Ordinary
Shares
%
9,929,975
5,194,054
4,603,945
4,363,315
901,457
237,369
193,656
-
66,250
-
26,750
-
52,750
34,750
34,750
1,547,732
16.5%
8.5%
7.7%
7.3%
*
*
*
*
*
*
*
*
*
*
*
2.5%
*
Indicates beneficial ownership of less than 1% of the total ordinary shares outstanding.
(1) The percentages shown are based on 59,989,886 ordinary shares issued and outstanding as of March 15, 2022.
(2) Consists of: (i) 1,533,744 ordinary shares and 160,743 ordinary shares issuable upon exercise of outstanding warrants held by Clal Biotechnology
Industries Ltd., or CBI; (ii) 1,374,377 ordinary shares held by Bio Medical Investment (1997) Ltd., or Bio Medical, a wholly owned subsidiary of CBI;
(iii) 3,750,000 ordinary shares by AI Gamida Holdings LLC and (iv) 3,111,111 ordinary shares held by AI biotechnology LLC. Clal Industries Ltd.
owns 47% of the outstanding shares of, and controls, CBI. Clal Industries Ltd. is wholly owned by Access AI Ltd., which is owned by AI Diversified
Holdings S.à r.l., which is owned by AI Diversified Parent S.à r.l., which is owned by AI Diversified Holdings Limited (“AIDH Limited”). AIDH
Limited is controlled by AI SMS L.P (“AI SMS”). Access Industries Holdings LLC (“AIH”) owns a majority of the equity of AI SMS, and Access
Industries, LLC (“LLC”), holds a majority of the outstanding voting interests in AIH. Access Industries Management, LLC (“AIM”) controls LLC and
AIH, and Len Blavatnik controls AIM. AIM controls AIH LLC and Len Blavatnik controls AIM. The address of each of Clal Industries Ltd., CBI and
Bio Medical is the Triangular Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address of each of foregoing other than Bio Medical, CBI, and
Clal Industries Ltd. is 730 Fifth Avenue, 20th Floor, New York, NY 10019.
(3) Consists of 4,336,759 ordinary shares and 857,295 ordinary shares issuable upon exercise of outstanding warrants. The principal address of Novartis
A.G. is Lichtstrasse 35 4056 Basel, Switzerland.
(4) The principal address of Fidelity Management & Research is 245 Summer Street, Boston, Massachusetts 02210. This information is based solely on
the information reported on the Schedule 13G/A filed on February 9, 2022 by FMR LLC.
(5) The principal address of Federated Global Investment Management is 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. This information is based
solely on the information reported on the Schedule 13G/A filed on February 14, 2022 by Federated Hermes, Inc. Federated Hermes, Inc. is the parent
holding company of Federated Global Investment Management Corp.
(6) Consists of options to purchase 1,547,732 ordinary shares, which are currently exercisable or will become exercisable within 60 days of March 15,
2022.
132
Securities authorized for issuance under equity compensation plans.
The following table summarizes our equity compensation plan information as of December 31, 2021. Information is included for equity compensation
plans approved by our shareholders. We do not have any equity compensation plans not approved by our shareholders.
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column
(a))
1,524,255
-
1,524,255
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants
and rights
(a)
4,942,901
-
4,942,901
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
(b)
5.95
-
5.95
Plan Category
Equity compensation plans approved by shareholders
Equity compensation plans not approved by shareholders
Total
133
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Our policy is to enter into transactions with related parties on terms that, on the whole, are no more favorable, or no less favorable than those available
from unaffiliated third parties. Based on our experience in the business sectors in which we operate and the terms of our transactions with unaffiliated third
parties, we believe that all of the transactions described below met this policy standard at the time they occurred. The following is a description of material
transactions, or series of related material transactions since January 1, 2020, to which we were or will be a party and in which the other parties included or
will include our directors, executive officers, holders of more than 10% of our voting securities or any member of the immediate family of any of the
foregoing persons.
Information Rights Agreements with Shareholders
As part of our initial public offering and effective as of its closing, we entered into an information rights agreement with an affiliate of one of our
principal shareholders, Access Industries. The information rights agreement provides the counterparty with rights to receive our annual and quarterly
financial statements, auditor consent letters and valuation reports, and other information reasonably required by such counterparty to enable it to prepare its
financial statements. The information rights agreement also requires that we provide the counterparty with information material to us and mandated to be
disclosed by the requirements applicable to such counterparty, as well as certain other material information of ours. The information rights agreement
contains customary confidentiality provisions and terminates when the counterparty, and any company that controls such counterparty, is no longer required
to issue public reports pursuant to the Israeli Securities Law or the Securities Exchange Act of 1934, as amended.
Agreements and Arrangements with Directors and Executive Officers
Each of the Company’s non-executive directors is entitled to the following payments, which are paid in arrears, in quarterly installments: (i) an annual
fee of $40,000 plus VAT, if applicable, (ii) for audit committee or compensation committee membership, an additional annual fee of $10,000 plus VAT, if
applicable, (iii) for nominating and corporate governance committee members, an additional annual fee of $4,000 plus VAT, if applicable, (iv) for
chairmanship of the board of directors an additional annual fee of $60,000 plus VAT, if applicable, (v) for each chairmanship of the audit committee and the
compensation committee, an additional annual fee of $5,000 plus VAT, if applicable and (vi) for chairmanship of the nominating and corporate governance
committee, an additional annual fee of $3,500 plus VAT, if applicable. In addition, each of the Company’s non-executive directors, other than the current
chairman of the board of directors, shall be entitled to receive an initial grant (upon his or her first appointment to election to the Board) of 4,000 restricted
ordinary shares of the Company and options to purchase 19,000 ordinary shares of the Company, and an annual grant of 2,000 restricted ordinary shares of
the Company and options to purchase 9,500 ordinary shares of the Company, and the current chairman of the board of directors shall be entitled to receive
an annual grant of 2,000 restricted ordinary shares of the Company and options to purchase 12,500 ordinary shares of the Company.
Executive Officers Employment Agreements.
We have entered into written employment agreements with each of our executive officers. These agreements provide for notice periods of varying
duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue to receive base
salary and benefits (except for the accrual of vacation days). These agreements also contain customary provisions regarding non-competition,
confidentiality of information and assignment of inventions. However, the enforceability of the non-competition provisions may be limited under
applicable law.
Options and Restricted Share Awards
Since our inception, we have granted options to purchase our ordinary shares and/or restricted share awards to our officers and certain of our directors.
Such agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our equity incentive
plans under “Item 11.—Executive Compensation—Additional Narrative Disclosure.” If the relationship between us and an executive officer or a director is
terminated, except for cause (as defined in the equity incentive plans), all options that are vested will generally remain exercisable for ninety days after
such termination.
Indemnification Agreements
Our amended and restated articles of association permit us to exculpate, indemnify and insure each of our directors and office holders to the fullest
extent permitted by Israeli law. In connection with the loss of our status as a foreign private issuer effective on January 1, 2022, we entered into amended
and restated indemnification agreements with each of our directors and executive officers, exculpating them, to the fullest extent permitted by law, from
liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by Israeli
law. We have also obtained directors and officers insurance for each of our executive officers and directors. The indemnification obligations under the
agreements are limited to certain maximum amounts. For further information see “Exculpation, Insurance and Indemnification of Office Holders” in Item
10 above.
134
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
We paid the following fees for professional services rendered by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, located at Tel-
Aviv, Israel, Auditor firm ID: 1281, an independent registered public accounting firm for the years ended December 31, 2021 and 2020:
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees(4)
Total
2021
(US$ in
thousands)
2020
(US$ in
thousands)
365
—
8
—
373
315
—
8
20
343
(1) Audit fees are the aggregate fees billed for the audit of our annual financial statements, quarterly review, statutory audits, issuance of consents and
assistance with and review of documents filed with the SEC.
(2) Audit-related fees would be assurance and related services by our independent registered public accounting firm that are reasonably related to the
performance of the audit or review of our consolidated financial statements and are not reported under item (1).
(3) Tax fees relate to tax compliance, planning and advice.
(4) All other fees would be fees billed for services provided by our independent registered public accounting firm, with respect to government incentives
and other matters.
Audit Committee Pre-Approval Policies and Procedures
Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting,
auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent accountants and
reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit committee also oversees the
audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of
management. Our audit committee has authorized all auditing and non-auditing services provided by Kost Forer Gabbay & Kasierer during 2021 and 2020
and the fees paid for such services.
135
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The documents filed as part of this report are as follows:
PART IV
1. The financial statements and accompanying report of independent registered public accounting firm are set forth immediately following the signature
page of this report on pages F-1 through F-28.
2. All financial statement schedules are omitted because they are inapplicable, not required or the information is included elsewhere in the financial
statements or the notes thereto.
3. The following is a list of exhibits filed as part of this Annual Report on Form 10-K.
136
EXHIBIT INDEX
Incorporated by Reference
Filed/
Furnished
Exhibit Filing Date Herewith
Form File No.
Exhibit
Number Exhibit Description
3.1
Amended and Restated Articles of Association of the Registrant, as currently
in effect
Memorandum of Association of the Registrant (unofficial English translation
from Hebrew original), as amended on September 14, 2006
Description of Securities
Form of Indemnification Agreement
Employee Share and Option Plan (1998)
Stock Option Plan (1999)
2003 Israeli Share Option Plan
2014 Israeli Share Option Plan
2017 Share Incentive Plan, as amended
Lease Agreement, dated December 13, 2017, by and between the Registrant
and Y.D.B. Investments Ltd. (unofficial English translation from Hebrew
original)
Lease Agreement, dated March 14, 2000, as amended on June 5, 2000 and
May 30, 2010, by and between the Registrant and Traub Group Investments
Ltd. (formerly P.P.D. Diamonds Ltd.) (unofficial English translation from
Hebrew original)
Form of Letter Agreement re: Information Rights
Gamida Cell Ltd. Compensation Policy, as amended
Indenture dated February 16, 2021, by and among Gamida Cell Inc., Gamida
Cell Ltd. and Wilmington Savings Fund Society, FSB
Form of Exchangeable Senior Note (included as an exhibit to Exhibit 4.13)
Registration Rights Agreement dated February 16, 2021, by and among
Gamida Cell Inc., Gamida Cell Ltd., Highbridge Convertible Dislocation
Fund, L.P., and Highbridge Tactical Credit Master Fund, L.P.
Open Market Sale Agreement dated September 10, 2021, by and among
Gamida Cell Ltd. and Jefferies LLC
Employment agreement, dated November 20, 2017, by and between Gamida
Cell Inc. and Dr. Julian Adams
Employment agreement, dated December 15, 2021, by and between Gamida
Cell Inc. and Shai Lankry
Employment agreement, dated July 20, 2020, by and between Gamida Cell
Inc. and Michele Korfin
Employment agreement, dated April 30, 2017, by and between Gamida Cell
Inc. and Ronit Simantov
Consulting agreement, dated January 7, 2020, by and between Gamida Cell
Limited and Uppal Healthcare Limited
3.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
21.1
23.1
F-1
333-227601
3.4
9/28/2018
F-1
F-1
F-1
F-1
333-227601
333-227601
333-227601
333-227601
10.2
10.3
10.4
10.5
9/28/2018
9/28/2018
9/28/2018
9/28/2018
F-1
333-227601
10.10
9/28/2018
F-1
333-227601
F-1/A 333-227601
001-38716
20-F
10.11
10.12
4.9
9/28/2018
10/17/2018
3/09/2021
6-K
6-K
001-38716
001-38716
4.1
4.2
2/16/2021
2/16/2021
6-K
001-38716
10.2
2/16/2021
F-3
333-259472
1.2
9/13/2021
*
*
*
*
*
*
*
*
*
*
Subsidiaries of the Registrant
F-1
333-227601
21.1
9/28/2018
Consent of KOST, FORER, GABBAY & KASIERER, a Member of Ernst &
Young Global, Independent Registered Accounting Firm
137
Exhibit
Number Exhibit Description
31.1
31.2
32.1
32.2
Certification of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101).
Incorporated by Reference
Filed/
Furnished
Exhibit Filing Date Herewith
Form File No.
*
*
**
**
*
*
*
*
*
*
*
Filed herewith.
*
** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, the Exchange Act,
and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether
made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
138
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
SIGNATURES
its behalf by the undersigned, thereunto duly authorized.
Dated: March 24, 2022
Gamida Cell Ltd.
By:
By:
/s/ Julian Adams
Julian Adams, Ph.D.
Chief Executive Officer (Principal Executive Officer)
/s/ Shai Lankry
Shai Lankry
Chief Financial Officer (Principal Financial and
Accounting Officer)
POWER OF ATTORNEY
Each of the undersigned officers and directors of Gamida Cell Ltd., hereby constitutes and appoints Julian Adams and Shai Lankry, their true and
lawful attorney-in-fact and agent, for them and in their name, place and stead, in any and all capacities, to sign their name to any and all amendments to this
Report on Form 10-K, and other related documents, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said
attorneys, full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes
as the undersigned could do if personally present, and the undersigned for himself hereby ratifies and confirms all that said attorney shall lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on March 24, 2022 on
behalf of the registrant and in the capacities indicated.
Signature
Title
/s/ Julian Adams
Julian Adams
/s/ Shai Lankry
Shai Lankry
/s/ Robert I. Blum
Robert I. Blum
/s/ Anat Cohen-Dayag
Anat Cohen-Dayag
/s/ Ofer Gonen
Ofer Gonen
/s/ Naama Halevi Davidov
Naama Halevi Davidov
/s/ Kenneth I. Moch
Kenneth I. Moch
/s/ Shawn Tomasello
Shawn Tomasello
/s/ Stephen T. Wills
Stephen T. Wills
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date
March 24, 2022
March 24, 2022
Chairman of the Board of Directors
March 24, 2022
Director
Director
Director
Director
Director
Director
139
March 24, 2022
March 24, 2022
March 24, 2022
March 24, 2022
March 24, 2022
March 24, 2022
GAMIDA CELL LTD. AND ITS SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021
U.S. DOLLARS IN THOUSANDS
INDEX
Report of Independent Registered Public Accounting Firm (PCAOB ID #1281)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
- - - - - - - - - - - - - -
F-1
Page
F-2
F-3 - F-4
F-5
F-6
F-7 - F-8
F-9 - F-28
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
GAMIDA CELL LTD.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Gamida Cell Ltd. and its subsidiary (the Company) as of December 31, 2021 and
2020, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows, for each of the two years in the period ended
December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations
and cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KOST FORER GABBAY & KASIERER
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company’s auditor since 2000.
Tel-Aviv, Israel
March 24, 2022
F-2
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Marketable securities
Prepaid expenses and other current assets
Total current assets
NON-CURRENT ASSETS:
Restricted deposits
Property, plant and equipment, net
Operating lease right-of-use assets
Severance pay fund
Other long-term assets
Total non-current assets
Total assets
The accompanying notes are an integral part of the consolidated financial statements.
F-3
December 31,
2021
2020
$
55,892 $
40,034
2,688
127,170
—
3,087
98,614
130,257
3,961
35,180
7,236
2,148
1,647
—
18,238
6,841
2,191
786
50,172
28,056
$
148,786 $
158,313
GAMIDA CELL LTD. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables
Employees and payroll accruals
Operating lease liabilities
Accrued interest of convertible senior notes
Accrued expenses and current liabilities
NON-CURRENT LIABILITIES:
Convertible senior notes, net
Accrued severance pay
Long-term operating lease liabilities
Total non-current liabilities
CONTINGENT LIABILITIES AND COMMITMENTS
SHAREHOLDERS’ EQUITY:
Ordinary shares of NIS 0.01 par value - Authorized: 150,000,000 and 100,000,000 shares at December 31, 2021 and
2020, respectively; Issued and outstanding: 59,970,389 and 59,000,153 shares at December 31, 2021 and 2020,
respectively
Additional paid-in capital
Accumulated deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of the consolidated financial statements.
F-4
$
December 31,
2021
2020
8,272 $
4,957
2,699
1,640
7,865
6,331
4,705
2,475
—
7,988
25,433
21,499
71,417
2,396
5,603
79,416
—
2,426
5,517
7,943
169
381,225
(337,457)
166
376,369
(247,664)
43,937
128,871
$
148,786 $
158,313
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Research and development expenses, net
Commercial expenses
General and administrative expenses
Total operating loss
Financial expenses, net
Loss
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Year ended
December 31,
2021
2020
$
50,177 $
20,013
16,977
38,873
8,894
13,158
87,167
60,925
2,626
648
89,793
61,573
Net loss per share attributable to ordinary shareholders, basic and diluted
$
1.52 $
1.41
Weighted average number of shares used in computing net loss per share attributable to ordinary shareholders, basic
and diluted
59,246,803
43,725,584
The accompanying notes are an integral part of the consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share and per share data)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Ordinary shares
Number
Amount
Additional
paid-in capital
Accumulated
deficit
Total
shareholders’
equity
Balance as of January 1, 2020
33,670,926 $
92 $
239,577 $
(186,091) $
53,578
Loss
Issuance of Ordinary shares, net of issuance expenses of
$10,902
Exercise of options
Share-based compensation
-
24,677,084
652,143
-
-
72
2
-
-
(61,573)
(61,573)
132,776
648
3,368
-
-
-
132,848
650
3,368
Balance as of December 31, 2020
59,000,153
166
376,369
(247,664)
128,871
Loss
Grant of restricted shares
Exercise of options
Share-based compensation
-
531,477
438,759
-
-
2
1
-
-
(2)
625
4,233
(89,793)
-
-
-
(89,793)
-
626
4,233
Balance as of December 31, 2021
59,970,389 $
169 $
381,225 $
(337,457) $
43,937
The accompanying notes are an integral part of the consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands (except share and per share data)
Cash flows from operating activities:
Loss
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation of property, plant and equipment
Financing expense, net
Share-based compensation
Amortization of debt discount and issuance costs
Operating lease right-of-use assets
Operating lease liabilities
Accrued severance pay, net
Decrease (increase) in prepaid expenses and other assets
Increase in trade payables
Increase (decrease) in accrued expenses and current liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Purchase of marketable securities
Proceeds from maturity of marketable securities
Investment in restricted deposits
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Year ended
December 31,
2021
2020
$
(89,793) $
(61,573)
431
359
4,233
638
2,109
(2,193)
12
1,008
1,941
(505)
357
166
3,368
-
1,891
(1,318)
-
(1,630)
5,066
3,454
(81,760)
(50,219)
(15,054)
(102,179)
61,534
(5,222)
(11,804)
-
13,551
(158)
Net cash provided by (used in) investing activities
$
(60,921) $
1,589
The accompanying notes are an integral part of the consolidated financial statements.
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands (except share and per share data)
Cash flows from financing activities:
Proceeds from issuance of ordinary shares, net
Proceeds from exercise of options
Proceeds from issuance of convertible senior notes, net
Net cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Significant non-cash transactions:
Lease liabilities arising from new right-of-use asset
Issuance expenses on credit
Purchase of property, plant and equipment on credit
Supplemental disclosures of cash flow information:
Cash paid for interest
The accompanying notes are an integral part of the consolidated financial statements.
F-8
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Year ended
December 31,
2021
2020
-
626
70,777
133,312
650
-
71,403
133,962
(71,278)
127,170
85,332
41,838
$
55,892 $
127,170
$
$
$
$
2,503 $
- $
634 $
3,373
468
415
2,572 $
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 1: GENERAL
GAMIDA CELL LTD. AND ITS SUBSIDIARY
a. Gamida Cell Ltd. (the “Company”), founded in 1998, is an advanced cell therapy company committed to finding cures for patients with
blood cancers and serious blood diseases. The Company develops novel curative treatments using stem cells and Natural Killer (NK)
cells.
b. The Company has created a novel NAM cell expansion technology platform that is designed to enhance the number and functionality of
allogenic donor cells. This proprietary therapeutic platform may enable the development of therapies with the potential to improve
treatment outcomes beyond what is possible with current donor-derived therapies.
The lead product candidate, omidubicel, is an advanced cell therapy in development as a potential life-saving treatment option for
patients in need of a bone marrow transplant (BMT). In May 2020, the Company reported that omidubicel met its primary endpoint in an
international, randomized, multi-center Phase 3 clinical study in 125 patients with high-risk hematologic malignancies undergoing bone
marrow transplant and who had no available matched donor. The study evaluated the safety and efficacy of omidubicel compared to
standard umbilical cord blood. BMT with a graft derived from bone marrow or peripheral blood cells of a matched donor is currently the
standard of care treatment for many of these patients, but there is a significant unmet need for patients who cannot find a fully matched
donor.
In October 2020, the Company reported that omidubicel met all three of its secondary endpoints.
In October 2021, the complete results from our pivotal Phase 3 clinical study of omidubicel in 125 patients with various hematologic
malignancies were published in the peer-reviewed medical journal Blood. The trial achieved its primary endpoint of time to neutrophil
engraftment as well as all three of the prespecified secondary endpoints. These secondary endpoints were the proportion of patients who
achieved platelet engraftment by day 42, the proportion of patients with grade 2 or grade 3 bacterial or invasive fungal infections in the
first 100 days following transplant, and the number of days alive and out of the hospital in the first 100 days following transplant. All
three secondary endpoints demonstrated statistical significance in an intent-to-treat analysis.
Omidubicel is the first bone marrow transplant product to receive Breakthrough Therapy Designation from the U.S. Food and Drug
Administration and has received orphan drug designation in the U.S. and in Europe.
In addition to omidubicel, the Company is developing GDA-201, an investigational NK cell-based cancer immunotherapy to be used in
combination with standard-of-care therapeutic antibodies. NK cells have potent anti-tumor properties and have the advantage over other
oncology cell therapies of not requiring genetic matching, potentially enabling NK cells to serve as a universal donor-based therapy when
combined with certain antibodies. GDA-201 is currently in an investigator-sponsored Phase 1/2 study for the treatment of relapsed or
refractory non-Hodgkin lymphoma (NHL). In December 2020, the Company reported updated and expanded results from the Phase 1
clinical study at the Annual Meeting of the American Society of Hematology, or ASH. The data from the first 35 patients demonstrated
that GDA-201 was clinically active and generally well tolerated. Among the 19 patients with NHL, 13 complete responses and one partial
response were observed, with an overall response rate of 74 percent and a complete response rate of 68 percent.
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 1: GENERAL (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
At the December 2021 Annual Meeting of ASH, the Company reported two-year follow-up data from this clinical trial on outcomes and
cytokine biomarkers associated with survival. The data demonstrated a median duration of response of 16 months (range 5-36 months),
an overall survival at two years of 78% (95% CI, 51%–91%) and a safety profile similar to that reported previously.
c. The Company is devoting substantially all of its efforts toward research and development activities. In the course of such activities, the
Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company’s accumulated
deficit as of December 31, 2021 was $337,457 and negative cash flows from operating activities during the year ended December 31,
2021 was $81,760. The Company is planning to finance its operations from its existing and future working capital resources and to
continue to evaluate additional sources of capital and financing. However, there is no assurance that additional capital and/or financing
will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in amounts required.
The Company believes that its existing capital resources will be adequate to satisfy its expected liquidity requirements for at least twelve
months from the issuance of the consolidated financial statements.
d. The Company has a wholly-owned U.S. subsidiary, Gamida Cell Inc. (the “Subsidiary”), which was incorporated in 2000, under the laws
of the State of Delaware. The Company has one operating segment and reporting unit.
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation of the financial statements:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Company’s consolidated financial statements have been prepared in accordance with United States generally accepted accounting
principles (U.S. GAAP) as set forth in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification
(ASC).
Prior to 2021, the Company prepared its financial statements in accordance with International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board (IASB), as permitted in the United States based on the Company’s qualification
as a “foreign private issuer” under the rules and regulations of the U.S Securities and Exchange Commission (the “SEC”). In connection
with the loss of the Company’s status as a foreign private issuer effective on January 1, 2022, the Company, as a domestic filer, prepared
its consolidated financial statements in accordance with U.S. GAAP.
b. Use of estimates:
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s
management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they
are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the
consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from
those estimates.
c. Principles of consolidation:
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances have been
eliminated upon consolidation.
d. Consolidated financial statements in U.S dollars:
The functional currency is the currency that best reflects the economic environment in which the Company and its subsidiary operates
and conducts their transactions. Most of the Company’s costs are incurred in U.S. dollar. In addition, the Company’s financing activities
are incurred in U.S. dollars. The Company’s management believes that the functional currency of the Company is the U.S. dollar.
Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with
ASC No. 830 “Foreign Currency Matters.” All transaction gains and losses of the remeasured monetary balance sheet items are reflected
in the statements of operations as financing income or expenses as appropriate.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
e. Cash and cash equivalents:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Cash equivalents are short-term highly liquid deposits that are readily convertible to cash with original maturities of three months or less,
at the date acquired.
f.
Investments in marketable securities:
The Company’s investment in marketable securities consist primarily of trading bonds with a quoted market price that are classified as
trading securities pursuant to ASC No. 320 “Investments — Debt Securities.” Marketable securities are stated at fair value as determined
by the closing price of each security at balance sheet date. Unrealized gains and losses on these securities are included in financing
income in the consolidated statements of operations.
g. Restricted short-term and long-term deposits:
Restricted short-term deposits are deposits with maturities of up to one year and are used as security for the Company’s credit cards.
Restricted short-term deposits amounted to $500 and $152 as of December 31, 2021 and 2020, respectively, and are included in prepaid
expenses and other current assets in the consolidated balance sheets.
Restricted long-term deposits are deposits with maturities of more than one year and are used as guarantee for the Israeli Investment
Center grant expected in 2022 and as security for the rental of premises and for the Company’s credit cards. Restricted long-term deposits
amounted to $3,961 as of December 31, 2021, as presented in the consolidated balance sheet.
h. Property, plant and equipment:
Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated
impairment losses and any related investment grants, excluding day-to-day servicing expenses.
Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
Machinery
Office, furniture and equipment
Leasehold improvements
Project in process- manufacturing plant
(*)
Over the shorter of the term of the lease or its useful life.
%
10 - 15
6 - 33
(*)
(**)
(**)
As of December 31, 2021, the manufacturing plant is under validation process and therefore is not yet ready for production. Depreciation of the
manufacturing plant will commence upon completion of the validation process.
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i.
Impairment of long-lived assets:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Company’s long-lived assets are reviewed for impairment in accordance with ASC No. 360 “Property, Plant and Equipment,”
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If indicators of
impairment exist and the undiscounted future cash flows that the assets are expected to generate are less than the carrying value of the
assets, the Company reduces the carrying amount of the assets through an impairment charge, to their estimated fair values. During the
years ended December 31, 2021 and 2020, no impairment indicators have been identified.
j. Research and development expenses:
Research and development expenses net of grants are recognized in the consolidated statements of operations when incurred. Research
and development expenses consist of personnel costs (including salaries, benefits and share-based compensation), materials, consulting
fees and payments to subcontractors, costs associated with obtaining regulatory approvals, and executing pre-clinical and clinical studies.
In addition, research and development expenses include overhead allocations consisting of various administrative and facilities related
costs. The Company charges research and development expenses as incurred.
Royalty-bearing grants from the Israeli Innovation Authority (the “IIA”) of the Ministry of Economy and Industry in Israel for funding of
approved research and development projects are recognized at the time the Company is entitled to such grants, on the basis of the costs
incurred, and are presented as a reduction from research and development expenses.
Since the payment of royalties is not probable when the grants are received, the Company does not record a liability for amounts received
from IIA until the related revenues are recognized. In the event of failure of a project that was partly financed by the IIA, the Company
will not be obligated to pay any royalties or repay the amounts received. The Company recognized the amounts of grants received in
research and development as a reduction from research and development expenses in the amount of $2,189 and $1,204 for the years
ended December 31, 2021 and 2020, respectively.
k. Convertible senior notes:
The Company accounts for its convertible senior notes in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The
Company early adopted ASU 2020-06 using the modified retrospective approach. The convertible senior notes are accounted for as a
single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives according
to ASC 815-40.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Company’s convertible senior notes are included in the calculation of diluted earnings per share (the “EPS”) if the assumed
conversion into ordinary shares is dilutive, using the “if-converted” method. This involves adding back the periodic non-cash interest
expense net of taxes associated with the convertible senior notes to the numerator and by adding the shares that would be issued in an
assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of
calculating diluted EPS. Since the effect of the convertible senior notes on the diluted EPS was antidilutive, the Company did not include
them in the calculation of the diluted EPS.
l.
Share-based compensation:
The Company accounts for share-based compensation in accordance with ASC No. 718, “Compensation - Stock Compensation”, which
requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The
value of the award is recognized as an expense over the requisite service periods, which is the vesting period of the respective award, on a
straight-line basis when the only condition to vesting is continued service.
The Company has selected the binominal option-pricing model as the most appropriate fair value method for its option awards. The fair
value of restricted shares is based on the closing market value of the underlying shares at the date of grant. The Company recognizes
forfeitures of equity-based awards as they occur.
m. Employee benefit liabilities:
The Company has several employee benefit plans:
1. Short-term employee benefits
Short-term employee benefits are benefits that are expected to be settled entirely before twelve months after the end of the annual
reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick
leave, recreation and social security contributions and are recognized as expenses as the services are rendered.
2. Severance pay
The majority of the Company’s employees who are Israeli citizens have subscribed to Section 14 of Israel’s Severance Pay Law,
5723-1963 (the “Severance Pay Law”). Pursuant to Section 14 of the Severance Pay Law, employees covered by this section are
entitled to monthly deposits at a rate of 8.33% of their monthly salary, made on their behalf by the Company. Payments made to
employees in accordance with this section release the Company from any future severance liabilities with respect to such employees.
Neither severance pay liability nor severance pay fund under Section 14 of the Severance Pay Law is recorded on the Company’s
consolidated balance sheets.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
For the Company’s employees in Israel who are not subject to Section 14 of the Severance Pay Law, the Company has a liability for
severance pay pursuant to the Severance Pay Law based on the most recent salary of these employees multiplied by the number of
years of employment as of the balance sheet date. The Company’s liability for these employees is fully provided for by monthly
deposits with severance pay funds, insurance policies and accruals. The deposited funds include profits accumulated up to the
balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Severance Pay
Law or labor agreements. The severance pay fund amounted to $2,148 and $2,191 as of December 31, 2021 and 2020, respectively.
Accrued severance pay is $2,396 and $2,426 as of December 31, 2021 and 2020, respectively. Severance expense for the years ended
December 31, 2021 and 2020, is $427 and $12, respectively.
n. Fair value of financial instruments:
The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands
disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes
a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value
hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable inputs that are based on inputs not quoted on active markets but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data are available.
The carrying amounts of cash and cash equivalents, marketable securities, other receivables, short-term deposits, prepaid expenses and
other current assets, trade payables, accrued expenses and other payables approximate their fair value due to the short-term maturity of
such instruments.
o. Leases:
The Company accounts for leases according to ASC 842, “Leases”. The Company determines if an arrangement is a lease and the
classification of that lease at inception based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the
Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the
Company has a right to direct the use of the asset. The Company elected the practical expedient for lease agreements with a term of
twelve months or less and does not recognize right-of-use (“ROU”) assets and lease liabilities in respect of those agreements. The
Company also elected the practical expedient to not separate lease and non-lease components for its leases.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
An ROU asset represents the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to
make lease payments arising from the lease agreement. An ROU asset is measured based on the discounted present value of the
remaining lease payments, plus any initial direct costs incurred and prepaid lease payments, excluding lease incentives. The lease liability
is measured at lease commencement date based on the discounted present value of the remaining lease payments. The implicit rate within
the operating leases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the
information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to
approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the
leased asset is located. Certain leases include options to extend the lease. An option to extend the lease is considered in connection with
determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to
terminate is considered unless it is reasonably certain that the Company will not exercise the option.
Payments under the Company’s lease arrangements are primarily fixed however, certain lease agreements contain variable payments,
which are expensed as incurred and not included in the operating lease right-of-use assets and liabilities. Variable lease payments are
primarily comprised of payments affected by common area maintenance and utility charges.
p.
Income taxes:
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, which prescribes the use of the liability method
whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. The Company provides a valuation allowance, to reduce deferred tax assets to their estimated realizable value, if
needed.
ASC 740 offers a two-step approach for recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the
tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely
than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related
appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be
realized upon ultimate settlement. As of December 31, 2021, and 2020 no liability for unrecognized tax benefits was recorded as a result
of ASC 740.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
q. Basic and diluted net loss per share:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Company computes net loss per share using the two-class method required for participating securities. The two-class method
requires income available to ordinary shareholders for the period to be allocated between ordinary shares and participating securities
based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considers its
restricted shares to be participating securities as the holders of the restricted shares would be entitled to dividends that would be
distributed to the holders of ordinary shares, on a pro-rata basis. These participating securities do not contractually require the holders of
such shares to participate in the Company’s losses. As such, net loss for the periods presented was not allocated to the Company’s
participating securities.
The Company’s basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average
number of shares of ordinary shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net
loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method
or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in
periods when the effects of potentially dilutive ordinary shares are anti-dilutive.
r. Recently issued accounting standards:
In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with
characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This guidance also
eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-
converted method. ASU 2020-06 will be effective for fiscal years beginning after December 15, 2021, with early adoption permitted.
Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. Adoption of the new
standard did not have a material impact on the financial statements.
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 3: MARKETABLE SECURITIES
The following table details the fair value of trading marketable securities as of December 31, 2021:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Corporate debentures
Government debentures
Total
NOTE 4:
PROPERTY, PLANT AND EQUIPMENT, NET
The composition of property, plant and equipment is as follows:
Cost:
Machinery
Leasehold improvements
Office, furniture and equipment
Production plant in process
Less - accumulated depreciation
Depreciated cost
As of
December 31,
2021
Fair value
$
19,605
20,429
$
40,034
Year ended
December 31,
2021
2020
$
4,345 $
1,447
800
32,644
3,545
1,542
627
16,149
39,236
21,863
(4,056)
(3,625)
$
35,180 $
18,238
Depreciation expense amounted to $431 and $357 for the years ended December 31, 2021 and 2020, respectively.
F-18
GAMIDA CELL LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 5:
LEASES
The Company entered into operating leases primarily for its in-process production plant, and its laboratories and offices. The leases have
remaining lease terms of up to six years, The Company does not assume renewals in its determination of the lease term unless the renewals
are considered as reasonably certain at lease commencement.
The components of operating lease costs were as follows:
Operating lease costs
Short-term lease costs
Total lease costs
Supplemental balance sheet information related to operating leases is as follows:
Weighted average remaining lease term (in years)
Weighted average discount rate
Maturities of lease liabilities were as follows:
2022
2023
2024
2025
2026
Thereafter
Total undiscounted lease payments
Less: Imputed interest
Present value of lease liabilities
F-19
Year ended
December 31,
2021
2020
$
$
2,391 $
103
2,494 $
2,140
43
2,183
Year ended
December 31,
2021
2020
4.31
2.54%
5.17
2.45%
As of
December 31,
2021
$
$
2,771
1,801
1,808
1,316
790
613
9,099
(797)
8,302
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 6:
CONVERTIBLE SENIOR NOTES, NET
GAMIDA CELL LTD. AND ITS SUBSIDIARY
On February 16, 2021, the Subsidiary issued convertible senior notes (the “Convertible Notes”) due in 2026, in the aggregate principal
amount of $75 million, pursuant to an Indenture between the Company, the Subsidiary, and Wilmington Savings Fund Society, FSB, dated
February 16, 2021 (the “Indenture”). The Convertible Notes bear interest payable semiannually in arrears, at a rate of 5.875% per year. The
Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased in accordance with their terms.
Subject to the provisions of the Indenture, the holders of the Convertible Notes have the right, prior to the close of business on the second
scheduled trading day immediately preceding February 15, 2026, to convert any Convertible Notes or portion thereof that is $1,000 or an
integral multiple thereof, into the Company’s ordinary shares at an initial conversion rate of 56.3063 shares per $1,000 principal amount of
Convertible Notes (equivalent to an exchange price of $17.76 per share). The conversion rate is subject to adjustment in specified events.
Upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Convertible Notes may require the Company to
repurchase for cash all or a portion of their Convertible Notes, in multiples of $1,000 principal amount, at a repurchase price equal to 100% of
the principal amount of the Convertible Notes, plus any accrued and unpaid interest, if any, to, but excluding, interest accrued after the date of
such repurchase notice. If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the
Convertible Notes may be increased.
Subject to the provisions of the Indenture, the Subsidiary may redeem for cash all or a portion of the Convertible Notes for cash, at its option,
at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest on the
notes to be redeemed, if the last reported closing price of the Company’s ordinary shares has been at least 130% of the exchange price then in
effect for at least 20 trading days during any 30 consecutive trading day period, and in the event of certain tax law changes.
The Convertible Notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation
and recognition as derivatives according to ASC 815-40.
Liability component:
Principal amount
Issuance costs
Net issuance costs
Amortized issuance costs
Net carrying amount
As of
December 31,
2021
$
$
$
75,000
(4,223)
70,777
640
71,417
The total issuance costs of the Convertible Notes amounted to $4,223 and are amortized to interest expenses at an annual effective interest
rate of 7.37%, over the term of the Convertible Notes.
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 7:
ACCRUED EXPENSES AND OTHER PAYABLES
Subcontractors
Clinical activities
Professional services
Production plant in process
Other
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Year ended
December 31,
2021
2020
$
517 $
5,445
740
983
180
$
7,865 $
609
4,841
1,943
415
180
7,988
NOTE 8:
FAIR VALUE MEASUREMENTS
The following tables present the fair value of money market funds and marketable securities for the years ended December 31, 2021 and
2020:
Cash equivalents:
Money market funds
Marketable securities:
Corporate debentures
Government debentures
Level 1
2021
Level 2
December 31,
Total
Level 1
2020
Level 2
Total
$
51,021 $
- $
51,021 $
123 $
- $
123
-
-
19,605
20,429
19,605
20,429
-
-
-
-
-
-
Total assets measured at fair value
$
51,021 $
40,034 $
91,055 $
123 $
- $
123
NOTE 9:
CONTINGENT LIABILITIES AND COMMITMENTS
a. Legal proceedings:
From time to time the Company or its subsidiaries may be involved in legal proceedings and/or litigation arising in the ordinary course of
business. While the outcome of these matters cannot be predicted with certainty, the Company does not believe it will have a material
effect on its consolidated financial position, results of operations, or cash flows.
b. Bank guarantees:
As of December 31, 2021, the Company obtained bank guarantees in the amount of $3,334, primarily in connection with an Investment
Center grant of up to $3,171 expected to be received in 2022 which requires a bank guarantee in order to ensure the fulfillment of the
grant terms.
F-21
GAMIDA CELL LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 9:
CONTINGENT LIABILITIES AND COMMITMENTS (Cont.)
c. Governments grants
The Company has received grants from the IIA to finance its research and development programs in Israel, through which the Company
received IIA participation payments in the aggregate amount of $37.3 million through December 31, 2021, of which $34.7 million is
royalty-bearing grants and $2.6 million is non-royalty-bearing grants. In return, the Company is committed to pay IIA royalties at a rate
of 3-3.5% of future sales of the developed products, up to 100% of the amount of grants received plus interest at LIBOR rate. Through
December 31, 2021, no royalties have been paid or accrued. The Company’s contingent royalty liability to the IIA at December 31, 2021,
including grants received by the Company and the associated LIBOR interest on all such grants totaled to $44.7 million.
NOTE 10: SHAREHOLDERS’ EQUITY
a. Ordinary shares:
Subject to the Company’s amended and restated Articles of Association, the holders of the Company’s ordinary shares have the right to
receive notices to attend and vote in general meetings of the Company’s shareholders, and the right to share in dividends and other
distributions upon liquidation.
In May 2020, the Company closed a second follow-on offering of its ordinary shares on Nasdaq, which resulted in the sale of a total of
15,333,334 ordinary shares at a public offering price of $4.50 per share, before underwriting discounts and inclusive of the underwriters’
exercise in full of their option to purchase additional shares in the offering. The Company received proceeds in the amount of $63,860
from the offering (net of issuance costs and underwriting discounts of $5,140).
In December 2020, the Company closed a third follow-on offering of its ordinary shares on Nasdaq, which resulted in the sale of
9,343,750 ordinary shares at a public offering price of $8.00 per share, before underwriting discounts and inclusive of the underwriters’
exercise in full of their option to purchase additional shares in the offering. The Company received proceeds in the amount of $68,988
from the offering (net of issuance costs and underwriting discounts of $5,762).
b. Warrants to investors:
As part of its 2017 investment round, the Company granted certain investors 4,323,978 warrants that will expire in July 2022. As of
December 31, 2021, 1,010,466 of the warrants have been exercised into the Company’s ordinary shares.
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 11: SHARE-BASED COMPENSATION
a. Option plans:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
On November 23, 2014, the Company’s Board of Directors approved, subject to the approval of the shareholders, creation of the
Company’s ordinary C share class, with nominal value NIS 0.01 per share and classification of 1,500,000 ordinary shares for such class
of shares, whereby 1,152,044 of such shares were allocated to the Company’s employees under the amended 2014 Israel Share Option
Plan (the “2014 Plan”). The exercise price of the options granted under the 2014 Plan may not be less than the nominal value of the
shares into which the options are exercised. The options vest primarily over three years. There are no cash settlement alternatives. On
December 29, 2014, the Company’s shareholders ratified and approved the aforesaid actions.
On January 23, 2017, the Company’s Board of Directors approved the Company’s 2017 Share Incentive Plan (the “2017 Plan” and
together with the 2014 Plan, the “Option Plans”), and the subsequent grant of options to the Company’s employees, officers and directors.
Pursuant to the 2017 Plan, the Company initially reserved for issuance 312,867 ordinary shares, nominal value NIS 0.01 each. On
February 28, 2017, the Company’s shareholders approved the 2017 Plan.
The 2017 Plan provides for the grant of awards, including options, restricted shares and restricted share units to the Company’s directors,
employees, officers, consultants and advisors.
On June 26, 2017 and on December 28, 2017, the Company’s Board of Directors approved the reservation of 463,384 and 559,764
additional ordinary shares, respectively, for issuance under the 2017 Plan (totaling, including previous plans, an aggregate of 1,338,015
ordinary Shares).
On February 25, 2021 and November 17, 2021, the board of directors and shareholders, respectively, approved an amendment and
restatement of the 2017 Plan. The 2017 Plan, as amended, also contains an “evergreen” provision, which provides for an automatic
allotment of ordinary shares to be added every year to the pool of ordinary shares available for grant under the 2017 Plan. Under the
evergreen provision, on January 1 of each year (beginning January 1, 2022), the number of ordinary shares available under the 2017 Plan
automatically increases by the lesser of the following: (i) 4% of our outstanding ordinary shares on the last day of the immediately
preceding year; and (ii) an amount determined in advance of January 1 by the board of directors. As of December 31, 2021, our 2017
Plan, as amended, has up to 1,520,066 ordinary shares available for issuance.
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 11: SHARE-BASED COMPENSATION (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Company estimates the fair value of stock options granted using the binominal option-pricing model. The option-pricing model
requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term.
Expected volatility was calculated based upon the Company’s historical share price and historical volatilities of similar entities in the
related sector index. The expected term of the options granted is derived from output of the option valuation model and represents the
period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury
bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
The following table lists the inputs to the binomial option-pricing model used for the fair value measurement of equity-settled share
options for the above Options Plans for the years 2021 and 2020:
Year ended
December 31,
Dividend yield
Expected volatility of the share prices
Risk-free interest rate
Expected term (in years)
2021
0%
65%
2020
0%
74%-79%
1.4%-1.5% 0.6%-1.38%
8
8
Based on the above inputs, the fair value of the options was determined to be $1.52 - $5.64 per option at the grant date.
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 11: SHARE-BASED COMPENSATION (Cont.)
b.
The following table summarizes the number of options granted to employees under the Option Plans for the years ended December
31, 2021 and related information:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Amount
of
options
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic value
Balance as of December 31, 2020
3,892,714 $
5.15
6.65 $
608,179
Granted
Exercised
Forfeited
Expired
Balance as of December 31, 2021
1,318,351
(438,759)
(217,325)
(143,557)
4,411,424
7.33
1.43
7.20
7.08
-
-
-
-
-
-
-
-
6.01
8.19
92,507
Exercisable as of December 31, 2021
2,171,616 $
5.57
7.11 $
92,507
As of December 31, 2021, there are $9,739 of total unrecognized costs related to share-based compensation that is expected to be
recognized over a period of up to four years.
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 11: SHARE-BASED COMPENSATION (Cont.)
c.
The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of
December 31, 2021:
GAMIDA CELL LTD. AND ITS SUBSIDIARY
Exercise price
$ 0.25-3.80
$ 4.15- 4.95
$ 5.21-7.56
$ 8.00-11.01
Options
outstanding
as of
December 31,
2021
Weighted
average
remaining
contractual
term
(years)
Options
exercisable
as of
December 31,
2021
Weighted
average
remaining
contractual
term
(years)
435,346
2,331,999
546,150
1,097,929
4,411,424
9.18
7.67
8.62
8.70
123,494
1,578,326
210,074
259,722
2,171,616
5.82
7.09
7.41
7.58
d.
A summary of restricted shares activity for the year ended December 31, 2021 is as follows:
Unvested as of December 31, 2020
Granted
Vested
Forfeited
Unvested as of December 31, 2021
Amount
of
restricted
shares
Weighted
average
grant date
fair value
- $
549,427
-
(17,950)
531,477 $
-
5.61
9.51
5.48
e.
The total share-based compensation expense related to all of the Company's equity-based awards, recognized for the years ended
December 31, 2021 and 2020 is comprised as follows:
Research and development expenses, net
Commercial expenses
General and administrative expenses
Total share-based compensation
NOTE 12: TAXES ON INCOME
a. Tax rates applicable to the income of the Company:
1. Corporate tax rates
Year ended
December 31,
2021
2020
$
$
(in thousands)
1,384 $
947
1,902
4,233 $
1,099
376
1,893
3,368
Taxable income of the Israeli parent is subject to the Israeli corporate tax at the rate of 23% in 2021 and 2020.
The Subsidiary is taxed according to the tax laws in its country of residence.
2.
Income tax benefits
Income is subject to tax benefits under the Law for Encouragement of Capital Investments, 1959 (the “Investment Law”), which
provides tax benefits for Israeli companies meeting certain requirements and criteria. The Investment Law has undergone certain
amendments and reforms in recent decades.
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 12: TAXES ON INCOME (Cont.)
GAMIDA CELL LTD. AND ITS SUBSIDIARY
The Israeli parliament enacted a reform to the Investment Law, effective January 2011. According to the reform, a flat rate tax
applies to companies eligible for the “Preferred Enterprise” status. In order to be eligible for Preferred Enterprise status, a company
must meet minimum requirements to establish that it contributes to the country’s economic growth and is a competitive factor for the
gross domestic product.
The Company’s Israeli operations elected “Preferred Enterprise” status, starting in 2017.
Benefits granted to a Preferred Enterprise include reduced tax rates. As part of the Economic Efficiency Law (Legislative
Amendments for Accomplishment of Budgetary Targets for Budget Years 2017-2018), 5777-2016, the tax rate for Area A will be
7.5% in 2017 onwards. In other regions, the tax rate is 16%. Preferred Enterprises in peripheral regions will be eligible for
Investment Center grants, as well as the applicable reduced tax rates.
b. The Law for the Encouragement of Industry (Taxation), 1969:
The Company has the status of an “industrial company”, under this law. According to this status and by virtue of regulations published
thereunder, the Company is entitled to claim a deduction of accelerated depreciation on equipment used in industrial activities, as
determined in the regulations issued under the law. The Company is also entitled to amortize a patent or knowhow usage right that is used
in the enterprise’s development or promotion, to deduct listed share issuance expenses and to file consolidated financial statements under
certain conditions.
c. The components of the loss were as follows:
Domestic
Foreign
F-27
Year ended
December 31,
2021
2020
$
$
55,853 $
33,940
45,871
15,702
89,793 $
61,573
GAMIDA CELL LTD. AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 12: TAXES ON INCOME (Cont.)
d. Net operating losses carryforward:
The Company has net operating losses and capital losses for tax purposes as of December 31, 2021 totaling approximately $236,875 and
$507, respectively, which may be carried forward and offset against taxable income in the future for an indefinite period.
As of December 31, 2021, the Subsidiary has net operating losses carryforwards of $33,100 for federal tax purposes.
e. Final tax assessments:
The Company’s tax assessments through the 2016 tax year are considered final.
f. Deferred taxes:
The Company provided a full valuation allowance, to reduce deferred tax assets to their estimated realizable value, since it is more likely
than not that all of the deferred tax assets will not be realized.
NOTE 13: BASIC AND DILUTED NET LOSS PER SHARE
Basic net loss per ordinary share is computed by dividing net loss for each reporting period by the weighted-average number of ordinary
shares outstanding during each year. Diluted net loss per ordinary share is computed by dividing net loss for each reporting period by the
weighted average number of ordinary shares outstanding during the period, plus dilutive potential ordinary shares considered outstanding
during the period, in accordance with ASC No. 260-10 “Earnings Per Share”. The Company experienced a loss in the year ended December
31, 2021; hence all potentially dilutive ordinary shares were excluded due to their anti-dilutive effect.
Details of the number of shares and loss used in the computation of net loss per share:
Year ended December 31,
2021
2020
Net
loss
attributable to
equity holders
of the
Company
Weighted
number of
shares
Net
loss
attributable
to equity
holders of the
Company
Weighted
number of
shares
For the computation of basic and diluted loss
59,246,803 $
89,793
43,725,584 $
61,573
- - - - - - - - - - - - - -
F-28
Exhibit 3.1
A LIMITED LIABILITY COMPANY
----------------
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
GAMIDA CELL LTD.
As Adopted on October 30, 2018
as amended on, and effective as of, November 17, 2021
PRELIMINARY
1.
DEFINITIONS; INTERPRETATION.
(a)
In these Articles, the following terms (whether or not capitalized) shall bear the meanings set forth opposite them, respectively, unless the
subject or context requires otherwise.
“Articles”
shall mean these Articles of Association, as amended from time to time.
“Board of Directors”
shall mean the Board of Directors of the Company.
“Chairperson”
shall mean the Chairperson of the Board of Directors, or the Chairperson of the General Meeting, as the context
implies;
“Company” shall
mean GAMIDA CELL LTD.
“Companies Law”
shall mean the Israeli Companies Law, 5759-1999, and the regulations promulgated thereunder. The Companies
Law shall include reference to the Companies Ordinance (New Version), 5743-1983, of the State of Israel, to the
extent in effect according to the provisions thereof.
“Director(s)”
shall mean the member(s) of the Board of Directors holding office at any given time, including alternate
directors.
“External Director(s)”
shall have the meaning provided for such term in the Companies Law.
“General Meeting”
shall mean an Annual General Meeting or Special General Meeting of the Shareholders, as the case may be.
“NIS”
“Office”
shall mean New Israeli Shekels.
shall mean the registered office of the Company at any given time.
“Office Holder” or “Officer”
shall have the meaning provided for such term in the Companies Law.
“RTP Law”
shall mean the Israeli Restrictive Trade Practices Law, 5758-1988.
“Securities Law”
shall mean the Israeli Securities Law 5728-1968.
“Shareholder(s)”
shall mean the shareholder(s) of the Company, at any given time.
“in writing” or “writing”
shall mean written, printed, photocopied, photographed or typed, including if appearing in an email, facsimile or
if produced by any visible substitute for a writing, or partly one and partly another. The term “signed” or
“signature” shall be construed in a corresponding manner.
(b) Unless otherwise defined in these Articles or required by the context, terms used herein shall have the meaning provided therefor under the
Companies Law.
(c) Unless the context shall otherwise require: words in the singular shall also include the plural, and vice versa; any pronoun shall include the
corresponding masculine, feminine and neuter forms; the words “include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”; the words “herein”, “hereof” and “hereunder” and words of similar import refer to these Articles in their entirety
and not to any part hereof; all references herein to Articles, Sections or clauses shall be deemed references to Articles, Sections or clauses of
these Articles; any references to any agreement or other instrument or law, statute or regulation are to it as amended, supplemented or restated,
from time to time (and, in the case of any law, to any successor provisions or re-enactment or modification thereof being in force at the time);
any reference to “law” shall include any supranational, national, federal, state, local, or foreign statute or law and all rules and regulations
promulgated thereunder (including, any rules, regulations or forms prescribed by any governmental authority or securities exchange
commission or authority, if and to the extent applicable); any reference to a “day” or a number of “days” (without any explicit reference
otherwise, such as to business days) shall be interpreted as a reference to a calendar day or number of calendar days; any reference to a month
or year shall be interpreted in accordance with the Gregorian calendar; any reference to a “company”, “corporate body” or “entity” shall
include a partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or
political subdivision thereof, and any reference to a “person” shall include any of the foregoing types of entities or a natural person.
(d) The captions in these Articles are for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any
provision hereof.
LIMITED LIABILITY
2.
The Company is a limited liability company and each Shareholder’s obligations to the Company shall therefore be limited to the payment of the
nominal value of the shares held by such shareholder, subject to the provisions of the Companies Law.
3.
PUBLIC COMPANY; OBJECTIVES.
PUBLIC COMPANY; COMPANY’S OBJECTIVES
(a) The Company is a public company as such term is defined and for so long as it qualifies under the Companies Law.
(b) The Company’s objectives are to carry on any business, and do any act, which is not prohibited by law.
- 2 -
4.
DONATIONS.
The Company may donate a reasonable amount of money (in cash or in kind, including the Company’s securities) for any purpose that the Board
of Directors finds appropriate.
5.
AUTHORIZED SHARE CAPITAL.
SHARE CAPITAL
1.1. The share capital of the Company shall consist of NIS 1,500,000 divided into 150,000,000 Ordinary Shares, of a nominal value of NIS 0.01
each (the “Shares”).
(a) The Shares shall rank pari passu in all respects. The Shares may be redeemable to the extent set forth in Article 13.
6.
INCREASE OF AUTHORIZED SHARE CAPITAL.
(a) The Company may, from time to time, by a Shareholders’ resolution, whether or not all of the shares then authorized have been issued,
increase its authorized share capital by increasing the number of shares it is authorized to issue. Any such increase shall be in such amount
and shall be divided into shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to
such restrictions, as such resolution shall provide.
(b) Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increase as aforesaid shall
be subject to all of the provisions of these Articles that are applicable to shares of such class that are included in the existing share capital.
7.
SPECIAL OR CLASS RIGHTS; MODIFICATION OF RIGHTS.
(a) The Company may, from time to time, by a Shareholders’ resolution, provide for shares with such preferred or deferred rights or other special
rights and/or such restrictions, whether in regard to dividends, voting, repayment of share capital or otherwise, as may be stipulated in such
resolution.
(b) If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class, unless otherwise
provided by these Articles, may be modified or cancelled by the Company by a resolution of the General Meeting of the holders of all shares
as one class, without any required separate resolution of any class of shares.
(c) The provisions of these Articles relating to General Meetings shall apply, mutatis mutandis, to any separate General Meeting of the holders of
the shares of a particular class, provided that the requisite quorum at any such separate General Meeting shall be one or more shareholders
present in person or by proxy and holding not less than thirty-three and one-third of a percent (33 1/3%) of the issued shares of such class.
(d) Unless otherwise provided by these Articles, an increase in the authorized share capital, the creation of a new class of shares, an increase in
the authorized share capital of a class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital,
shall not be deemed, for purposes of this Article 7, to modify or derogate or cancel the rights attached to previously issued shares of such class
or of any other class.
- 3 -
8.
CONSOLIDATION, DIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL.
(a) The Company may, from time to time, by or pursuant to an authorization of a Shareholders’ resolution, and subject to applicable law:
(i) consolidate all or any part of its issued or unissued authorized share capital into shares of a per share nominal value which is larger,
equal to or smaller than the per share nominal value of its existing shares;
(ii) divide or sub-divide its shares (issued or unissued) or any of them, into shares of smaller or the same nominal value (subject,
however, to the provisions of the Companies Law), and the resolution whereby any share is divided may determine that, as among the
holders of the shares resulting from such subdivision, one or more of the shares may, in contrast to others, have any such preferred or
deferred rights or rights of redemption or other special rights, or be subject to any such restrictions, as the Company may attach to
unissued or new shares;
(iii) cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and
reduce the amount of its share capital by the amount of the shares so canceled; or
(iv) reduce its share capital in any manner.
(b) With respect to any consolidation of issued shares and with respect to any other action which may result in fractional shares, the Board of
Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in connection with any such consolidation or
other action which could result in fractional shares, may, without limiting its aforesaid power:
(i) determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger, equal or
smaller nominal value per share;
(ii) issue, in contemplation of or subsequent to such consolidation or other action, shares sufficient to preclude or remove fractional share
holdings;
(iii) redeem such shares or fractional shares sufficient to preclude or remove fractional share holdings;
(iv) round up, round down or round to the nearest whole number, any fractional shares resulting from the consolidation or from any other
action which may result in fractional shares; or
(v) cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently
preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to pay the transferors thereof the fair
value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and
transferees of any such fractional shares, with full power of substitution, for the purposes of implementing the provisions of this sub-
Article 8 (b) (v).
9.
ISSUANCE OF SHARE CERTIFICATES, REPLACEMENT OF LOST CERTIFICATES.
(a) To the extent that the Board of Directors determines that all shares shall be certificated or, if the Board of Directors does not so determine, to
the extent that any shareholder requests a share certificate or the Company’s transfer agent so requires, share certificates shall be issued under
the corporate seal of the Company or its written, typed or stamped name and shall bear the signature of one Director, the Company’s Chief
Executive Officer, or any person or persons authorized therefor by the Board of Directors. Signatures may be affixed in any mechanical or
electronic form, as the Board of Directors may prescribe.
- 4 -
(b) Subject to the provisions of Article 9(a), each Shareholder shall be entitled to one numbered certificate for all of the shares of any class
registered in his name. Each certificate shall specify the serial numbers of the shares represented thereby and may also specify the amount
paid up thereon. The Company (as determined by an officer of the Company to be designated by the Chief Executive Officer) shall not refuse
a request by a Shareholder to obtain several certificates in place of one certificate, unless such request is, in the opinion of such officer,
unreasonable. Where a Shareholder has sold or transferred some of such Shareholder’s shares, such Shareholder shall be entitled to receive a
certificate in respect of such Shareholder’s remaining shares, provided that the previous certificate is delivered to the Company before the
issuance of a new certificate.
(c) A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Register of Shareholders
in respect of such co-ownership.
(d) A share certificate which has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such
defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as
the Board of Directors in its discretion deems fit.
10.
REGISTERED HOLDER.
Except as otherwise provided in these Articles or the Companies Law, the Company shall be entitled to treat the registered holder of each share as
the absolute owner thereof, and accordingly, shall not, except as ordered by a court of competent jurisdiction, or as required by the Companies
Law, be obligated to recognize any equitable or other claim to, or interest in, such share on the part of any other person.
11.
ISSUANCE AND REPURCHASE OF SHARES.
(a) The unissued shares from time to time shall be under the control of the Board of Directors (and, to the full extent permitted by law, any
Committee thereof), which shall have the power to issue or otherwise dispose of shares and of securities convertible or exercisable into or
other rights to acquire from the Company to such persons, on such terms and conditions, and either at par or at a premium, or subject to the
provisions of the Companies Law, at a discount and/or with payment of commission, and at such times, as the Board of Directors (or the
Committee, as the case may be) deems fit, and the power to give to any person the option to acquire from the Company any shares or
securities convertible or exercisable into or other rights to acquire from the Company, either at par or at a premium, or, subject as aforesaid, at
a discount and/or with payment of commission, during such time and for such consideration as the Board of Directors (or the Committee, as
the case may be) deems fit.
(b) The Company may at any time and from time to time, subject to the Companies Law, repurchase or finance the purchase of any shares or
other securities issued by the Company, in such manner and under such terms as the Board of Directors shall determine, whether from any one
or more shareholders. Such purchase shall not be deemed as payment of dividends and no shareholder will have the right to require the
Company to purchase his shares or offer to purchase shares from any other shareholders.
12.
PAYMENT IN INSTALLMENT.
If pursuant to the terms of issuance of any share, all or any portion of the price thereof shall be payable in installments, every such installment
shall be paid to the Company on the due date thereof by the then registered holder(s) of the share or the person(s) then entitled thereto.
- 5 -
13.
REDEEMABLE SHARES.
The Company may, subject to applicable law, issue redeemable shares or other securities and redeem the same upon terms and conditions to be set
forth in a written agreement between the Company and the holder of such shares or in their terms of issuance.
14.
REGISTRATION OF TRANSFER.
TRANSFER OF SHARES
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to
the Board of Directors) has been submitted to the Company (or its transfer agent), together with any share certificate(s) and such other evidence of
title as the Board of Directors may reasonably require. Notwithstanding anything to the contrary herein, shares registered in the name of The
Depository Trust Company or its nominee shall be transferrable in accordance with the policies and procedures of The Depository Trust Company.
Until the transferee has been registered in the Register of Shareholders in respect of the shares so transferred, the Company may continue to regard
the transferor as the owner thereof. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer, and may
approve other methods of recognizing the transfer of shares in order to facilitate the trading of the Company’s shares on the Nasdaq Stock Market
or on any other stock exchange on which the Company’s shares are then listed for trading.
15.
SUSPENSION OF REGISTRATION.
The Board of Directors may, in its discretion to the extent it deems necessary, close the Register of Shareholders of registration of transfers of
shares for a period determined by the Board of Directors, and no registrations of transfers of shares shall be made by the Company during any such
period during which the Register of Shareholders is so closed.
16.
DECEDENTS’ SHARES.
TRANSMISSION OF SHARES
(a)
In case of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof
unless and until the provisions of Article 16 (b) have been effectively invoked.
(b) Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters
of administration or declaration of succession (or such other evidence as the Board of Directors, or an officer of the Company to be designated
by the Chief Executive Officer, may reasonably deem sufficient), shall be registered as a shareholder in respect of such share, or may, subject
to the provisions as to transfer contained herein, transfer such share.
17.
RECEIVERS AND LIQUIDATORS.
(a) The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate
shareholder, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of,
or similar proceeding with respect to a shareholder or its properties, as being entitled to the shares registered in the name of such shareholder.
(b) Such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder and such trustee,
manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings
with respect to a shareholder or its properties, upon producing such evidence as the Board of Directors (or an officer of the Company to be
designated by the Chief Executive Officer) may deem sufficient as to his authority to act in such capacity or under this Article, shall with the
consent of the Board of Directors (which the Board of Directors may grant or refuse in its absolute discretion), be registered as a shareholder
in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.
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18.
GENERAL MEETINGS.
GENERAL MEETINGS
(a) An annual General Meeting (“Annual General Meeting”) shall be held at least once in every calendar year, not later than 15 months after the
last preceding annual General Meeting, at such time and at such place, either within or out of the State of Israel, as may be determined by the
Board of Directors.
(b) All General Meetings other than Annual General Meetings shall be called “Special General Meetings”.
19.
RECORD DATE FOR GENERAL MEETING.
Notwithstanding any provision of these Articles to the contrary, and to allow the Company to determine the shareholders entitled to notice of or to
vote at any General Meeting or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or grant of any rights,
or entitled to exercise any rights in respect of or to take or be the subject of any other action, the Board of Directors may fix a record date, which
shall not be more than the maximum period and not less than the minimum period permitted by law. A determination of shareholders of record
entitled to notice of or to vote at a meeting shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
20.
SHAREHOLDER PROPOSAL REQUEST.
(a) Any Shareholder or Shareholders of the Company holding at least one percent (1%) of the voting rights of the Company (the “Proposing
Shareholder(s)”) may request, subject to the Companies Law, that the Board of Directors include a matter on the agenda of a General
Meeting to be held in the future, provided that the Board determines that the matter is appropriate to be considered at a General Meeting (a
“Proposal Request”). In order for the Board of Directors to consider a Proposal Request and whether to include the matter stated therein in
the agenda of a General Meeting, notice of the Proposal Request must be timely delivered in accordance with applicable law, and the Proposal
Request must comply with the requirements of these Articles (including this Article 20) and any applicable law and stock exchange rules and
regulations. The Proposal Request must be in writing, signed by all of the Proposing Shareholder(s) making such request, delivered, either in
person or by certified mail, postage prepaid, and received by the Secretary (or, in the absence thereof by the Chief Executive Officer of the
Company). To be considered timely, a Proposal Request must be received within the time periods prescribed by applicable law. The
announcement of an adjournment or postponement of a General Meeting shall not commence a new time period (or extend any time period)
for the delivery of a Proposal Request as described above. In addition to any information required to be included in accordance with
applicable law, a Proposal Request must include the following: (i) the name, address, telephone number, fax number and email address of the
Proposing Shareholder (or each Proposing Shareholder, as the case may be) and, if an entity, the name(s) of the person(s) that controls or
manages such entity; (ii) the number of Shares held by the Proposing Shareholder(s), directly or indirectly (and, if any of such Shares are held
indirectly, an explanation of how they are held and by whom), which shall be in such number no less than as is required to qualify as a
Proposing Shareholder, accompanied by evidence satisfactory to the Company of the record holding of such Shares by the Proposing
Shareholder(s) as of the date of the Proposal Request, and a representation that the Proposing Shareholder(s) intends to appear in person or by
proxy at the meeting; (iii) the matter requested to be included on the agenda of a General Meeting, all information related to such matter, the
reason that such matter is proposed to be brought before the General Meeting, the complete text of the resolution that the Proposing
Shareholder proposes to be voted upon at the General Meeting and, if the Proposing Shareholder wishes to have a position statement in
support of the Proposal Request, a copy of such position statement that complies with the requirement of any applicable law (if any), (iv) a
description of all arrangements or understandings between the Proposing Shareholders and any other Person(s) (naming such Person or
Persons) in connection with the matter that is requested to be included on the agenda and a declaration signed by all Proposing Shareholder(s)
of whether any of them has a personal interest in the matter and, if so, a description in reasonable detail of such personal interest; (v) a
description of all Derivative Transactions (as defined below) by each Proposing Shareholder(s) during the previous twelve (12) month period,
including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such
Derivative Transactions; and (vi) a declaration that all of the information that is required under the Companies Law and any other applicable
law and stock exchange rules and regulations to be provided to the Company in connection with such matter, if any, has been provided to the
Company. The Board of Directors, may, in its discretion, to the extent it deems necessary, request that the Proposing Shareholder(s) provide
additional information necessary so as to include a matter in the agenda of a General Meeting, as the Board of Directors may reasonably
require.
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A “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any
Proposing Shareholder or any of its affiliates or associates, whether of record or beneficial: (1) the value of which is derived in whole or in part
from the value of any class or series of shares or other securities of the Company, (2) which otherwise provides any direct or indirect opportunity
to gain or share in any gain derived from a change in the value of securities of the Company, (3) the effect or intent of which is to mitigate loss,
manage risk or benefit of security value or price changes, or (4) which provides the right to vote or increase or decrease the voting power of, such
Proposing Shareholder, or any of its affiliates or associates, with respect to any shares or other securities of the Company, which agreement,
arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap,
stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to
borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate
interest of such Proposing Shareholder in the securities of the Company held by any general or limited partnership, or any limited liability
company, of which such Proposing Shareholder is, directly or indirectly, a general partner or managing member.
(b) The information required pursuant to this Article shall be updated as of (i) the record date of the General Meeting, (ii) five business days
before the General Meeting, and (iii) as of the General Meeting, and any adjournment or postponement thereof.
(c) Notwithstanding the forgoing, the Company shall make available to shareholders the right to make a proposal in compliance with the
requirements under Section 14 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
promulgated thereunder, for so long as the Company is subject to such requirements.
(d) The provisions of Articles 20(a), 20(b) and 20 (c) shall apply, mutatis mutandis, on any matter to be included on the agenda of a Special
General Meeting which is convened pursuant to a request of a Shareholder duly delivered to the Company in accordance with the Companies
Law.
21.
NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE.
(a) The Company is not required to give notice of a General Meeting, subject to any mandatory provision of the Companies Law.
Notwithstanding anything herein to the contrary, to the extent permitted under the Companies Law, with the consent of all Shareholders
entitled to vote thereon, a resolution may be proposed and passed at such meeting although a lesser notice period than hereinabove prescribed
has been given.
(b) The accidental omission to give notice of a General Meeting to any Shareholder, or the non-receipt of notice sent to such Shareholder, shall
not invalidate the proceedings at such meeting or any resolution adopted thereat.
(c) No Shareholder present, in person or by proxy, at any time during a General Meeting shall be entitled to seek the cancellation or invalidation
of any proceedings or resolutions adopted at such General Meeting on account of any defect in the notice of such meeting relating to the time
or the place thereof, or any item acted upon at such meeting.
(d) The Company may add additional places for Shareholders to review the full text of the proposed resolutions to be adopted at a General
Meeting, including an internet site.
22.
QUORUM.
PROCEEDINGS AT GENERAL MEETINGS
(a) No business shall be transacted at a General Meeting, or at any adjournment thereof, unless the quorum required under these Articles for such
General Meeting or such adjourned meeting, as the case may be, is present when the meeting proceeds to business.
(b) In the absence of contrary provisions in these Articles, one or more shareholders present in person or by proxy holding shares conferring in
the aggregate at least thirty-three and one-third of a percent (33 1/3%) of the voting power of the Company, shall constitute a quorum of
General Meetings. A proxy may be deemed to constitute the presence of such number of Shareholders equal to the number of Shareholders
represented by the holder of such proxy.
(c)
If within half an hour from the time appointed for the meeting a quorum is not present, then without any further notice the meeting shall be
adjourned either (i) to the same day in the next week, at the same time and place, (ii) to such day and at such time and place as indicated in the
notice to such meeting, or (iii) to such day and at such time and place as the Chairperson of the General Meeting shall determine (which may
be earlier or later than the date pursuant to clause (i) above). No business shall be transacted at any adjourned meeting except business which
might lawfully have been transacted at the meeting as originally called. At such adjourned meeting, one or more shareholders, present in
person or by proxy within half an hour from the time appointed for the Adjourned Meeting, and holding in the aggregate at least thirty-three
and one-third of a percent (33 ⅓%) of the voting power of the Company, shall constitute a quorum.
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23.
CHAIRPERSON OF GENERAL MEETING.
The Chairperson of the Board of Directors, shall preside as Chairperson of every General Meeting of the Company. If at any meeting the
Chairperson is not present within fifteen (15) minutes after the time fixed for holding the meeting or is unwilling to act as Chairperson, any of the
following may preside as Chairperson of the meeting (and in the following order): Director, Chief Executive Officer, Chief Financial Officer,
Secretary, General Legal Counsel or any person designated by any of the foregoing. If at any such meeting none of the foregoing persons is
present or all are unwilling to act as Chairperson, the Shareholders present (in person or by proxy) shall choose a Shareholder or its proxy present
at the meeting to be Chairperson. The office of Chairperson shall not, by itself, entitle the holder thereof to vote at any General Meeting nor shall it
entitle such holder to a second or casting vote (without derogating, however, from the rights of such Chairperson to vote as a shareholder or proxy
of a shareholder if, in fact, he is also a shareholder or such proxy).
24.
ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS.
(a) Except as required by the Companies Law or these Articles, including, without limitation, Article 34 below, a resolution of the Shareholders
shall be adopted if approved by the holders of a simple majority of the voting power represented at the General Meeting in person or by proxy
and voting thereon, as one class, and disregarding abstentions from the count of the voting power present and voting. Without limiting the
generality of the foregoing, a resolution with respect to a matter or action for which the Companies Law prescribes a higher majority or
pursuant to which a provision requiring a higher majority would have been deemed to have been incorporated into these Articles, but for
which the Companies Law allows these Articles to provide otherwise (including, Section 327 and 24 of the Companies Law), shall be adopted
by a simple majority of the voting power represented at the General Meeting in person or by proxy and voting thereon, as one class, and
disregarding abstentions from the count of the voting power present and voting.
(b) Every question submitted to a General Meeting shall be decided by a show of hands, but the Chairperson of the General Meeting may
determine that a resolution shall be decided by a written ballot. A written ballot may be implemented before the proposed resolution is voted
upon or immediately after the declaration by the Chairperson of the results of the vote by a show of hands. If a vote by written ballot is taken
after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such
written ballot.
(c) A declaration by the Chairperson of the General Meeting that a resolution has been carried unanimously, or carried by a particular majority, or
rejected, and an entry to that effect in the minute book of the Company, shall be prima facie evidence of the fact without proof of the number
or proportion of the votes recorded in favor of or against such resolution.
25.
POWER TO ADJOURN.
A General Meeting, the consideration of any matter on its agenda or the resolution on any matter on its agenda, may be postponed or adjourned,
from time to time and from place to place: (i) by the Chairperson of a General Meeting at which a quorum is present (and he shall if so directed by
the meeting, with the consent of the holders of a majority of the voting power represented in person or by proxy and voting on the question of
adjournment), but no business shall be transacted at any such adjourned meeting except business which might lawfully have been transacted at the
meeting as originally called, or a matter on its agenda with respect to which no resolution was adopted at the meeting originally called; or (ii) by
the Board (whether prior to or at a General Meeting).
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26.
VOTING POWER.
Subject to any provision hereof conferring special rights as to voting, or restricting the right to vote, every Shareholder shall have one vote for
each share held by him of record, on every resolution, without regard to whether the vote thereon is conducted by a show of hands, by written
ballot or by any other means.
27.
VOTING RIGHTS.
(a) A company or other corporate body being a Shareholder of the Company may duly authorize any person to be its representative at any
meeting of the Company or to execute or deliver a proxy on its behalf. Any person so authorized shall be entitled to exercise on behalf of such
Shareholder all the power, which the Shareholder could have exercised if it were an individual. Upon the request of the Chairperson of the
General Meeting, written evidence of such authorization (in form acceptable to the Chairperson) shall be delivered to him.
(b) Any Shareholder entitled to vote may vote either in person or by proxy (who need not be Shareholder of the Company), or, if the Shareholder
is a company or other corporate body, by representative authorized pursuant to Article (a) above.
(c)
If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person or by proxy, shall be
accepted to the exclusion of the vote(s) of the other joint holder(s). For the purpose of this Article 27 (c), seniority shall be determined by the
order of registration of the joint holders in the Register of Shareholder.
28.
INSTRUMENT OF APPOINTMENT.
PROXIES
(a) An instrument appointing a proxy shall be in writing and shall be substantially in the following form:
“I
Being a shareholder of Gamida Cell Ltd. hereby appoints
(Name of Shareholder)
of
of
(Address of Shareholder)
as my proxy to vote for me and on my behalf at the General Meeting of the Company to be held on the ___ day of _______, _______ and at any
adjournment(s) thereof.
(Name of Proxy)
(Address of Proxy)
Signed this ____ day of ___________, ______.
(Signature of Appointor)”
or in any usual or common form or in such other form as may be approved by the Board of Directors. Such proxy shall be duly signed by the
appointor of such person’s duly authorized attorney, or, if such appointor is company or other corporate body, in the manner in which it signs
documents which binds it together with a certificate of an attorney with regard to the authority of the signatories.
(b) Subject to the Companies Law, the original instrument appointing a proxy or a copy thereof certified by an attorney (and the power of
attorney or other authority, if any, under which such instrument has been signed) shall be delivered to the Company (at its Office, at its
principal place of business, or at the offices of its registrar or transfer agent, or at such place as notice of the meeting may specify) not less
than forty eight (48) hours (or such shorter period as the notice shall specify) before the time fixed for such meeting. Notwithstanding the
above, the Chairperson shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to
accept any and all instruments of proxy until the beginning of a General Meeting. A document appointing a proxy shall be valid for every
adjourned meeting of the General Meeting to which the document relates.
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29.
EFFECT OF DEATH OF APPOINTOR OF TRANSFER OF SHARE AND OR REVOCATION OF APPOINTMENT.
(a) A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the prior death or bankruptcy of the
appointing shareholder (or of his attorney-in-fact, if any, who signed such instrument), or the transfer of the share in respect of which the vote
is cast, unless written notice of such matters shall have been received by the Company or by the Chairperson of such meeting prior to such
vote being cast.
(b) Subject to the Companies Law, an instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the
Chairperson, subsequent to receipt by the Company of such instrument, of written notice signed by the person signing such instrument or by
the Shareholder appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed)
or of an instrument appointing a different proxy (and such other documents, if any, required under Article 28(b) for such new appointment),
provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery
of the instrument revoked thereby as referred to in Article 28(b) hereof, or (ii) if the appointing shareholder is present in person at the meeting
for which such instrument of proxy was delivered, upon receipt by the Chairperson of such meeting of written notice from such shareholder of
the revocation of such appointment, or if and when such shareholder votes at such meeting. A vote cast in accordance with an instrument
appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or
vote of the appointing shareholder at a meeting for which it was rendered, unless such instrument of appointment was deemed revoked in
accordance with the foregoing provisions of this Article 29 (b) at or prior to the time such vote was cast.
30.
POWERS OF BOARD OF DIRECTORS.
BOARD OF DIRECTORS
(a) The Board of Directors may exercise all such powers and do all such acts and things as the Board of Directors is authorized by law or as the
Company is authorized to exercise and do and are not hereby or by law required to be exercised or done by the General Meeting. The
authority conferred on the Board of Directors by this Article 30 shall be subject to the provisions of the Companies Law, these Articles and
any regulation or resolution consistent with these Articles adopted from time to time at a General Meeting, provided, however, that no such
regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board of Directors which would have been valid
if such regulation or resolution had not been adopted.
(b) Without limiting the generality of the foregoing, the Board of Directors may, from time to time, set aside any amount(s) out of the profits of
the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its absolute discretion, shall deem fit, including
without limitation, capitalization and distribution of bonus shares, and may invest any sum so set aside in any manner and from time to time
deal with and vary such investments and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of
the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or re-designate any
reserve or cancel the same or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.
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31.
EXERCISE OF POWERS OF BOARD OF DIRECTORS.
(a) A meeting of the Board of Directors at which a quorum is present shall be competent to exercise all the authorities, powers and discretion
vested in or exercisable by the Board of Directors.
(b) A resolution proposed at any meeting of the Board of Directors shall be deemed adopted if approved by a majority of the Directors present,
entitled to vote and voting thereon when such resolution is put to a vote.
(c) The Board of Directors may adopt resolutions, without convening a meeting of the Board of Directors, in writing or in any other manner
permitted by the Companies Law.
(d) The Board of Directors may hold meetings by use of any means of communication on the condition that all participating directors can hear
each other at the same time.
32.
DELEGATION OF POWERS.
(a) The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees (in these Articles
referred to as a “Committee of the Board of Directors”, or “Committee”), each consisting of one or more persons (who may or may not be
Directors), and it may from time to time revoke such delegation or alter the composition of any such Committee. No regulation imposed by
the Board of Directors on any Committee and no resolution of the Board of Directors shall invalidate any prior act done or pursuant to a
resolution by the Committee which would have been valid if such regulation or resolution of the Board had not been adopted. The meeting
and proceedings of any such Committee of the Board of Directors shall, mutatis mutandis, be governed by the provisions herein contained for
regulating the meetings of the Board of Directors, to the extent not superseded by any regulations adopted by the Board of Directors. Unless
otherwise expressly prohibited by the Board of Directors, in delegating powers to a Committee of the Board of Directors, such Committee
shall be empowered to further delegate such powers.
(b) Without derogating from the provisions of Article 44, the Board of Directors may from time to time appoint a Secretary to the Company, as
well as officers, agents, employees and independent contractors, as the Board of Directors deems fit, and may terminate the service of any
such person. The Board of Directors may, subject to the provisions of the Companies Law, determine the powers and duties, as well as the
salaries and compensation, of all such persons.
(c) The Board of Directors may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be
the attorney or attorneys of the Company at law or in fact for such purposes(s) and with such powers, authorities and discretions, and for such
period and subject to such conditions, as it deems fit, and any such power of attorney or other appointment may contain such provisions for
the protection and convenience of persons dealing with any such attorney as the Board of Directors deems fit, and may also authorize any
such attorney to delegate all or any of the powers, authorities and discretions vested in him.
33.
NUMBER OF DIRECTORS.
(a) The Board of Directors shall consist of such number of Directors (not less than five (5) nor more than 11 (eleven), including External
Directors, if any were elected) as may be fixed from time to time by the Board of Directors.
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(b) Notwithstanding anything to the contrary herein, this Article 33 may only be amended or replaced by a resolution adopted at a General
Meeting by a majority of 60% of the total voting power of the Company’s shareholders.
34.
ELECTION AND REMOVAL OF DIRECTORS.
(a) The Directors, excluding the External Directors if any were elected, shall be classified, with respect to the term for which they each severally
hold office, into three classes, as nearly equal in number as practicable, hereby designated as Class I, Class II and Class III. The Board of
Directors may assign members of the Board of Directors already in office to such classes at the time such classification becomes effective.
(i)The term of office of the initial Class I directors shall expire at the first Annual General Meeting to be held in 2019 and when their
successors are elected and qualified,
(ii)The term of office of the initial Class II directors shall expire at the first Annual General Meeting following the Annual General
Meeting referred to in clause (i) above and when their successors are elected and qualified, and
(iii)The term of office of the initial Class III directors shall expire at the first Annual General Meeting following the Annual General
Meeting referred to in clause (ii) above and when their successors are elected and qualified,
(b) At each Annual General Meeting, commencing with the Annual General Meeting to be held in 2019, each of the successors elected to replace
the Directors of a Class whose term shall have expired at such Annual General Meeting shall be elected to hold office until the third Annual
General Meeting next succeeding his or her election and until his or her respective successor shall have been elected and qualified.
Notwithstanding anything to the contrary, each Director shall serve until his or her successor is elected and qualified or until such earlier time
as such Director’s office is vacated.
(c)
If the number of Directors (excluding External Directors, if any were elected) that consists the Board of Directors is hereafter changed, any
newly created directorships or decrease in directorships shall be so apportioned by the Board of Directors among the classes as to make all
classes as nearly equal in number as is practicable, provided that no decrease in the number of Directors constituting the Board of Directors
shall shorten the term of any incumbent Director.
(d) Prior to every General Meeting of the Company at which Directors are to be elected, and subject to clauses (a) and (h) of this Article, the
Board of Directors (or a Committee thereof) shall select, by a resolution adopted by a majority of the Board of Directors (or such Committee),
a number of Persons to be proposed to the Shareholders for election as Directors at such General Meeting (the “Nominees”).
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(e) Any Proposing Shareholder requesting to include on the agenda of a General Meeting a nomination of a Person to be proposed to the
Shareholders for election as Director (such person, an “Alternate Nominee”), may so request provided that it complies with this Article 34 (e)
and Article 20 and applicable law. Unless otherwise determined by the Board, a Proposal Request relating to Alternate Nominee is deemed to
be a matter that is appropriate to be considered only in an Annual General Meeting. In addition to any information required to be included in
accordance with applicable law, such a Proposal Request shall include information required pursuant to Article 20, and shall also set forth: (i)
the name, address, telephone number, fax number and email address of the Alternate Nominee and all citizenships and residencies of the
Alternate Nominee; (ii) a description of all arrangements, relations or understandings between the Proposing Shareholder(s) or any of its
affiliates and each Alternate Nominee; (iii) a declaration signed by the Alternate Nominee that he consents to be named in the Company’s
notices and proxy materials relating to the General Meeting, if provided or published, and, if elected, to serve on the Board of Directors and to
be named in the Company’s disclosures and filings, (iv) a declaration signed by each Alternate Nominee as required under the Companies
Law and any other applicable law and stock exchange rules and regulations for the appointment of such an Alternate Nominee and an
undertaking that all of the information that is required under law and stock exchange rules and regulations to be provided to the Company in
connection with such an appointment has been provided (including, information in respect of the Alternate Nominee as would be provided in
response to the applicable disclosure requirements under Form 20-F or any other applicable form prescribed by the U.S. Securities and
Exchange Commission (the “SEC”); (v) a declaration made by the Alternate Nominee of whether he meets the criteria for an independent
director and/or External Director of the Company under the Companies Law and/or under any applicable law, regulation or stock exchange
rules, and if not, then an explanation of why not; and (vi) any other information required at the time of submission of the Proposal Request by
applicable law, regulations or stock exchange rules. In addition, the Proposing Shareholder shall promptly provide any other information
reasonably requested by the Company. The Board of Directors may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing. The Company shall be entitled to publish any information provided by a Proposing Shareholder pursuant to
this Article 34 (e) and Article 20, and the Proposing Shareholder shall be responsible for the accuracy and completeness thereof.
(f) The Nominees or Alternate Nominees shall be elected by a resolution adopted at the General Meeting at which they are subject to election.
(g) Notwithstanding anything to the contrary herein, this Article 34 and Article 37(e) may only be amended, replaced or suspended by a
resolution adopted at a General Meeting by a majority of 60% of the total voting power of the Company’s shareholders.
(h) Notwithstanding anything to the contrary in these Articles, the election, qualification, removal or dismissal of External Directors, if so
elected, shall be only in accordance with the applicable provisions set forth in the Companies Law.
35.
COMMENCEMENT OF DIRECTORSHIP.
Without derogating from Article 34, the term of office of a Director shall commence as of the date of his appointment or election, or on a later date
if so specified in his appointment or election.
36.
CONTINUING DIRECTORS IN THE EVENT OF VACANCIES.
The Board may at any time and from time to time appoint any person as a Director to fill a vacancy (whether such vacancy is due to a Director no
longer serving or due to the number of Directors serving being less than the maximum number stated in Article 33 hereof). In the event of one or
more such vacancies in the Board of Directors, the continuing Directors may continue to act in every matter, provided, however, that if they
number less than the minimum number provided for pursuant to Article 33 hereof, they may only act in an emergency or to fill the office of
director which has become vacant up to a number equal to the minimum number provided for pursuant to Article 33 hereof, or in order to call a
General Meeting of the Company for the purpose of electing Directors to fill any or all vacancies. The office of a Director that was appointed by
the Board of Directors to fill any vacancy shall only be for the remaining period of time during which the Director whose service has ended was
filled would have held office, or in case of a vacancy due to the number of Directors serving being less than the maximum number stated in Article
33 hereof the Board shall determine at the time of appointment the class pursuant to Article 34 to which the additional Director shall be assigned.
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37.
VACATION OF OFFICE.
The office of a Director shall be vacated and he shall be dismissed or removed:
(a)
ipso facto, upon his death;
(b) if he is prevented by applicable law from serving as a Director;
(c)
if the Board determines that due to his mental or physical state he is unable to serve as a director;
(d) if his directorship expires pursuant to these Articles and/or applicable law;
(e) by a resolution adopted at a General Meeting by a majority of 60% of the total voting power of the Company’s shareholders. Such removal
shall become effective on the date fixed in such resolution;
(f) by his written resignation, such resignation becoming effective on the date fixed therein, or upon the delivery thereof to the Company,
whichever is later; or
(g) with respect to an External Director, if so elected, and notwithstanding anything to the contrary herein, only pursuant to applicable law.
38.
CONFLICT OF INTERESTS; APPROVAL OF RELATED PARTY TRANSACTIONS.
(a) Subject to the provisions of the Companies Law and these Articles, no Director shall be disqualified by virtue of his office from holding any
office or place of profit in the Company or in any company in which the Company shall be a shareholder or otherwise interested, or from
contracting with the Company as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement entered into by
or on behalf of the Company in which any Director shall be in any way interested, be avoided, nor, other than as required under the
Companies Law, shall any Director be liable to account to the Company for any profit arising from any such office or place of profit or
realized by any such contract or arrangement by reason only of such Director’s holding that office or of the fiduciary relations thereby
established, but the nature of his interest, as well as any material fact or document, must be disclosed by him at the meeting of the Board of
Directors at which the contract or arrangement is first considered, if his interest then exists, or, in any other case, at no later than the first
meeting of the Board of Directors after the acquisition of his interest.
(b) Subject to the Companies Law and these Articles, a transaction between the Company and an Office Holder, and a transaction between the
Company and another entity in which an Office Holder of the Company has a personal interest, in each case, which is not an Extraordinary
Transaction (as defined by the Companies Law), shall require only approval by the Board of Directors and by the Audit Committee or
Compensation Committee of the Board of Directors (as applicable). Such authorization, as well as the actual approval, may be for a particular
transaction or more generally for specific type of transactions.
39.
ALTERNATE DIRECTORS.
(a) Subject to the provisions of the Companies Law, a Director may, by written notice to the Company, appoint, remove or replace any person as
an alternate for himself; provided that the appointment of such person shall have effect only upon and subject to its being approved by the
Board (in these Articles, an “Alternate Director”). Unless the appointing Director, by the instrument appointing an Alternate Director or by
written notice to the Company, limits such appointment to a specified period of time or restricts it to a specified meeting or action of the
Board of Directors, or otherwise restricts its scope, the appointment shall be for all purposes, and for a period of time concurrent with the term
of the appointing Director.
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(b) Any notice to the Company pursuant to Article 39 (a) shall be given in person to, or by sending the same by mail to the attention of the
Chairperson of the Board of Directors at the principal office of the Company or to such other person or place as the Board of Directors shall
have determined for such purpose, and shall become effective on the date fixed therein, upon the receipt thereof by the Company (at the place
as aforesaid) or upon the approval of the appointment by the Board, whichever is later.
(c) An Alternate Director shall have all the rights and obligations of the Director who appointed him, provided however, that (i) he may not in
turn appoint an alternate for himself (unless the instrument appointing him otherwise expressly provides), and (ii) an Alternate Director shall
have no standing at any meeting of the Board of Directors or any Committee thereof while the Director who appointed him is present.
(d) Any individual, who qualifies to be a member of the Board of Directors, may act as an Alternate Director. One person may not act as
Alternate Director for several directors or if he is serving as a Director.
(e) The office of an Alternate Director shall be vacated under the circumstances, mutatis mutandis, set forth in Article 37, and such office shall
ipso facto be vacated if the office of the Director who appointed such Alternate Director is vacated, for any reason.
40.
MEETINGS.
PROCEEDINGS OF THE BOARD OF DIRECTORS
(a) The Board of Directors may meet and adjourn its meetings and otherwise regulate such meetings and proceedings as the Directors think fit.
(b) Any Director may at any time, and the Secretary, upon the request of such Director, shall, convene a meeting of the Board of Directors, but
not less than two (2) days’ notice shall be given of any meeting so convened, unless such notice is waived in writing by all of the Directors as
to a particular meeting or unless the matters to be discussed at such meeting are of such urgency and importance that notice ought reasonably
to be waived under the circumstances.
(c) Notice of any such meeting shall be given orally, by telephone, in writing or by mail or facsimile or such other means of delivery of notices as
the Company may apply, from time to time.
(d) Notwithstanding anything to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required hereby may
be waived by such Director, and a meeting shall be deemed to have been duly convened notwithstanding such defective notice if such failure
or defect is waived prior to action being taken at such meeting, by all Directors entitled to participate at such meeting to whom notice was not
duly given as aforesaid. Without derogating from the foregoing, no Director present at any time during a meeting of the Board of Directors
shall be entitled to seek the cancellation or invalidation of any proceedings or resolutions adopted at such meeting on account of any defect in
the notice of such meeting relating to the date, time or the place thereof or the convening of the meeting.
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41.
QUORUM.
Until otherwise unanimously decided by the Board of Directors, a quorum at a meeting of the Board of Directors shall be constituted by the
presence in person or by any means of communication of a majority of the Directors then in office who are lawfully entitled to participate and vote
in the meeting. No business shall be transacted at a meeting of the Board of Directors unless the requisite quorum is present (in person or by any
means of communication) when the meeting proceeds to business.
42.
CHAIRPERSON OF THE BOARD OF DIRECTORS.
The Board of Directors shall, from time to time, elect one of its members to be the Chairperson of the Board of Directors, remove such
Chairperson from office and appoint in his place. The Chairperson of the Board of Directors shall preside at every meeting of the Board of
Directors, but if there is no such Chairperson, or if at any meeting he is not present within fifteen (15) minutes of the time fixed for the meeting or
if he is unwilling to take the chair, the Directors present shall choose one of the Directors present at the meeting to be the Chairperson of such
meeting. The office of Chairperson of the Board of Directors shall not, by itself, entitle the holder to a second or casting vote.
43.
VALIDITY OF ACTS DESPITE DEFECTS.
All acts done or transacted at any meeting of the Board of Directors, or of a Committee of the Board of Directors, or by any person(s) acting as
Director(s), shall, notwithstanding that it may afterwards be discovered that there was some defect in the appointment of the participants in such
meeting or any of them or any person(s) acting as aforesaid, or that they or any of them were disqualified, be as valid as if there were no such
defect or disqualification.
44.
CHIEF EXECUTIVE OFFICER.
CHIEF EXECUTIVE OFFICER
(a) The Board of Directors shall from time to time appoint one or more persons, whether or not Directors, as Chief Executive Officer of the
Company and may confer upon such person(s), and from time to time modify or revoke, such titles and such duties and authorities of the
Board of Directors as the Board of Directors may deem fit, subject to such limitations and restrictions as the Board of Directors may from
time to time prescribe. Such appointment(s) may be either for a fixed term or without any limitation of time, and the Board of Directors may
from time to time (subject to any additional approvals required under, and the provisions of, the Companies Law and of any contract between
any such person and the Company) fix their salaries and compensation, remove or dismiss them from office and appoint another or others in
his or their place or places.
(b) Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have authority with respect to the management and
operations of the Company in the ordinary course of business.
45.
MINUTES.
MINUTES
Any minutes of the General Meeting or the Board of Directors or any committee thereof, if purporting to be signed by the Chairperson of the
General Meeting, the Board or a committee thereof, as the case may be, or by the Chairperson of the next succeeding General Meeting, meeting of
the Board or meeting of a committee thereof, as the case may be, shall constitute prima facie evidence of the matters recorded therein.
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46.
DECLARATION OF DIVIDENDS.
DIVIDENDS
The Board of Directors may from time declare, and cause the Company to pay, such dividend as may appear to the Board of Directors to be
justified by the profits of the Company and as permitted by the Companies Law. The Board of Directors shall determine the time for payment of
such dividends and the record date for determining the shareholders entitled thereto.
47.
AMOUNT PAYABLE BY WAY OF DIVIDENDS.
(a) Subject to the provisions of these Articles and subject to the rights or conditions attached at that time to any share in the capital of the
Company granting preferential, special or deferred rights or not granting any rights with respect to dividends, any dividend paid by the
Company shall be allocated among the shareholders entitled thereto in proportion to their respective holdings of the shares in respect of which
such dividends are being paid.
48.
INTEREST.
No dividend shall carry interest as against the Company.
49.
CAPITALIZATION OF PROFITS, RESERVES, ETC.
The Board of Directors may determine that the Company (i) may cause any moneys, investments, or other assets forming part of the undivided
profits of the Company, standing to the credit of a reserve fund, or to the credit of a reserve fund for the redemption of capital, or in the hands of
the Company and available for dividends, or representing premiums received on the issuance of shares and standing to the credit of the share
premium account, to be capitalized and distributed among such of the shareholders as would be entitled to receive the same if distributed by way
of dividend and in the same proportion, on the footing that they become entitled thereto as capital; and (ii) may cause such distribution or payment
to be accepted by such shareholders in full satisfaction of their interest in the said capitalized sum.
50.
IMPLEMENTATION OF POWERS.
For the purpose of giving full effect to any resolution under Article 49, , the Board of Directors may settle any difficulty which may arise in regard
to the distribution as it thinks expedient, and, in particular, may fix the value for distribution of any specific assets and may determine that cash
payments shall be made to any shareholders upon the footing of the value so fixed, or that fractions of less value than a certain determined value
may be disregarded in order to adjust the rights of all parties, and may vest any such cash, shares, debentures, debenture stock or specific assets in
trustees upon such trusts for the persons entitled to the dividend or capitalized fund as may seem expedient to the Board of Directors. Where
requisite, a proper contract shall be filed in accordance with Section 291 of the Companies Law, and the Board of Directors may appoint any
person to sign such contract on behalf of the persons entitled to the dividend or capitalized fund.
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51.
UNCLAIMED DIVIDENDS.
All unclaimed dividends or other moneys payable in respect of a share may be invested or otherwise made use of by the Board of Directors for the
benefit of the Company until claimed. The payment by the Directors of any unclaimed dividend or such other moneys into a separate account shall
not constitute the Company a trustee in respect thereof, and any dividend unclaimed after a period of seven (7) years from the date of declaration
of such dividend, and any such other moneys unclaimed after a like period from the date the same were payable, shall be forfeited and shall revert
to the Company, provided, however, that the Board of Directors may, at its discretion, cause the Company to pay any such dividend or such other
moneys, or any part thereof, to a person who would have been entitled thereto had the same not reverted to the Company. The principal (and only
the principal) of any unclaimed dividend of such other moneys shall be if claimed, paid to a person entitled thereto.
52.
MECHANICS OF PAYMENT.
Any dividend or other moneys payable in cash in respect of a share may be paid by check or payment order sent through the post to, or left at, the
registered address of the person entitled thereto or by transfer to a bank account specified by such person (or, if two or more persons are registered
as joint holders of such share or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, to the joint holder
whose name is registered first in the Register of Shareholders or his bank account or the person who the Company may then recognize as the
owner thereof or entitled thereto under Article 16 or 17 hereof, as applicable, or such person’s bank account), or to such person and at such other
address as the person entitled thereto may by writing direct, or in any other manner the Board deems appropriate. Every such check or warrant or
other method of payment shall be made payable to the order of the person to whom it is sent, or to such person as the person entitled thereto as
aforesaid may direct, and payment of the check or warrant by the banker upon whom it is drawn shall be a good discharge to the Company.
53.
RECEIPT FROM A JOINT HOLDER.
If two or more persons are registered as joint holders of any share, or are entitled jointly thereto in consequence of the death or bankruptcy of the
holder or otherwise, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable in respect of
such share.
54.
BOOKS OF ACCOUNT.
ACCOUNTS
The Company’s books of account shall be kept at the Office of the Company, or at such other place or places as the Board of Directors may think
fit, and they shall always be open to inspection by all Directors. No shareholder, not being a Director, shall have any right to inspect any account
or book or other similar document of the Company, except as conferred by law or authorized by the Board of Directors. The Company shall make
copies of its annual financial statements available for inspection by the shareholders at the principal offices of the Company. The Company shall
not be required to send copies of its annual financial statements to shareholders.
55.
AUDITORS.
The appointment, authorities, rights and duties of the auditor(s) of the Company, shall be regulated by applicable law, provided, however, that in
exercising its authority to fix the remuneration of the auditor(s), the shareholders in General Meeting may act (and in the absence of any action in
connection therewith shall be deemed to have so acted) to authorize the Board of Directors (with right of delegation to management) to fix such
remuneration subject to such criteria or standards, and if no such criteria or standards are so provided, such remuneration shall be fixed in an
amount commensurate with the volume and nature of the services rendered by such auditor(s).
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56.
SUPPLEMENTARY REGISTERS.
SUPPLEMENTARY REGISTERS
Subject to and in accordance with the provisions of Sections 138 and 139 of the Companies Law, the Company may cause supplementary registers
to be kept in any place outside Israel as the Board of Directors may think fit, and, subject to all applicable requirements of law, the Board of
Directors may from time to time adopt such rules and procedures as it may think fit in connection with the keeping of such branch registers.
57.
INSURANCE.
EXEMPTION, INDEMNITY AND INSURANCE
Subject to the provisions of the Companies Law with regard to such matters, the Company may enter into a contract for the insurance of the
liability, in whole or in part, of any of its Office Holders imposed on such Office Holder due to an act performed by or an omission of the Office
Holder in the Office Holder’s capacity as an Office Holder of the Company arising from any matter permitted by law, including the following:
(a) a breach of duty of care to the Company or to any other person;
(b) a breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds to assume that
act that resulted in such breach would not prejudice the interests of the Company;
(c) a financial liability imposed on such Office Holder in respect to his capacity as an Office Holder in favor of any other person; and
(d) any other event, occurrence, matters or circumstances under any law with respect to which the Company may, or will be able to, insure an
Office Holder, and to the extent such law requires the inclusion of a provision permitting such insurance in these Articles, then such provision
is deemed to be included and incorporated herein by reference (including, without limitation, in accordance with Section 56h(b)(1) of the
Securities Law, if and to the extent applicable, and Section 50P of the RTP Law).
58.
INDEMNITY.
(a) Subject to the provisions of the Companies Law, the Company may retroactively indemnify an Office Holder of the Company with respect to
the following liabilities and expenses, provided that such liabilities or expenses were imposed on such Office Holder or incurred by such
Office Holder due to an act performed by or an omission of the Office Holder in such Office Holder’s capacity as an Office Holder of the
Company:
(i) a financial liability imposed on an Office Holder in favor of another person by any court judgment, including a judgment given as a
result of a settlement or an arbitrator’s award which has been confirmed by a court in respect of an act performed by the Office Holder;
(ii) reasonable litigation expenses, including attorneys’ fees, expended by the Office Holder as a result of an investigation or proceeding
instituted against him or her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial
sanction, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such
investigation or proceeding; and (2) no financial liability in lieu of a criminal proceeding (as defined in the Companies Law) was
imposed upon him or her as a result of such investigation or proceeding or if such financial liability was imposed, it was imposed with
respect to an offence that does not require proof of criminal intent;
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(iii) reasonable litigation costs, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a
court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge in
respect of which the Office Holder was acquitted or in a criminal charge in respect of which the Office Holder was convicted for an
offence which did not require proof of criminal intent;
(iv) A financial obligation imposed upon an Office Holder and reasonable litigation costs, including attorney’s fees, expended by an
Office Holder as a result of an administrative proceeding instituted against an Office Holder. Without derogating from the generality of
the foregoing, such obligation or expenses will include a payment which an Office Holder is obligated to make to an injured party as set
forth in Section 52(54)(a)(1)(a) of the Securities Law and expenses that an Office Holder incurred in connection with a proceeding under
Chapters H’3, H’4 or I’1 of the Securities Law; and
(v) any other event, occurrence, matter or circumstances under any law with respect to which the Company may, or will be able to,
indemnify an Office Holder, and to the extent such law requires the inclusion of a provision permitting such indemnity in these Articles,
then such provision is deemed to be included and incorporated herein by reference (including, without limitation, in accordance with
Section 56h(b)(1) of the Israeli Securities Law, if and to the extent applicable, and Section 50P(b)(2) of the RTP Law).
(b) Subject to the provisions of the Companies Law, the Company may undertake to indemnify an Office Holder, in advance, with respect to
those liabilities and expenses described in the following Articles:
(i) Sub-Article 58(a)(ii) to 58(a)(iv); and
(ii) Sub-Article 58 (a)(i), provided that:
(1) the undertaking to indemnify is limited to such events which the Directors shall deem to be likely to occur in light of the
operations of the Company at the time that the undertaking to indemnify is made and for such amounts or criterion which the
Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances; and
(2) the undertaking to indemnify shall set forth such events which the Directors shall deem to be likely to occur in light of the
operations of the Company at the time that the undertaking to indemnify is made, and the amounts and/or criterion which the
Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances.
59.
EXEMPTION.
Subject to the provisions of the Companies Law, the Company may, to the maximum extent permitted by law exempt and release, in advance, any
Office Holder from any liability to the Company for damages arising out of a breach of a duty of care towards the Company.
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60.
GENERAL.
(a) Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to Articles 57
to 59 and any amendments to Articles 57 to 59 shall be prospective in effect, and shall not affect the Company’s obligation or ability to
indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by applicable
law.
(b) The provisions of Articles 57 to 59 (i) shall apply to the maximum extent permitted by law (including, the Companies Law, the Securities
Law and the RTP Law); and (ii) are not intended, and shall not be interpreted so as to restrict the Company, in any manner, in respect of the
procurement of insurance and/or in respect of indemnification (whether in advance or retroactively) and/or exemption, in favor of any person
who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office
Holder; and/or any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law.
61.
WINDING UP.
WINDING UP
If the Company is wound up, then, subject to applicable law and to the rights of the holders of shares with special rights upon winding up, the
assets of the Company available for distribution among the shareholders shall be distributed to them in proportion to the nominal value of their
respective holdings of the shares in respect of which such distribution is being made.
62.
NOTICES.
NOTICES
(a) Any written notice or other document may be served by the Company upon any shareholder either personally, by facsimile, email or other
electronic transmission, or by sending it by prepaid mail (airmail if sent internationally) addressed to such shareholder at his address as
described in the Register of Shareholders or such other address as he may have designated in writing for the receipt of notices and other
documents.
(b) Any written notice or other document may be served by any shareholder upon the Company by tendering the same in person to the Secretary
or the Chief Executive Officer of the Company at the principal office of the Company, by facsimile transmission, or by sending it by prepaid
registered mail (airmail if posted outside Israel) to the Company at its Office.
(c) Any such notice or other document shall be deemed to have been served:
(i) in the case of mailing, forty-eight (48) hours after it has been posted, or when actually received by the addressee if sooner than forty-
eight hours after it has been posted, or
(ii) in the case of overnight air courier, on the next business day following the day sent, with receipt confirmed by the courier, or when
actually received by the addressee if sooner than three business days after it has been sent;
(iii) in the case of personal delivery, when actually tendered in person, to such addressee.
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(iv) in the case of facsimile, email or other electronic transmission, the on the first business day (during normal business hours in place of
addressee) on which the sender receives automatic electronic confirmation by the addressee’s facsimile machine that such notice was
received by the addressee or delivery confirmation from the addressee’s email or other communication server.
(d) If a notice is, in fact, received by the addressee, it shall be deemed to have been duly served, when received, notwithstanding that it was
defectively addressed or failed, in some other respect, to comply with the provisions of this Article 62.
(e) All notices to be given to the shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such
persons is named first in the Register of Shareholders, and any notice so given shall be sufficient notice to the holders of such share.
(f) Any shareholder whose address is not described in the Register of Shareholders, and who shall not have designated in writing an address for
the receipt of notices, shall not be entitled to receive any notice from the Company.
(g) Notwithstanding anything to the contrary contained herein, notice by the Company of a General Meeting, containing the information required
by applicable law and these Articles to be set forth therein, which is published, within the time otherwise required for giving notice of such
meeting, in either or several of the following manners (as applicable) shall be deemed to be notice of such meeting duly given, for the
purposes of these Articles, to any shareholder whose address as registered in the Register of Shareholders (or as designated in writing for the
receipt of notices and other documents) is located either inside or outside the State of Israel:
(i) if the Company’s shares are then listed for trading on a national securities exchange in the United States or quoted in an over-the-
counter market in the United States, publication of notice of a General Meeting on Schedule 14A (or an equivalent form subsequently
adopted by the SEC), as appropriate, furnished to the SEC; and/or
(ii) on the Company’s internet site.
(h) The mailing or publication date and the record date and/or date of the meeting (as applicable) shall be counted among the days comprising
any notice period under the Companies Law and the regulations thereunder.
63.
FORUM FOR ADJUDICATION OF DISPUTES
(a) Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America,
shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the U.S. Securities Act of
1933, as amended, including all causes of action asserted against any defendant to such complaint. For the avoidance of doubt, this provision
is intended to benefit and may be enforced by the Company, its officers and directors, the underwriters to any offering giving rise to such
complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has
prepared or certified any part of the documents underlying the offering. The foregoing provisions of this Article 63 shall not apply to causes
of action arising under the Exchange Act.
(b) Unless the Company consents in writing to the selection of an alternative forum, the competent courts in Tel Aviv, Israel shall be the exclusive
forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary
duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action
asserting a claim arising pursuant to any provision of the Companies Law or the Securities Law.
(c) Any person or entity purchasing or otherwise acquiring or holding any interest in shares of the Company shall be deemed to have notice of
and consented to the provisions of this Article 63.
* * *
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DESCRIPTION OF SHARE CAPITAL
Exhibit 4.3
The following descriptions of our share capital and provisions of our amended and restated articles of association are summaries and do not purport to be
complete. For a complete description you should refer to our amended and restated articles of incorporation which are included as an exhibit to our Annual
Report on Form 10-K, and to the applicable provisions of the Israeli law.
General
Our authorized share capital consists of 150,000,000 ordinary shares, par value NIS 0.01 per share. All of our outstanding ordinary shares are validly
issued, fully paid and non-assessable. Our ordinary shares are not redeemable and do not have any preemptive rights. We have no preferred shares
authorized or outstanding.
Registration Number and Purpose of the Company
We are registered with the Israeli Registrar of Companies. Our registration number is 51-260120-4. Our purpose, as set forth in our amended and restated
articles of association, is to engage in any lawful act or activity
Voting Rights
All ordinary shares have identical voting and other rights in all respects.
Transfer of Shares
Our fully paid ordinary shares are issued in registered form and may be freely transferred under our amended and restated articles of association, unless the
transfer is restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The
ownership or voting of our ordinary shares by non-residents of Israel is not restricted in any way by our amended and restated articles of association or the
laws of the State of Israel, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.
Election of Directors
Under our amended and restated articles of association, our board of directors must consist of not less than 5 but no more than 11 directors. Pursuant to our
amended and restated articles of association, each of our directors will appointed by a simple majority vote of holders of our voting shares, participating
and voting at an annual general meeting of our shareholders. In addition, our directors are divided into three classes, one class being elected each year at the
annual general meeting of our shareholders, and serve on our board of directors until they are removed by a vote of 60% of the total voting power of our
shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance with the Israeli Companies Law, and our
amended and restated articles of association. In addition, our amended and restated articles of association allow our board of directors to fill vacancies on
the board of directors or to appoint new directors up to the maximum number of directors permitted under our amended and restated articles of association.
Such directors serve for a term of office equal to the remaining period of the term of office of the directors(s) whose office(s) have been vacated or in the
case of new directors, for a term of office according to the class to which such director was assigned upon appointment.
Dividend and Liquidation Rights
We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the Israeli Companies
Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s
articles of association provide otherwise. Our amended and restated articles of association do not require shareholder approval of a dividend distribution
and provide that dividend distributions may be determined by our board of directors.
Pursuant to the Israeli Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two
years, according to our then last reviewed or audited financial statements, provided that the end of the period to which the financial statements relate is not
more than six months prior to the date of the distribution. If we do not meet such criteria, then we may distribute dividends only with court approval. In
each case, we are only permitted to distribute a dividend if our board of directors and the court, if applicable, determines that there is no reasonable concern
that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.
In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to
their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the
holders of a class of shares with preferential rights that may be authorized in the future.
Exchange Controls
There are currently no Israeli currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or
interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with
Israel.
Shareholder Meetings
Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months
after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to in our amended
and restated articles of association as special general meetings. Our board of directors may call special general meetings whenever it sees fit, at such time
and place, within or outside of Israel, as it may determine. In addition, the Israeli Companies Law provides that our board of directors is required to
convene a special general meeting upon the written request of (i) any two or more of our directors or one-quarter or more of the members of our board of
directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% or more of our
outstanding voting power or (b) 5% or more of our outstanding voting power.
Subject to the provisions of the Israeli Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general
meetings are the shareholders of record on a date to be decided by the board of directors, which may generally be between four and 21 days prior to the
date of the meeting, and in certain circumstances, between four and 40 days prior to the date of the meeting. Furthermore, the Israeli Companies Law
requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:
● amendments to our articles of association;
● appointment or termination of our auditors;
● appointment of external directors;
● approval of certain related party transactions;
● 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 the exercise of
any of its powers is required for our proper management.
The Israeli Companies Law requires that a notice of any annual general meeting or special general meeting be provided to shareholders at least 21 days
prior to the meeting and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or
interested or related parties, or an approval of a merger, notice must be provided at least 35 days prior to the meeting. Under the Israeli Companies Law and
our amended and restated articles of association, shareholders are not permitted to take action by way of written consent in lieu of a meeting.
2
Voting Rights
Quorum
Pursuant to our amended and restated articles of association, holders of our ordinary shares have one vote for each ordinary share held on all matters
submitted to a vote before the shareholders at a general meeting. The quorum required for our general meetings of shareholders consists of one or more
shareholders present in person, by proxy or written ballot who hold or represent between them at least 33 1/3% of the total outstanding voting rights. A
meeting adjourned for lack of a quorum shall be adjourned either to the same day in the next week, at the same time and place, to such day and at such time
and place as indicated in the notice to such meeting, or to such day and at such time and place as the chairperson of the meeting shall determine. At the
reconvened meeting, one or more shareholders present in person, by proxy or written ballot who hold or represent between them at least 33 1/3% of the
total outstanding voting rights shall constitute a quorum.
Vote Requirements
Our amended and restated articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required
by the Israeli Companies Law or by our amended and restated articles of association. Under the Israeli Companies Law, each of (i) the approval of an
extraordinary transaction with a controlling shareholder, (ii) the terms of employment or other engagement of the controlling shareholder of the company or
such controlling shareholder’s relative (even if such terms are not extraordinary) requires the approval under “Management–Fiduciary duties and approval
of specified related party transactions under Israeli law” and (iii) approval of certain compensation-related matters require the approval described in the
final prospectus filed with our Form F-1 Registration Statement (No. 333-232302) on June 28, 2019 under “Management–Compensation Committee.”
Under our amended and restated articles of association, the alteration of the rights, privileges, preferences or obligations of any class of our shares requires
a simple majority of the class so affected (or such other percentage of the relevant class that may be set forth in the governing documents relevant to such
class), in addition to the ordinary majority vote of all classes of shares voting together as a single class at a shareholder meeting. Our amended and restated
articles of association also provide that the removal of any director from office or the amendment of the provisions relating to our staggered board requires
the vote of 60% of the total voting power of our shareholders. Another exception to the simple majority vote requirement is a resolution for the voluntary
winding up, or an approval of a scheme of arrangement or reorganization, of the company pursuant to Section 350 of the Israeli Companies Law, which
requires the approval of holders of 75% of the voting rights represented at the meeting and voting on the resolution.
Access to Corporate Records
Under the Companies Law, all shareholders generally have the right to review minutes of our general meetings, our shareholder register, including with
respect to material shareholders, our articles of association, our financial statements, other documents as provided in the Companies Law, and any
document we are required by law to file publicly with the Israeli Companies Registrar or the Israeli Securities Authority. Any shareholder who specifies the
purpose of its request may request to review any document in our possession that relates to any action or transaction with a related party which requires
shareholder approval under the Companies Law. We may deny a request to review a document if we determine that the request was not made in good faith,
that the document contains a commercial secret or a patent or that the document’s disclosure may otherwise impair our interests.
3
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 and outstanding
share capital or that of a certain class of shares is required by the Companies Law to make a tender offer to all of the company’s shareholders or the
shareholders who hold shares of the same class for the purchase of all of the issued and outstanding shares of the company or of the same class, as
applicable.
If the shareholders who do not respond to or accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the
applicable class of the shares, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law (provided that a
majority of the offerees that do not have a personal interest in such tender offer shall have approved it, which condition shall not apply if offerees holding
less than 2% of the company’s issued and outstanding share capital failed to approve such tender offer).
Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether the shareholder accepted the
tender offer or not, may, within six months from the date of acceptance of the tender offer, petition the Israeli court to determine whether the tender offer
was for less than fair value and that the fair value should be paid as determined by the court unless the acquirer stipulated that a shareholder that accepts the
offer may not seek appraisal rights. If the shareholders who did not respond or accept the tender offer hold at least 5% of the issued and outstanding share
capital of the company or of the applicable class, or the shareholders who did not accept the tender offer hold 2% or more of the issued and outstanding
share capital of the company (or of the applicable class), the acquirer may not acquire shares of the company that will increase its holdings to more than
90% of the company’s issued and outstanding share capital or of the applicable class from shareholders who accepted the tender offer.
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 result of the
acquisition the purchaser would become a holder of at least 25% of the voting rights in the company. This rule does not apply if there is already another
holder of at least 25% of the voting rights in the company. Similarly, the Companies Law provides that an acquisition of shares in a public company must
be made by means of a tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights in the
company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company.
These requirements do not apply if the acquisition (i) occurs in the context of a private placement, provided that the general meeting approved the
acquisition as a private offering whose purpose is to give the acquirer at least 25% of the voting rights in the company if there is no person who holds at
least 25% of the voting rights in the company, or as a private offering whose purpose is to give the acquirer 45% of the voting rights in the company, if
there is no person who holds 45% of the voting rights in the company, (ii) was from a shareholder holding at least 25% of the voting rights in the company
and resulted in the acquirer becoming a holder of at least 25% of the voting rights in the company, or (iii) was from a holder of more than 45% of the voting
rights in the company and resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company.
The special tender offer may be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by
the offeror and (ii) the special tender offer is accepted by a majority of the votes of those offerees who gave notice of their position in respect of the offer,
excluding the votes of a holder of control in the offeror, a person who has personal interest in acceptance of the special tender offer, holders of 25% or more
of the voting rights in the company or anyone on their behalf, including their relatives and entities controlled by them.
In the event that a special tender offer is made, a company’s board of directors is required to express its opinion on the advisability of the offer, or shall
abstain from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention. In addition, the board of directors must
disclose any personal interest each member of the board of directors has in the offer or stems therefrom. An office holder in a target company who, in his or
her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing or foreseeable special tender offer or is to
impair the chances of its acceptance, is liable to the potential purchaser and shareholders for damages resulting from his or her acts, unless such office
holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit of the company. However, office holders of the target
company may negotiate with the potential purchaser in order to improve the terms of the special tender offer, and may further negotiate with third parties in
order to obtain a competing offer.
4
If a special tender offer was accepted by a majority of the shareholders who announced their stand on such offer, then shareholders who did not respond to
the special tender offer or had objected to the offer may accept the offer within four days of the last day set for the acceptance of the offer.
In the event that a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or
such controlling person or entity shall refrain from making a subsequent tender offer for the purchase of shares of the target company and cannot execute a
merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an
offer or merger in the initial special tender offer.
Merger
The Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under the
Companies Law are met, a majority of each party’s shareholders and, in the case of the target company, a majority vote of each class of its shares, voted on
the proposed merger at a shareholders meeting. The board of directors of a merging company is required pursuant to the Companies Law to discuss and
determine whether in its opinion there exists a reasonable concern that as a result of a proposed merger, the surviving company will not be able to satisfy its
obligations towards its creditors, such determination taking into account the financial status of the merging companies. If the board of directors has
determined that such a concern exists, it may not approve a proposed merger. Following the approval of the board of directors of each of the merging
companies, the boards of directors must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.
For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares represented at the
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 shares or
the right to appoint 25% or more of the directors of the other party, vote against the merger. In addition, if the non-surviving entity of the merger has more
than one class of shares, the merger must be approved by each class of shareholders. If the transaction would have been approved but for the separate
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 request of
holders of at least 25% of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the value of the
parties to the merger and the consideration offered to the shareholders. Pursuant to the Companies Law, if a merger is with a company’s controlling
shareholder or if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same special majority approval
that governs all extraordinary transactions with controlling shareholders (as described in our final prospectus filed with our Form F-1 Registration
Statement (No. 333-232302) on June 28, 2019 under “Management–Fiduciary duties and approval of specified related party transactions under Israeli
law.”).
Under the Companies Law, each merging company must send a copy of the proposed merger plan to its secured creditors. Unsecured creditors are entitled
to receive notice of the merger pursuant to regulations promulgated under the Companies Law. Upon the request of a creditor of either party to the
proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result of the merger, the
surviving company will be unable to satisfy the obligations the target company. The court may further 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 with the
Israeli Registrar of Companies and 30 days from the date that shareholder approval of both merging companies was obtained.
5
Anti-Takeover Measures
The Israeli Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including shares
providing certain preferred rights with respect to voting, distributions or other matters and shares having preemptive rights. We have no preferred shares
authorized under our amended and restated articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares,
such class of shares, depending on the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover or otherwise prevent
our shareholders from realizing a potential premium over the market value of their ordinary shares. The authorization and designation of a class of
preferred shares will require an amendment to our amended and restated articles of association, which requires the prior approval of the holders of a
majority of the voting power attaching to our issued and outstanding shares at a general meeting. The convening of the meeting, the shareholders entitled to
participate and the majority vote required to be obtained at such a meeting will be subject to the requirements set forth in the Israeli Companies Law as
described above in “–Voting Rights.” In addition, as disclosed under “–Election of directors”, we have a classified board structure which effectively limits
the ability of any investor or potential investor or group of investors or potential investors to gain control of our board of directors.
Borrowing Powers
Pursuant to the Israeli Companies Law and our amended and restated articles of association, our board of directors may exercise all powers and take all
actions that are not required under law or under our amended and restated articles of association to be exercised or taken by our shareholders, including the
power to borrow money for company purposes.
Changes in Capital
Our amended and restated articles of association enable us to increase or reduce our share capital. Any such changes are subject to Israeli Companies Law
and must be approved by a resolution duly passed by our shareholders at a general 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 or
profits, require the approval of both our board of directors and an Israeli court.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is Broadridge Corporate Issuer Solutions, Inc. Its address is 1717 Arch Street, Suite 1300,
Philadelphia, Pennsylvania 19103, and its telephone number is (215) 553-5400.
Listing
Our ordinary shares are listed on The Nasdaq Global Market under the symbol “GMDA.”
6
INDEMNIFICATION AGREEMENT
Exhibit 10.1
THIS INDEMNIFICATION AGREEMENT (the “Agreement”), dated as of ____________, is entered into by and between Gamida Cell Ltd., an Israeli
company whose address is 5 Nahum Heftsadie Street Givaat Shaul, Jerusalem 91340, Israel (the “Company”), and the undersigned Director or Officer of
the Company whose name appears on the signature page hereto (the “Indemnitee”).
WHEREAS, Indemnitee is an Office Holder (“Nosse Misra”), as such term is defined in the Companies Law, 5759–1999, as amended (the “Companies
Law” and “Office Holder” respectively), of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against Office Holders of
companies and that highly competent persons have become more reluctant to serve corporations as directors and officers or in other
capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of
claims and actions against them arising out of their service to, and activities on behalf of, companies;
WHEREAS, the Articles of Association of the Company authorize the Company to indemnify and advance expenses to its Office Holders and provide
for insurance and exculpation to its Office Holders, in each case, to the fullest extent permitted by applicable law and this Agreement is
provided to Indemnitee in accordance with applicable law, the Articles of the Association of the Company and all requisite corporate
approvals;
WHEREAS, the Company has determined that (i) the increased difficulty in attracting and retaining competent persons is detrimental to the best interests
of the Company’s shareholders and that the Company should act to assure such persons that there will be increased certainty of such
protection in the future, (ii) and it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to
advance expenses on behalf of, such persons to the fullest extent permitted by applicable law, so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified;
WHEREAS, the Company acknowledges that Indemnitee is relying on the obligations of the Company set forth in this Agreement in agreeing to serve
the Company, which obligations are therefore irrevocable; and
WHEREAS, in recognition of Indemnitee’s need for substantial protection against loss arising from the Indemnitee’s liability, including costs and
expenses incurred by the Indemnitee due to his position as an Office Holder, in order to assure Indemnitee’s continued service to the
Company in an effective manner and, in part, in order to provide Indemnitee with specific contractual assurance that the indemnification,
insurance and exculpation afforded by the Articles of Association will be available to Indemnitee, the Company wishes to undertake in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent permitted by applicable law and as
set forth in this Agreement and provide for insurance and exculpation of Indemnitee as set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. INDEMNIFICATION AND INSURANCE.
1.1. The Company hereby undertakes to indemnify Indemnitee to the fullest extent permitted by applicable law and the Company’s Articles of
Association, as each may be amended from time to time, for any liability and expense specified in Sections 1.1.1 through 1.1.4 below, imposed on
Indemnitee due to or in connection with an act performed by such Indemnitee, either prior to or after the date hereof, in Indemnitee’s capacity as
an Office Holder, including, without limitation, as a director, officer, employee, agent or fiduciary of the Company, any subsidiary thereof or any
other corporation, collaboration, partnership, joint venture, trust or other enterprise, in which Indemnitee serves at any time at the request of the
Company (the “Corporate Capacity”). The term “act performed in Indemnitee’s capacity as an Office Holder” shall include, without limitation,
any act, omission and failure to act and any other circumstances relating to or arising from Indemnitee’s service in a Corporate Capacity.
Notwithstanding the foregoing, in the event that the Office Holder is the beneficiary of an indemnification undertaking provided by a subsidiary of
the Company or any other entity, with respect to his Corporate Capacity with such subsidiary or entity, then the indemnification obligations of the
Company hereunder with respect to such Corporate Capacity shall only apply to the extent that the indemnification by such subsidiary or other
entity does not actually fully cover the indemnifiable liabilities and expenses relating thereto. The following shall be hereinafter referred to as
“Indemnifiable Events”:
1.1.1.Financial liability imposed on Indemnitee in favor of another person by any court judgment, including a judgment given as a result of a
settlement or an arbitrator’s award which has been confirmed by a court in respect of an act performed by the Indemnitee. For purposes of
Section 1 of this Agreement, the term “person” shall include, without limitation, a natural person, firm, partnership, joint venture, trust,
company, corporation, limited liability entity, unincorporated organization, estate, government, municipality, or any political, governmental,
regulatory or similar agency or body;
1.1.2.Reasonable Expenses (as defined below) expended by the Indemnitee as a result of an investigation or proceeding instituted against him or
her by an authority authorized to conduct such investigation or proceeding, or in connection with a financial sanction, provided that (1) no
indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no
financial liability in lieu of a criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such
investigation or proceeding or if such financial liability was imposed, it was imposed with respect to an offence that does not require proof of
criminal intent;
1.1.3.Reasonable Expenses expended by an Indemnitee or which were imposed on an Indemnitee by a court in proceedings filed against the
Indemnitee by the Company or in its name or by any other person or in a criminal charge in respect of which the Indemnitee was acquitted or
in a criminal charge in respect of which the Indemnitee was convicted for an offence which did not require proof of criminal intent;
1.1.4.A financial obligation imposed upon Indemnitee and reasonable Expenses expended Indemnitee as a result of an administrative proceeding
instituted against Indemnitee. Without derogating from the generality of the foregoing, such obligation or Expense will include a payment
which Indemnitee is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 1968 – 5728
(the “Israeli Securities Law”) and Expenses that Indemnitee incurred in connection with a proceeding under Chapters H’3, H’4 or I’1 of the
Securities Law; and
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1.1.5.Any other event, occurrence, matter or circumstances under any law with respect to which the Company may, or will be able to, indemnify
the Indemnitee (including, without limitation, in accordance with Section 56h(b)(1) of the Israeli Securities Law, if and to the extent
applicable, and Section 50P(b)(2) of the Israeli Restrictive Trade Practices Law, 5758-1988 (the “RTP Law”)).
For the purpose of this Agreement, “Expenses” shall include, without limitation, attorneys’ fees and all other costs, expenses and obligations paid
or incurred by Indemnitee in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in any claim, action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or
investigation relating to any matter for which indemnification hereunder may be provided, and costs and expenses paid or incurred by Indemnitee
in successfully enforcing this Agreement. Expenses shall be considered paid or incurred by Indemnitee at such time as Indemnitee is required to
pay or incur such cost or expenses, including upon receipt of an invoice or payment demand. The Company shall pay the Expenses in accordance
with the provisions of Section 1.3.
1.2. Notwithstanding anything herein to the contrary, the Company’s undertaking to indemnify the Indemnitee in advance under Section 1.1.1 shall
only be with respect to events described in Exhibit A hereto. The Board of Directors of the Company (the “Board”) has determined that the
categories of events listed in Exhibit A are likely to occur in light of the operations of the Company. The maximum amount of indemnification
payable by the Company under Section 1.1.1 of this Agreement with respect to all persons with respect to whom the Company undertook to
indemnify under agreements similar to this Agreement (the “Indemnifiable Persons”), for all events described in Exhibit A shall be as set forth
in Exhibit A hereto (the “Limit Amount”). If the Limit Amount is insufficient to cover all the indemnity amounts payable with respect to all
Indemnifiable Persons, then such amount shall be allocated to such Indemnifiable Persons pro rata according to the percentage of their culpability,
as finally determined by a court in the relevant claim, or, absent such determination or in the event such persons are parties to different claims,
based on an equal pro rata allocation among such Indemnifiable Persons. The Limit Amount payable by the Company as described in Exhibit A is
deemed by the Company to be reasonable in light of the circumstances. The indemnification provided under Section 1.1.1 herein shall not be
subject to the limitations imposed by this Section 1.2 and Exhibit A if and to the extent such limits are no longer required by the Companies Law.
1.3. If so requested by Indemnitee, and subject to the Company’s repayment and reimbursements right set forth in Sections 3 and 5 below, the
Company shall pay amounts to cover Indemnitee’s Expenses with respect to which Indemnitee is entitled to be indemnified under Section 1.1
above, as and when incurred. The payments of such amounts shall be made by the Company directly to the Indemnitee’s legal and other advisors,
as soon as practicable, but in any event no later than fifteen (15) days after written demand by such Indemnitee therefor to the Company, and any
such payment shall be deemed to constitute indemnification hereunder. All amounts paid as indemnification hereunder shall be grossed-up to
cover any tax payment that Indemnitee may be required to make if the indemnification payments are taxable, subject to the Limit Amount if
required by applicable law. As part of the aforementioned undertaking, the Company will make available to Indemnitee any security or guarantee
that Indemnitee may be required to post in accordance with an interim decision given by a court, governmental or administrative body, or an
arbitrator, including for the purpose of substituting liens imposed on Indemnitee’s assets.
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1.4. The Company’s obligation to indemnify Indemnitee and advance Expenses in accordance with this Agreement shall be for such period as
Indemnitee shall be subject to any actual, possible or threatened claim, action, suit, demand or proceeding or any inquiry or investigation, whether
civil, criminal or investigative, arising out of the Indemnitee’s service in the Corporate Capacity as described in Section 1.1 above, whether or not
Indemnitee is still serving in such position (the “Indemnification Period).
1.5. The Company undertakes that, subject to the mandatory limitations under applicable law, as long as it may be obligated to provide indemnification
and advance Expenses under this Agreement, the Company will purchase and maintain in effect directors and officers liability insurance, which
will include coverage for the benefit of the Indemnitee, providing coverage in amounts as reasonably determined by the Board; provided that, the
Company shall have no obligation to obtain or maintain directors and officers insurance policy if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, or the
coverage provided by such insurance is so limited by exclusions that it provides an insufficient benefit. The Company hereby undertakes to notify
the Indemnitee 30 days prior to the expiration or termination of the directors and officers’ liability insurance.
1.6. The Company undertakes to give prompt written notice of the commencement of any claim hereunder to the insurers in accordance with the
procedures set forth in each of the policies. The Company shall thereafter diligently take all actions reasonably necessary under the circumstances
to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in
accordance with the terms of such policies. The above shall not derogate from Company’s authority to freely negotiate or reach any compromise
with the insurer which is reasonable at the Company’s sole discretion provided that the Company shall act in good faith and in a diligent manner.
1.7. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination
shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has requested it, and the Company shall have the
burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.
2. SPECIFIC LIMITATIONS ON INDEMNIFICATION.
Notwithstanding anything to the contrary in this Agreement, the Company shall not indemnify or advance Expenses to Indemnitee with respect to (i)
any act, event or circumstance with respect to which it is prohibited to do so under applicable law, or (ii) a counter claim made by the Company or in
its name in connection with a claim against the Company filed by the Indemnitee.
3. REPAYMENT OF EXPENSES.
3.1. In the event that the Company provides or is required to provide indemnification with respect to Expenses hereunder and at any time thereafter the
Company determines, based on advice from its legal counsel, that the Indemnitee was not entitled to such payments, the amounts so indemnified
by the Company will be promptly repaid by Indemnitee, unless the Indemnitee disputes the Company’s determination, in which case the
Indemnitee’s obligation to repay to the Company shall be postponed until such dispute is resolved by a court of competent jurisdiction in a final
and non-appealable order.
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3.2. Indemnitee’s obligation to repay the Company for any Expenses or other sums paid hereunder shall be deemed as a loan given to Indemnitee by
the Company subject to the minimum interest rate prescribed by Section 3(9) of the Income Tax Ordinance [New Version], 1961, or any other
legislation replacing it, which is not considered a taxable benefit.
4. SUBROGATION.
In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all documents required and shall do everything that may be necessary to secure such rights, including the execution of
such documents necessary to enable the Company effectively to bring suit to enforce such rights.
5. REIMBURSEMENT.
The Company shall not be liable under this Agreement to make any payment in connection with any Indemnifiable Event to the extent Indemnitee has
otherwise actually received payment under any insurance policy or otherwise (without any obligation of Indemnitee to repay any such amount), of the
amounts otherwise indemnifiable hereunder. Any amounts paid to Indemnitee under such insurance policy or otherwise after the Company has
indemnified Indemnitee for such liability or Expense shall be repaid to the Company as soon as practical upon receipt by Indemnitee.
The Company hereby acknowledges that the Indemnitee has now or may have in the future certain rights to indemnification, advancement of expenses
and/or insurance provided by third parties (the “Third Party Indemnitor”), and the Company hereby agrees (a) that the Company is the indemnitor of
first resort (i.e., its obligations to the Indemnitee are primary and any obligation of any Third Party Indemnitor to advance expenses or to provide
indemnification for the same expenses or liabilities incurred by the Indemnitee are secondary), (b) it shall be required to advance the full amount of
expenses incurred by the Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement
to the fullest extent legally permitted and as required by the terms of this Agreement and/or the Articles of Association of the Company (or any other
agreement between the Company and the Indemnitee), without regard to any rights the Indemnitee may have against the Third Party Indemnitors, and
(c) that it irrevocably waives, relinquishes and releases any Third Party Indemnitor from any and all claims against any Third Party Indemnitor for
contribution, subrogation or any other recovery of any kind of respect of the subject matters of this Indemnification Agreement. Without altering or
expanding any of the Company’s indemnification obligations hereunder, the Company further agrees that no advancement or payment by any Third
Party Indemnitor on the Indemnitee ‘s behalf with respect to any claim for which Indemnitee has sought indemnification from the Company shall
affect the foregoing and any Third Party Indemnitor shall have a right of contribution and/or be subrogated to the extent of such advancement or
payment to all of the rights of recovery of the Indemnitee against the Company. The Company and the Indemnitee agree that the Third Party
Indemnitors are express third party beneficiaries of the terms of this Section 5.
6. EFFECTIVENESS.
The Company represents and warrants that this Agreement is valid, binding and enforceable in accordance with its terms and was duly adopted and
approved by the Company, and shall be in full force and effect immediately upon its execution and shall continue to be in full force for the duration of
the Indemnification Period.
-5-
7. NOTIFICATION AND DEFENSE OF CLAIM.
Indemnitee shall notify the Company of the commencement of any action, suit or proceeding, and of the receipt of any notice or threat that any such
legal proceeding has been or shall or may be initiated against Indemnitee (including any proceedings by or against the Company and any subsidiary
thereof), promptly upon Indemnitee first becoming so aware; but the omission to so notify the Company will not relieve the Company from any
liability which it may have to Indemnitee under this Agreement unless and to the extent that such failure to provide notice materially impact the
Company’s ability to defend such action. Notice to the Company shall be directed to the Chief Executive Officer or Chief Financial Officer of the
Company at the address shown in the preamble to this Agreement (or such other address as the Company shall designate in writing to Indemnitee).
With respect to any such action, suit or proceeding as to which Indemnitee notifies the Company of the commencement thereof and without derogating
from Sections 1.1 and 2:
7.1. The Company will be entitled to participate therein at its own expense.
7.2. Except as otherwise provided below, the Company, alone or jointly with any other indemnifying party similarly notified, will be entitled to assume
the defense thereof, with counsel selected by the Company. Indemnitee shall have the right to employ his or her own counsel in such action, suit or
proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at
the expense of Indemnitee, unless: (i) the employment of counsel by Indemnitee has been authorized in writing by the Company; (ii) the Company
shall have, in good faith, reasonably concluded that there may be a conflict of interest under the law and rules of attorney professional conduct
applicable to such claim between the Company and Indemnitee in the conduct of the defense of such action; or (iii) the Company has not in fact
employed counsel to assume the defense of such action, in which cases the reasonable fees and expenses of Indemnitee’s counsel shall be at the
expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the
Company or as to which the Company shall have reached the conclusion specified in (ii) above.
7.3. The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts or expenses paid in connection with a settlement
of any action, claim or otherwise, effected without the Company’s prior written consent.
7.4. The Company shall have the right to conduct the defense as it sees fit in its sole discretion (provided that the Company shall conduct the defense
in good faith and in a diligent manner and that the Company and its counsel shall keep the indemnitee reasonably notified on a regular basis of all
events in the action), including the right to settle or compromise any claim or to consent to the entry of any judgment against Indemnitee without
the consent of the Indemnitee, provided that, the amount of such settlement, compromise or judgment does not exceed the Limit Amount (if
applicable) and is fully indemnifiable pursuant to this Agreement (subject to Section 1.2 of this Agreement) and/or applicable law, and any such
settlement, compromise or judgment does not impose any penalty or limitation on Indemnitee without the Indemnitee’s prior written consent. The
Indemnitee’s consent shall not be required if the settlement includes a complete release of Indemnitee, does not contain any admission of wrong-
doing by Indemnitee, and includes monetary sanctions only as provided above. In the case of criminal proceedings the Company and/or its legal
counsel will not have the right to plead guilty or agree to a plea-bargain in the Indemnitee’s name without the Indemnitee’s prior written consent.
Neither the Company nor Indemnitee will unreasonably withhold or delay their consent to any proposed settlement.
-6-
7.5. Indemnitee shall fully cooperate with the Company and shall give the Company all information and access to documents, files and to his advisors
and representatives as shall be within Indemnitee’s power, in every reasonable way as may be required by the Company with respect to any claim
which is the subject matter of this Agreement and in the defense of other claims asserted against the Company (other than claims asserted by
Indemnitee), provided that the Company shall cover all expenses, costs and fees incidental thereto such that the Indemnitee will not be required to
pay or bear such expenses, costs and fees.
8. EXCULPATION.
Subject to the provisions of the Companies Law, the Company hereby releases, in advance, the Office Holder from liability to the Company for any
damage that arises from the breach of the Office Holder’s duty of care to the Company (within the meaning of such terms under Sections 252 and 253
of the Companies Law), other than breach of the duty of care towards the Company in a distribution (as such term is defined in the Companies Law).
9. NON-EXCLUSIVITY.
The rights of the Indemnitee hereunder shall not be deemed exclusive of any other rights Indemnitee may have under the Company’s Articles of
Association, applicable law or otherwise, and to the extent that during the Indemnification Period the indemnification rights of the then serving
Indemnitees are more favorable to such Indemnitees than the indemnification rights provided under this Agreement, Indemnitee shall be entitled to the
full benefits of such more favorable indemnification rights to the extent permitted by law.
10. PARTIAL INDEMNIFICATION.
If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments,
fines or penalties actually or reasonably incurred by Indemnitee in connection with any proceedings, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines or penalties to which Indemnitee is entitled
under any provision of this Agreement. Subject to the provisions of Section 4 above, any amount received by Indemnitee (under any insurance policy
or otherwise) shall not reduce the Limit Amount hereunder and shall not derogate from the Company’s obligation to indemnify the Indemnitee in
accordance with the provisions of this Agreement up to the Limit Amount, as set forth in Section 1.2.
11. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted
assigns. In the event of a merger or consolidation of the Company or a transfer or disposition of all or substantially all of the business or assets of the
Company, the Indemnitee shall be entitled to the same indemnification and insurance provisions as the most favorable indemnification and insurance
provisions afforded to the then-serving Office Holders of the Company. In the event that in connection with such transaction the Company purchases a
directors and officers’ “tail” or “run-off” policy for the benefit of its then serving Office Holders, then such policy shall cover Indemnitee and such
coverage shall be deemed to be in satisfaction of the insurance requirements under this Agreement. This Agreement shall continue in effect during the
Indemnification Period regardless of whether Indemnitee continues to serve in a Corporate Capacity.
-7-
Any amendment to the Companies Law, the Israeli Securities Law, the RTP Law or other applicable law adversely affecting the right of the Indemnitee
to be indemnified, insured or released pursuant hereto shall be prospective in effect, and shall not affect the Company’s obligation or ability to
indemnify or insure the Indemnitee for any act or omission occurring prior to such amendment, unless otherwise provided by applicable law.
12. SEVERABILITY.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision or
circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or
enforceability of such provision, or the application thereof, in any other jurisdiction.
13. NOTICE.
All notices and other communications pursuant to this Agreement shall be in writing and shall be deemed provided if delivered personally, telecopied,
sent by electronic facsimile, email, reputable overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to
the parties at the addresses shown in the preamble to this Agreement, or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance herewith. Any such notice or communication shall be deemed to have been delivered and
received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of telecopier or an electronic facsimile or email, one business
day after the date of transmission if confirmation of receipt is received, (iii) in the case of a reputable overnight courier, three business days after
deposit with such reputable overnight courier service, and (iv) in the case of mailing, on the seventh business day following that on which the mail
containing such communication is posted.
14. GOVERNING LAW; JURISDICTION.
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Israel, without giving effect to the
conflicts of law provisions of those laws. The Company and Indemnitee each hereby irrevocably consent to the exclusive jurisdiction and venue of the
courts of Tel Aviv, Israel for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement.
15. ENTIRE AGREEMENT AND TERMINATION.
This Agreement represents the entire agreement between the parties and supersedes any other agreements, contracts or understandings between the
parties, whether written or oral, with respect to the subject matter of this Agreement. For the avoidance of doubt, it is hereby clarified that nothing
contained herein derogates from the Company’s right in its sole discretion, subject to applicable law and the Articles of Association of the Company, to
indemnify Indemnitee post factum for any amounts which Indemnitee may be obligated to pay.
-8-
16. NO MODIFICATION AND NO WAIVER.
No supplement, modification or amendment, termination or cancellation of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver. Any waiver shall be in writing. The Company hereby undertakes not to
amend its Articles of Association in a manner which will adversely affect the provisions of this Agreement.
17. ASSIGNMENTS; NO THIRD PARTY RIGHTS
Neither party hereto may assign any of its rights or obligations hereunder except with the express prior written consent of the other party. Nothing
herein shall be deemed to create or imply an obligation for the benefit of a third party. Without limitation of the foregoing, nothing herein shall be
deemed to create any right of any insurer that provides directors and officers’ liability insurance, to claim, on behalf of Indemnitee, any rights
hereunder.
18. INTERPRETATION; DEFINITIONS.
The obligations of the Company as provided hereunder shall be interpreted broadly and in a manner that shall facilitate its execution, to the extent
permitted by law, and for the purposes for which it was intended.
Unless the context shall otherwise require: words in the singular shall also include the plural, and vice versa; any pronoun shall include the
corresponding masculine, feminine and neuter forms; the words “include”, “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”; the words “herein”, “hereof” and “hereunder” and words of similar import refer to this Agreement in its entirety and not to any
part hereof; all references herein to Sections or clauses shall be deemed references to Sections or clauses of this Agreement; any references to any
agreement or other instrument or law, statute or regulation are to it as amended, supplemented or restated, from time to time (and, in the case of any
law, to any successor provisions or re-enactment or modification thereof being in force at the time); any reference to “law” shall include any
supranational, national, federal, state, local, or foreign statute or law and all rules and regulations promulgated thereunder; any reference to a “day” or
a number of “days” (without any explicit reference otherwise, such as to business days) shall be interpreted as a reference to a calendar day or number
of calendar days; reference to month or year means according to the Gregorian calendar; reference to a “company”, “corporate body” or “entity” shall
include a, partnership, firm, company, corporation, limited liability company, association, joint venture, trust, unincorporated organization, estate, or a
government municipality or any political, governmental, regulatory or similar agency or body, and reference to a “person” shall mean any of the
foregoing or a natural person.
19. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually
executing such counterpart, and all of which together shall constitute one and the same instrument; it being understood that parties need not sign the
same counterpart. The exchange of an executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in pdf format shall be
sufficient to bind the parties to the terms and conditions of this Agreement, as an original.
[SIGNATURE PAGE TO FOLLOW]
-9-
IN WITNESS WHEREOF, the parties, each acting under due and proper authority, have executed this Indemnification Agreement as of the date
first mentioned above, in one or more counterparts.
Gamida Cell Ltd.
By:
Name:
Title:
Indemnitee:
Name:
Title:
Signature:
Address:
-10-
EXHIBIT A*
CATEGORY OF INDEMNIFIABLE EVENT
LIMIT AMOUNT PER EACH SPECIFIC EVENT
WITHIN THIS CATEGORY OF EVENTS
The greater of (a) twenty-five percent (25%) of the
Company’s total shareholders’ equity on a consolidated
basis according to the Company’s most recent financial
statements as of the time of the actual payment of
indemnification; (b) US$150 million; and (c) forty percent
(40%) of the Company Total Market Cap (which shall
mean the average closing price of the Company’s ordinary
shares over the 30 trading days prior to the actual payment
of indemnification multiplied by the total number of issued
and outstanding shares of the Company as of the date of
actual payment) (the “Maximum Amount”).
The Maximum Amount
The Maximum Amount
The Maximum Amount
1.
2.
3.
4.
Claims in connection with employment relationships with and/or by employees or
consultants of the Company, and in connection with business relations between the
Company and its employees, independent contractors, customers, suppliers and
various service providers.
Negotiations, execution, delivery and performance of agreements of any kind or
nature, anti-competitive acts, acts of commercial wrongdoing, approval of corporate
actions including the approval of the acts of the Company’s management, their
guidance and their supervision, actions concerning the approval of transactions with
Office Holders or shareholders, including controlling persons and claims of failure to
exercise business judgment and a reasonable level of proficiency, expertise and care
with respect to the Company’s business.
Violation, infringement, misappropriation, dilution and other misuse of copyrights,
patents, designs, trade secrets and any other intellectual property rights, acts in
connection with the registration, assertion or protection of rights to intellectual
property and the defense of claims related to intellectual property, breach of
confidentiality obligations, acts in regard of invasion of privacy including with
respect to databases or personal information, acts in connection with slander and
defamation, and claims in connection with publishing or providing any information,
including any filings with any governmental authorities, whether or not required
under any applicable laws.
Violations of securities laws of any jurisdiction, including without limitation, claims
under the U.S. Securities Act of 1933, as amended from time to time, or the U.S.
Exchange Act of 1934, as amended from time to time, or under the Israeli Securities
Law, as amended from time to time, fraudulent disclosure claims, failure to comply
with any securities authority or any stock exchange disclosure or other rules and any
other claims relating to relationships with investors, debt holders, shareholders and
the investment community and any claims related to the Sarbanes-Oxley Act of
2002, as amended from time to time; claims relating to or arising out of financing
arrangements, any breach of financial covenants or other obligations towards lenders
or debt holders of the Company, class actions, violations of laws requiring the
Company to obtain regulatory and governmental licenses, permits and authorizations
in any jurisdiction; actions taken in connection with the issuance, purchase, holding
or disposition of any type of securities of Company, including, without limitation, the
grant of options to purchase any of the same or any offering of the Company’s
securities to private investors or to the public, and listing of such securities, or the
offer by the Company to purchase securities from the public or from private investors
or other holders, and any undertakings, representations, warranties and other
obligations related to any such offering, listing or offer or to the Company’s status as
a public company or as an issuer of securities.
-11-
5.
6.
7.
8.
9.
10.
11.
Liabilities arising in connection with the conduct of clinical trials, testing,
development or manufacturing of any products or services developed, distributed,
rendered, sold, provided, licensed or marketed by the Company, and any actions in
connection with the distribution, provision, sale, marketing, license or use of such
products or services, including without limitation in connection with professional
liability and product liability claims.
The Maximum Amount
The offering of securities by the Company to the public, including the offering of
The gross proceeds raised by the Company and/or any
securities by a shareholder in connection with a secondary offering.
selling shareholder in such public offering
The offering of securities by the Company to private investors or the offer by the
Company to purchase securities from the public and/or from private investors or
other holders pursuant to a prospectus, agreements, notices, reports, tenders and/or
other proceedings.
The Maximum Amount
Events in connection with change in ownership or in the structure of the Company,
its reorganization, dissolution, or any decision concerning any of the foregoing,
including but not limited to, merger, sale or acquisition of assets, division, change in
capital.
The Maximum Amount
Any claim or demand made in connection with any transaction not in the ordinary
course of business of the Company, including the sale, lease or purchase of any assets
or business.
The Maximum Amount
Any claim or demand made by any third party suffering any personal injury and/or
bodily injury or damage to business or personal property or any other type of damage
through any act or omission attributed to the Company, or its employees, agents or
other persons acting or allegedly acting on its behalf, including, without limitation,
failure to make proper safety arrangements for the Company or its employees and
liabilities arising from any accidental or continuous damage or harm to the
Company’s employees, its contractors, its guests and visitors as a result of an
accidental or continuous event, or employment conditions, permanent or temporary,
in the Company’s offices.
Any claim or demand made directly or indirectly in connection with complete or
partial failure, by the Company or its directors, officers and employees, to pay,
report, keep applicable records or otherwise, of any foreign, federal, state, county,
local, municipal or city taxes or other compulsory payments of any nature
whatsoever, including, without limitation, income, sales, use, transfer, excise, value
added, registration, severance, stamp, occupation, customs, duties, real property,
personal property, capital stock, social security, unemployment, disability, payroll or
employee withholding or other withholding, including any interest, penalty or
addition thereto, whether disputed or not.
The Maximum Amount
The Maximum Amount
-12-
12.
13.
14.
15.
16.
17.
Any administrative, regulatory, judicial or civil actions orders, decrees, suits,
demands, demand letters, directives, claims, liens, investigations, proceedings or
notices of noncompliance or violation by any governmental entity or other person
alleging potential responsibility or liability (including potential responsibility or
liability for costs of enforcement investigation, cleanup, governmental response,
removal or remediation, for natural resources damages, property damage, personal
injuries or penalties or for contribution,
indemnification, cost recovery,
compensation or injunctive relief) arising out of, based on or related to (a) the
presence of, release, spill, emission, leaning, dumping, pouring, deposit, disposal,
discharge, leaching or migration into the environment (each a “Release”) or
threatened Release of, or exposure to, any hazardous, toxic, explosive or radioactive
substances, wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos-containing material, polychlorinated biphenyls (“PCBs”) or
PCB-containing materials or equipment, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to any environmental
law, at any location, whether or not owned, operated, leased or managed by the
Company or any of its subsidiaries, or (b) circumstances forming the basis of any
violation of any environmental law or environmental permit, license, registration or
other authorization required under applicable environmental law or public health law.
Any administrative, regulatory or judicial actions, orders, decrees, suits, demands,
demand letters, directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any governmental entity or other person alleging the
failure to comply with any statute, law, ordinance, rule, regulation, order or decree of
any governmental entity applicable to the Company or any of its businesses, assets or
operations, or the terms and conditions of any operating certificate or licensing
agreement.
The Maximum Amount
The Maximum Amount
Participation and/or non-participation at the Company’s Board meetings, bona fide
expression of opinion and/or voting and/or abstention from voting at the Company’s
Board meetings.
The Maximum Amount
Review and approval of the Company’s financial statements, including any action,
consent or approval related to or arising from the foregoing, including, without
limitations, execution of certificates for the benefit of third parties related to the
financial statements.
The Maximum Amount
Violation of laws, rules or regulations requiring the Company to obtain regulatory
and governmental licenses, permits and authorizations (including without limitation
relating to export, import, encryption, antitrust or competition authorities) or laws
related to any governmental grants in any jurisdiction.
The Maximum Amount
Resolutions and/or actions relating to investments in the Company and/or its
subsidiaries and/or affiliated companies and/or the purchase and sale of assets,
including the purchase or sale of companies and/or businesses, and/or investment in
corporate or other entities and/or investments in traded securities and/or any other
form of investment.
The Maximum Amount
18.
Liabilities arising out of advertising, including misrepresentations regarding the
The Maximum Amount
Company’s products or services and unlawful distribution of emails.
-13-
19.
20.
21.
22.
An announcement or statement, including a position taken or an opinion or
representation made in good faith by the Office Holder in the course of his duties or
in conjunction with his duties, whether in public or in private, including during a
meeting of the Board of Directors of the Company or any of the committees thereof.
The Maximum Amount
Management of the Company’s bank accounts, including money management,
foreign currency deposits, securities, loans and credit facilities, credit cards, bank
guarantees, letters of credit, consultation agreements concerning investments
including with portfolio managers, hedging transactions, options, futures, and the
like.
The Maximum Amount
Any action or decision in relation to protection of work safety and/or working
conditions, including with respect to provisions of the law, procedures or standards as
applicable in or outside of Israel with relating to protection of work safety,
pertaining, inter alia, to contamination, health protection, production processes,
distribution, use, treatment, storage and transportation of certain materials, including
in connection with corporal damage, property and environmental damages.
The Maximum Amount
Any liability arising under any administrative, regulatory, judicial or civil actions
orders, decrees, suits, demands, demand
liens,
investigations, proceedings or notices of noncompliance or violation of Section
50P(b)(2) of the Israeli Restrictive Trade Practices Law, 5758-1988.
letters, directives, claims,
The Maximum Amount
23.
All actions, consents and approvals relating to a distribution of dividends, in cash or
The Maximum Amount
otherwise.
Aggregate Limit Amount for all events together.
The Maximum Amount
* Any reference in this Exhibit A to the Company shall include the Company and any entity in which the Indemnitee serves in a Corporate Capacity.
-14-
GAMIDA CELL LTD.
2017 SHARE INCENTIVE PLAN
(as amended and restated July 1, 2020)
Exhibit 10.6
Unless otherwise defined, terms used herein shall have the meaning ascribed to them in Section 2 hereof.
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
1.1. Purpose. The purpose of this 2017 Share Incentive Plan (as amended, this “Plan”) is to afford an incentive to Service Providers of Gamida
Cell Ltd., an Israeli company(together with any successor corporation thereto, the “Company”), or any Affiliate of the Company, which now exists or
hereafter is organized or acquired by the Company or its Affiliates, to continue as Service Providers, to increase their efforts on behalf of the Company or
its Affiliates and to promote the success of the Company’s business, by providing such Service Providers with opportunities to acquire a proprietary interest
in the Company by the issuance of Shares or restricted Shares (“Restricted Shares”) of the Company, and by the grant of options to purchase Shares
(“Options”), Restricted Shares Units (“RSUs”) and other Share-based Awards pursuant to Sections 11 through 13 of this Plan.
1.2. Types of Awards. This Plan is intended to enable the Company to issue Awards under various tax regimes, including:
(i) pursuant and subject to the provisions of Section 102 of the Ordinance (or the corresponding provision of any subsequently enacted
statute, as amended from time to time), and all regulations and interpretations adopted by any competent authority, including the Israel Tax
Authority (the “ITA”), including the Income Tax Rules (Tax Benefits in Stock Issuance to Employees) 5763-2003 or such other rules so adopted
from time to time (the “Rules”) (such Awards that are intended to be (as set forth in the Award Agreement) and which qualify as such under
Section 102 of the Ordinance and the Rules, “102 Awards”);
(ii) pursuant to Section 3(i) of the Ordinance or the corresponding provision of any subsequently enacted statute, as amended from time
to time (such Awards, “3(i) Awards”);
(iii) Incentive Stock Options within the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted
United States federal tax statute, as amended from time to time, to be granted to Employees who are deemed to be residents of the United States,
for purposes of taxation, or are otherwise subject to U.S. Federal income tax (such Awards that are intended to be (as set forth in the Award
Agreement) and which qualify as an incentive stock option within the meaning of Section 422(b) of the Code, “Incentive Stock Options”); and
(iv) Awards not intended to be (as set forth in the Award Agreement) or which do not qualify as an Incentive Stock Option (“Nonqualified
Stock Options”).
In addition to the issuance of Awards under the relevant tax regimes in the United States of America and the State of Israel, and without derogating from
the generality of Section 25, this Plan contemplates issuances to Grantees in other jurisdictions or under other tax regimes with respect to which the
Committee is empowered, but is not required, to make the requisite adjustments in this Plan and set forth the relevant conditions in an appendix to this Plan
or in the Company’s agreement with the Grantee in order to comply with the requirements of such other tax regimes.
1.3. Company Status. This Plan contemplates the issuance of Awards by the Company, both as a private and public company.
1.4. Construction. To the extent any provision herein conflicts with the conditions of any relevant tax law, rule or regulation which are relied upon
for tax relief in respect of a particular Award to a Grantee, the Committee is empowered, but is not required, hereunder to determine that the provisions of
such law, rule or regulation shall prevail over those of this Plan and to interpret and enforce such prevailing provisions. With respect to 102 Awards, if and
to the extent any action or the exercise or application of any provision hereof or authority granted hereby is conditioned or subject to obtaining a ruling or
tax determination from the ITA, to the extent required by applicable law, then the taking of any such action or the exercise or application of such section or
authority with respect to 102 Awards shall be conditioned upon obtaining such ruling or tax determination, and, if obtained, shall be subject to any
condition set forth therein; it being clarified that there is no obligation to apply for any such ruling or tax determination (which shall be in the sole
discretion of the Committee) and no assurance is made that if applied any such ruling or tax determination will be obtained (or the conditions thereof).
2. DEFINITIONS.
2.1. Terms Generally. Except when otherwise indicated by the context, (i) the singular shall include the plural and the plural shall include the
singular; (ii) any pronoun shall include the corresponding masculine, feminine and neuter forms; (iii) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth therein
or herein), (iv) references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof shall refer to it as
amended from time to time and shall include any successor thereof, (v) reference to a “company” or “entity” shall include a, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof, and reference to a
“person” shall mean any of the foregoing or an individual, (vi) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Plan in its entirety, and not to any particular provision hereof, (vii) all references herein to Sections shall be construed to refer to
Sections to this Plan; (viii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; and (ix) use
of the term “or” is not intended to be exclusive.
2.2. Defined Terms. The following terms shall have the meanings ascribed to them in this Section 2:
2.3. “Affiliate” shall mean, (i) with respect to any person, any other person that, directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such person (with the term “control” or “controlled by” within the meaning of Rule 405 of Regulation C
under the Securities Act), including, without limitation, any Parent or Subsidiary, or (ii) Employer.
2.4. “Applicable Law” shall mean any applicable law, rule, regulation, statute, pronouncement, policy, interpretation, judgment, order or decree of
any federal, provincial, state or local governmental, regulatory or adjudicative authority or agency, of any jurisdiction, and the rules and regulations of any
stock exchange, over-the-counter market or trading system on which the Company’s shares are then traded or listed.
2.5. “Award” shall mean any Option, Restricted Share, RSUs or any other Share-based award granted under this Plan.
2.6. “Board” shall mean the Board of Directors of the Company.
2.7. Reserved.
2.8. “Code” shall mean the United States Internal Revenue Code of 1986, and any applicable regulations promulgated thereunder, all as amended.
2.9. “Committee” shall mean a committee established or appointed by the Board to administer this Plan, subject to Section 3.1. To the extent
required to comply with the provisions of Rule 16b-3 of the Exchange Act, it is intended that each member of the Committee will be, at the time the
Committee takes any action with respect to an Award that is subject to Rule 16b-3 of the Exchange Act, a “non-employee director” within the meaning of
Rule 16b-3 of the Exchange Act; however, a Committee member’s failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 of the
Exchange Act will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.
2
2.10. “Companies Law” shall mean the Israel Companies Law, 5759-1999, and the regulations promulgated thereunder, all as amended from time
to time.
2.11. “Controlling Shareholder” shall have the meaning set forth in Section 32(9) of the Ordinance.
2.12. “Disability” shall mean (i) the inability of a Grantee to engage in any substantial gainful activity or to perform the major duties of the
Grantee’s position with the Company or its Affiliates by reason of any medically determinable physical or mental impairment which has lasted or can be
expected to last for a continuous period of not less than 12 months (or such other period as determined by the Committee), as determined by a qualified
doctor acceptable to the Company, (ii) if applicable, a “permanent and total disability” as defined in Section 22(e)(3) of the Code or Section 409A(a)(2)(c)
(i) of the Code, as amended from time to time, or (iii) as defined in a policy of the Company that the Committee deems applicable to this Plan, or that
makes reference to this Plan, for purposes of this definition.
2.13. “Employee” shall mean any person treated as an employee (including an officer or a director who is also treated as an employee) in the
records of the Company or any of its Affiliates (and in the case of 102 Awards, subject to Section 9.3 or in the case of Incentive Stock Options, who is an
employee for purposes of Section 422 of the Code); provided, however, that neither service as a director nor payment of a director’s fee shall be sufficient
to constitute employment for purposes of this Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual
has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For
purposes of a person’s rights, if any, under this Plan as of the time of the Company’s determination, all such determinations by the Company shall be final,
binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination.
2.14. “Employer” means, for purpose of a 102 Trustee Award, the Company or an Affiliate, Subsidiary or Parent thereof, which is an “employing
company” within the meaning and subject to the conditions of Section 102(a) of the Ordinance.
2.15. “employment”, “employed” and words of similar import shall be deemed to refer to the employment of Employees or to the services of any
other Service Provider, as the case may be.
2.16. “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and all regulations, guidance and other interpretative
authority issued thereunder.
2.17. “exercise”, “exercised” and words of similar import, when referring to an Award that does not require exercise or that is settled upon vesting
(such as may be the case with RSUs or Restricted Shares, if so determined in their terms), shall be deemed to refer to the vesting of such an Award
(regardless of whether or not the wording included reference to vesting of such an Awards explicitly).
2.18. “Exercise Period” shall mean the period, commencing on the date of grant of an Award, during which an Award shall be exercisable, subject
to any vesting provisions thereof (including any acceleration thereof, if any) and subject to the termination provisions hereof.
2.19. “Exercise Price” shall mean the exercise price for each Share covered by an Option or the purchase price for each Share covered by any
other Award.
2.20. “Fair Market Value” shall mean, as of any date, the value of a Share or other securities, property or rights as determined by the Board, in its
discretion, subject to the following: (i) if, on such date, the Shares are listed on any securities exchange, the closing sales price per Share on which the
Shares are principally traded on such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in
The Wall Street Journal or such other source as the Company deems reliable; (ii) if, on such date, the Shares are then quoted in an over-the-counter market,
the average of the closing bid and asked prices for the Shares in that market on such date, or if there are no bid and asked prices on such date, the last day
preceding such date on which there are bid and asked prices, as reported in The Wall Street Journal or such other source as the Company deems reliable; or
(iii) if, on such date, the Shares are not then listed on a securities exchange or quoted in an over-the-counter market, or in case of any other securities,
property or rights, such value as the Committee, in its sole discretion, shall determine, with full authority to determine the method for making such
determination and which determination shall be conclusive and binding on all parties, and shall be made after such consultations with outside legal,
accounting and other experts as the Committee may deem advisable; provided, however, that, if applicable, the Fair Market Value of the Shares shall be
determined in a manner that is intended to satisfy the applicable requirements of and subject to Section 409A of the Code, and with respect to Incentive
Stock Options, in a manner that is intended to satisfy the applicable requirements of and subject to Section 422 of the Code, subject to Section 422(c)(7) of
the Code. The Committee shall maintain a written record of its method of determining such value. If the Shares are listed or quoted on more than one
established stock exchange or over-the-counter market, the Committee shall determine the principal such exchange or market and utilize the price of the
Shares on that exchange or market (determined as per the method described in clauses (i) or (ii) above, as applicable) for the purpose of determining Fair
Market Value.
3
2.21. “Grantee” shall mean a person who has been granted an Award(s) under this Plan.
2.22. “Ordinance” shall mean the Israeli Income Tax Ordinance (New Version) 5271-1961, and the regulations and rules (including the Rules)
promulgated thereunder, all as amended from time to time.
2.23. “Parent” shall mean any company (other than the Company), which now exists or is hereafter organized, (i) in an unbroken chain of
companies ending with the Company if, at the time of granting an Award, each of the companies (other than the Company) owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain, or (ii) if applicable and for
purposes of Incentive Stock Options, that is a “parent corporation” of the Company, as defined in Section 424(e) of the Code.
2.24. “Retirement” shall mean a Grantee’s retirement pursuant to Applicable Law or in accordance with the terms of any tax-qualified retirement
plan maintained by the Company or any of its Affiliates in which the Grantee participates or is subject to.
2.25. “Securities Act” shall mean the U.S. Securities Act of 1933, and the rules and regulations promulgated thereunder, all as amended from time
to time.
2.26. “Service Provider” shall mean an Employee, director, officer, consultant, advisor and any other person or entity who provides services to the
Company or any Parent, Subsidiary or other Affiliate thereof. Service Providers shall include prospective Service Providers to whom Awards are granted in
connection with written offers of an employment or other service relationship with the Company or any Parent, Subsidiary or any other Affiliates thereof,
provided, however, that such employment or service shall have actually commenced. Notwithstanding the foregoing, unless otherwise determined by the
Committee, each Service Provider shall be an “employee” as defined in the General Instructions to Form S-8 Registration Statement under the Securities
Act (or any successor form thereto).
2.27. “Share(s)” shall mean Ordinary Share(s), nominal value NIS 0.01 each, of the Company (as adjusted for stock split, reverse stock split,
bonus shares, combination or other recapitalization events), or shares of such other class of shares of the Company as shall be designated by the Board in
respect of the relevant Award(s). “Shares” include any securities or property issued or distributed with respect thereto.
2.28. “Subsidiary” shall mean any company (other than the Company), which now exists or is hereafter organized or acquired by the Company, (i)
in an unbroken chain of companies beginning with the Company if, at the time of granting an Award, each of the companies other than the last company in
the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other
companies in such chain, or (ii) if applicable and for purposes of Incentive Stock Options, that is a “subsidiary corporation” of the Company, as defined in
Section 424(f) of the Code.
2.29. “tax(es)” shall mean (a) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all income,
capital gains, alternative or add-on minimum, transfer, value added tax, real and personal property, withholding, payroll, employment, escheat, social
security, disability, national security, health tax, wealth surtax, stamp, registration and estimated taxes, customs duties, fees, assessments and charges of any
similar kind whatsoever (including under Section 280G of the Code) or other tax of any kind whatsoever, (b) all interest, indexation differentials, penalties,
fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (a), (c) any transferee or
successor liability in respect of any items described in clauses (a) or (b) payable by reason of contract, assumption, transferee liability, successor liability,
operation of Applicable Law, or as a result of any express or implied obligation to assume Taxes or to indemnify any other person, and (d) any liability for
the payment of any amounts of the type described in clause (a) or (b) payable as a result of being a member of an affiliated, consolidated, combined, unitary
or aggregate or other group for any taxable period, including under U.S. Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof
of any analogous or similar provision under Applicable Law) or otherwise.
4
2.30. “Ten Percent Shareholder” shall mean a Grantee who, at the time an Award is granted to the Grantee, owns shares possessing more than ten
percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary, within the meaning of
Section 422(b)(6) of the Code.
2.31. “Trustee” shall mean the trustee appointed by the Committee to hold the Awards (and, in relation with 102 Trustee Awards, approved by the
ITA), if so appointed.
2.32. Other Defined Terms. The following terms shall have the meanings ascribed to them in the Sections set forth below:
Term
102 Awards
102 Capital Gains Track Awards
102 Non-Trustee Awards
102 Ordinary Income Track Awards
102 Trustee Awards
3(i) Awards
Award Agreement
Cause
Company
Effective Date
Election
Eligible 102 Grantees
Incentive Stock Options
Information
ITA
Market Stand-Off
Market Stand-Off Period
Merger/Sale
Nonqualified Stock Options
Plan
Pool
Recapitalization
Required Holding Period
Restricted Period
Restricted Share Agreement
Restricted Share Unit Agreement
Restricted Share
RSUs
Rules
Securities
Successor Corporation
Withholding Obligations
3. ADMINISTRATION.
Section
1.2(i)
9.1
9.2
9.1
9.1
1.2(ii)
6
6.6.4.4
1.1
24.1
9.2
9.3.1
1.2(iii)
16.4
1.1(i)
17.1
17.1
14.2
1.2(iv)
1.1
5.1
14.1
9.5
11.2
11
12
1.1
1.1
1.1(i)
17.1
14.2.1
18.5
3.1. To the extent permitted under Applicable Law, the Company’s Articles of Association and any other governing document of the Company,
this Plan shall be administered by the Committee. In the event that the Board does not appoint or establish a committee to administer this Plan, this Plan
shall be administered by the Board and, accordingly, any and all references herein to the Committee shall be construed as references to the Board. In the
event that an action necessary for the administration of this Plan is required under Applicable Law to be taken by the Board without the right of delegation,
or if such action or power was explicitly reserved by the Board in appointing, establishing and empowering the Committee, then such action shall be so
taken by the Board. In any such event, all references herein to the Committee shall be construed as references to the Board. Even if such a Committee was
appointed or established, the Board may take any actions that are stated to be vested in the Committee, and shall not be restricted or limited from exercising
all rights, powers and authorities under this Plan or Applicable Law.
3.2. The Board shall appoint the members of the Committee, may from time to time remove members from, or add members to, the Committee,
and shall fill vacancies in the Committee, however caused, provided that the composition of the Committee shall at all times be in compliance with any
mandatory requirements of Applicable Law, the Articles of Association and any other governing document of the Company. The Committee may select one
of its members as its Chairman and shall hold its meetings at such times and places as it shall determine. The Committee may appoint a Secretary, who
shall keep records of its meetings, and shall make such rules and regulations for the conduct of its business as it shall deem advisable and subject to
mandatory requirements of Applicable Law.
5
3.3. Subject to the terms and conditions of this Plan, any mandatory provisions of Applicable Law and any provisions of any Company policy
required under mandatory provisions of Applicable Law, and in addition to the Committee’s powers contained elsewhere in this Plan, the Committee shall
have full authority, in its discretion, from time to time and at any time, to determine any of the following, or to recommend to the Board any of the
following if it is not authorized to take such action according to Applicable Law:
(i) eligible Grantees,
(ii) grants of Awards and setting the terms and provisions of Award Agreements (which need not be identical) and any other agreements
or instruments under which Awards are made, including, the number of Shares underlying each Award and the class of Shares underlying each
Award (if more than one class was designated by the Board),
(iii) the time or times at which Awards shall be granted,
(iv) the terms, conditions and restrictions applicable to each Award (which need not be identical) and any Shares acquired upon the
exercise or (if applicable) vesting thereof, including, (1) designating Awards under Section 1.2; (2) the vesting schedule, the acceleration thereof
and terms and conditions upon which Awards may be exercised or become vested, (3) the Exercise Price, (4) the method of payment for Shares
purchased upon the exercise or (if applicable) vesting of the Awards, (5) the method for satisfaction of any tax withholding obligation arising in
connection with the Awards or such Shares, including by the withholding or delivery of Shares, (6) the time of the expiration of the Awards, (7)
the effect of the Grantee’s termination of employment with the Company or any of its Affiliates, and (8) all other terms, conditions and restrictions
applicable to the Award or the Shares not inconsistent with the terms of this Plan,
(v) to accelerate, continue, extend or defer the exercisability of any Award or the vesting thereof, including with respect to the period
following a Grantee’s termination of employment or other service,
(vi) the interpretation of this Plan and any Award Agreement and the meaning, interpretation and applicability of terms referred to in
Applicable Law,
(vii) policies, guidelines, rules and regulations relating to and for carrying out this Plan, and any amendment, supplement or rescission
thereof, as it may deem appropriate,
6
(viii) to adopt supplements to, or alternative versions of, this Plan, including, without limitation, as it deems necessary or desirable to
comply with the laws of, or to accommodate the tax regime or custom of, foreign jurisdictions whose citizens or residents may be granted Awards,
(ix) the Fair Market Value of the Shares or other securities property or rights,
(x) the tax track (capital gains, ordinary income track or any other track available under the Section 102 of the Ordinance) for the purpose
of 102 Awards,
(xi) the authorization and approval of conversion, substitution, cancellation or suspension under and in accordance with this Plan of any
or all Awards or Shares,
(xii) unless otherwise provided under the terms of this Plan, the amendment, modification, waiver or supplement of the terms of any
outstanding Award (including reducing the Exercise Price of an Award), provided, however, that if such amendments increase the Exercise Price
of an Award or reduce the number of Shared underlying an Award, then such amendments shall require the consent of the applicable Grantee,
unless such amendment is made pursuant to the exercise of rights or authorities in accordance with Section 14,
(xiii) without limiting the generality of the foregoing, and subject to the provisions of Applicable Law, to grant to a Grantee, who is the
holder of an outstanding Award, in exchange for the cancellation of such Award, a new Award having an Exercise Price lower than that provided
in the Award so canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of this
Plan or to set a new Exercise Price for the same Award lower than that previously provided in the Award,
(xiv) to correct any defect, supply any omission or reconcile any inconsistency in this Plan or any Award Agreement and all other
determinations and take such other actions with respect to this Plan or any Award as it may deem advisable to the extent not inconsistent with the
provisions of this Plan or Applicable Law, and
(xv) any other matter which is necessary or desirable for, or incidental to, the administration of this Plan and any Award thereunder.
3.4. The authority granted hereunder includes the authority to modify Awards to eligible individuals who are foreign nationals or are individuals
who are employed outside the State of Israel or the United States of America, to recognize differences in local law, tax policy or custom, in order to
effectuate the purposes of this Plan but without amending this Plan.
3.5. The Board and the Committee shall be free at all times to make such determinations and take such actions as they deem fit. The Board and the
Committee need not take the same action or determination with respect to all Awards, with respect to certain types of Awards, with respect to all Service
Providers or any certain type of Service Providers and actions and determinations may differ as among the Grantees, and as between the Grantees and any
other holders of securities of the Company.
3.6. All decisions, determinations, and interpretations of the Committee, the Board and the Company under this Plan shall be final and binding on
all Grantees (whether before or after the issuance of Shares pursuant to Awards), unless otherwise determined by the Committee, the Board or the
Company, respectively. The Committee shall have the authority (but not the obligation) to determine the interpretation and applicability of Applicable Law
to any Grantee or any Awards. No member of the Committee or the Board shall be liable to any Grantee for any action taken or determination made in good
faith with respect to this Plan or any Award granted hereunder.
3.7. Any officer or authorized signatory of the Company shall have the authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided such person has apparent
authority with respect to such matter, right, obligation, determination or election. Such person or authorized signatory shall not be liable to any Grantee for
any action taken or determination made in good faith with respect to this Plan or any Award granted hereunder.
7
4. ELIGIBILITY.
Awards may be granted to Service Providers of the Company or any Affiliate thereof, taking into account, at the Committee’s discretion and without an
obligation to do so, the qualification under each tax regime pursuant to which such Awards are granted, subject to the limitation on the granting of Incentive
Stock Options set forth in Section 8.1. A person who has been granted an Award hereunder may be granted additional Awards, if the Committee shall so
determine, subject to the limitations herein. However, eligibility in accordance with this Section 4 shall not entitle any person to be granted an Award, or,
having been granted an Award, to be granted an additional Award.
Awards may differ in number of Shares covered thereby, the terms and conditions applying to them or on the Grantees or in any other respect (including,
that there should not be any expectation (and it is hereby disclaimed) that a certain treatment, interpretation or position granted to one shall be applied to
the other, regardless of whether or not the facts or circumstances are the same or similar).
5. SHARES.
5.1. The maximum aggregate number of Shares that may be issued pursuant to Awards under this Plan (the “Pool”) shall be the sum of (a)
4,862,994 Shares plus (and without the need to further amend the Plan) (b) on January 1st, 2021 and on January 1st of each calendar year thereafter during
the term of the Plan (i.e., until January 1st, 2027, inclusive), a number of Shares equal to the lesser of: (i) four percent (4.0%) of the total number of Shares
outstanding as of the end of the last day of the immediately preceding year, and (ii) such smaller amount of Shares as is determined by the Board, if so
determined prior to the January 1st of the calendar year in which the increase will occur (in each case, without the need to amend the Plan in case of such
determination); in all events subject to adjustment as provided in Section 14.1. Notwithstanding the foregoing, the total number of Shares that may be
issued pursuant to Incentive Stock Options granted under this Plan shall be 16,983,585 subject to adjustment as provided in Section 14.1. The Board may,
at its discretion, reduce the number of Shares that may be issued pursuant to Awards under this Plan, at any time (provided that such reduction does not
derogate from any issuance of Shares in respect of Awards then outstanding).
5.2. Any Shares (a) underlying an Award granted hereunder that has expired, or was cancelled, terminated, forfeited, or settled in cash in lieu of
issuance of Shares, for any reason, without having been exercised; (b) if permitted by the Company, tendered to pay the Exercise Price of an Award or
withholding tax obligations with respect to an Award; or (c) if permitted by the Company, subject to an Award that are not delivered to a Grantee because
such Shares are withheld to pay the Exercise Price of such Award, or withholding tax obligations with respect to such Award; shall automatically, and
without any further action on the part of the Company or any Grantee, again be available for grant of Awards and for issuance upon exercise or (if
applicable) vesting thereof for the purposes of this Plan (unless this Plan shall have been terminated), unless the Board determines otherwise. Such Shares
may be, in whole or in part, authorized but unissued Shares, (and, subject to obtaining a ruling as it applies to 102 Awards) treasury shares (dormant shares)
or otherwise Shares that shall have been or may be repurchased by the Company (to the extent permitted pursuant to the Companies Law).
5.3. Any Shares under the Pool that are not subject to outstanding or exercised Awards at the termination of this Plan shall cease to be reserved for
the purpose of this Plan.
5.4. From and after the Effective Date, no further grants or awards shall be made under any prior equity incentive plans of the Company; however,
Awards made under any prior equity incentive plan of the Company before the Effective Date shall continue in effect in accordance with their terms.
8
6. TERMS AND CONDITIONS OF AWARDS.
Each Award granted pursuant to this Plan shall be evidenced by a written or electronic agreement between the Company and the Grantee or a written or
electronic notice delivered by the Company (the “Award Agreement”), in substantially such form or forms and containing such terms and conditions, as the
Committee shall from time to time approve. The Award Agreement shall comply with and be subject to the following general terms and conditions and the
provisions of this Plan (except for any provisions applying to Awards under different tax regimes), unless otherwise specifically provided in such Award
Agreement, or the terms referred to in other Sections of this Plan applying to Awards under such applicable tax regimes, or terms prescribed by Applicable
Law. Award Agreements need not be in the same form and may differ in the terms and conditions included therein.
6.1. Number of Shares. Each Award Agreement shall state the number of Shares covered by the Award.
6.2. Type of Award. Each Award Agreement may state the type of Award granted thereunder, provided that the tax treatment of any Award,
whether or not stated in the Award Agreement, shall be as determined in accordance with Applicable Law.
6.3. Exercise Price. Each Award Agreement shall state the Exercise Price, if applicable. Unless otherwise set forth in this Plan, an Exercise Price
of an Award of less than the nominal value of the Shares (if shares bear a nominal value) shall comply with Section 304 of the Companies Law. Subject to
Sections 3, 7.2 and 8.2 and to the foregoing, the Committee may reduce the Exercise Price of any outstanding Award, on terms and subject to such
conditions as it deems advisable. The Exercise Price shall also be subject to adjustment as provided in Section 14 hereof. . The Exercise Price of any Award
granted to a Grantee who is subject to U.S. federal income tax shall be determined in accordance with Section 409A of the Code.
6.4. Manner of Exercise.
6.4.1 An Award may be exercised, as to any or all Shares as to which the Award has become exercisable, (a) by written notice delivered
in person or by mail (or such other methods of delivery prescribed by the Company) to the Chief Financial Officer of the Company or, if no such
officer is then incumbent, to the Chief Executive Officer of the Company or to such other person as determined by the Committee, (b) by way of
an exercise order submitted via the online service operated and maintained by the Trustee, or (c) or in any other manner as the Committee shall
prescribe from time to time, specifying the number of Shares with respect to which the Award is being exercised (which may be equal to or lower
than the aggregate number of Shares that have become exercisable at such time, subject to the last sentence of this Section), accompanied by
payment of the aggregate Exercise Price for such Shares in the manner specified in the following sentence. The Exercise Price shall be paid in full
with respect to each Share, at the time of exercise, either (i) in cash, (ii) if the Company’s shares are listed for trading on any securities exchange
or over-the-counter market, and if the Committee so determines, all or part of the Exercise Price and any withholding taxes may be paid by the
delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to
deliver all or part of the sales proceeds to the Company or the Trustee, (iii) if the Company’s shares are listed for trading on any securities
exchange or over-the-counter market, and if the Committee so determines, all or part of the Exercise Price and any withholding taxes may be paid
by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by
the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company or the Trustee, (iv) by applying the Cashless
Exercise Mechanism set forth in Section 6.4.2 below, or (v) in such other manner as the Committee shall determine, which may include
procedures for cashless exercise.
9
6.4.2 The application of Cashless Exercise Mechanism with respect to (i) any 102 Awards shall be subject to obtaining a ruling from the
ITA, to the extent required by Applicable Law, and (ii) any Incentive Stock Options, may result in such Options being treated as Nonqualified
Stock Options.
6.4.3 Unless otherwise determined by the Committee, any and all Options may be exercised using a cashless exercise mechanism, in
which case the number of the Shares to be issued by the Company upon such exercise shall be calculated pursuant to the following formula (the
“Cashless Exercise Mechanism”):
X = Y * (A – B)
A
Where: X =
the number of Shares to be issued to the Grantee.
Y =
the number of Shares, as adjusted to the date of such calculation, underlying the number of Options being
exercised.
A =
the Fair Market Value of one Share at the exercise date.
B =
the Exercise Price of the Options being exercised.
Upon the completion of the calculation, if X is a negative number, then X shall be deemed to equal 0 (zero).
6.5. Term and Vesting of Awards.
6.5.1 Each Award Agreement shall provide the vesting schedule for the Award as determined by the Committee. The Committee shall
have the authority to determine the vesting schedule and accelerate the vesting of any outstanding Award at such time and under such
circumstances as it, in its sole discretion, deems appropriate. Unless otherwise resolved by the Committee and stated in the Award Agreement, and
subject to Sections 6.6 and 6.7 hereof, Awards shall vest and become exercisable under the following schedule: twenty-five percent (25%) of the
Shares covered by the Award, on the first anniversary of the vesting commencement date determined by the Committee (and in the absence of
such determination, of date on which such Award was granted), and six and one-quarter percent (6.25%) of the Shares covered by the Award at the
end of each subsequent three-month period thereafter over the course of the following three (3) years; provided that the Grantee remains
continuously as a Service Provider of the Company or its Affiliates throughout such vesting dates.
6.5.2 The Award Agreement may contain performance goals and measurements (which, in case of 102 Trustee Awards, may, if then
required, be subject to obtaining a specific tax ruling or determination from the ITA), and the provisions with respect to any Award need not be the
same as the provisions with respect to any other Award. Such performance goals may include, but are not limited to, sales, earnings before interest
and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by
the Committee. The Committee may adjust performance goals pursuant to Awards previously granted to take into account changes in law and
accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or the exclusion
of the impact of extraordinary or unusual items, events or circumstances.
6.5.3 The Exercise Period of an Award will be ten (10) years from the date of grant of the Award, unless otherwise determined by the
Committee and stated in the Award Agreement, but subject to the vesting provisions described above and the early termination provisions set forth
in Sections 6.6 and 6.7 hereof. At the expiration of the Exercise Period, any Award, or any part thereof, that has not been exercised within the term
of the Award and the Shares covered thereby not paid for in accordance with this Plan and the Award Agreement shall terminate and become null
and void, and all interests and rights of the Grantee in and to the same shall expire.
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6.6. Termination.
6.6.1 Unless otherwise determined by the Committee, and subject to this Section 6.6 and Section 6.7 hereof, an Award may not be
exercised unless the Grantee is then a Service Provider of (i) the Company or an Affiliate thereof or, (ii) in the case of an Incentive Stock Option,
of the Company, of a Parent or Subsidiary, or of a company (or a parent or subsidiary company of such company) issuing or assuming an Option
of such Grantee in a transaction to which Section 424(a) of the Code applies, and unless the Grantee has remained continuously so employed since
the date of grant of the Award and throughout the vesting dates.
6.6.2 In the event that the employment or service of a Grantee shall terminate (other than by reason of death, Disability or Retirement),
such that Grantee is no longer a Service Provider of neither the Company nor any Affiliate thereof), all Awards of such Grantee that are unvested
at the time of such termination shall terminate on the date of such termination, and all Awards of such Grantee that are vested and exercisable at
the time of such termination may be exercised within up to three (3) months after the date of such termination (or such different period as the
Committee shall prescribe), but in any event no later than the date of expiration of the Award’s term as set forth in the Award Agreement or
pursuant to this Plan; provided, however, that if the Company (or its Subsidiary or other Affiliate thereof, as applicable) shall have terminated the
Grantee’s employment or service for Cause (as defined below) (whether the facts or circumstances that constitute such Cause occur prior to or
after termination of employment or service), facts or circumstances arise or are discovered with respect to the Grantee that would have constituted
Cause, then all Awards theretofore granted to such Grantee (whether vested or not) shall terminate and be subject to recoupment by the Company
on the date of such termination (or on such subsequent date on which such facts or circumstances arise or are discovered, as the case may be)
unless otherwise determined by the Committee, and any Shares issued upon exercise or (if applicable) vesting of Awards (including other Shares
or securities issued or distributed with respect thereto, and including the gross amount of any proceeds, gains or other economic benefit the
Grantee actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award),
whether held by the Grantee or by the Trustee for the Grantee’s benefit, shall be deemed to be irrevocably offered for sale to the Company, any of
its Affiliates or any person designated by the Company to purchase, at the Company’s election and subject to Applicable Law, either for no
consideration, for the nominal value of such Shares (if such Shares bear a nominal value) or against payment of the Exercise Price previously
received by the Company for such Shares upon their issuance, as the Committee deems fit, upon written notice to the Grantee at any time prior to,
at or after the Grantee’s termination of employment or service. Such Shares or other securities shall be sold and transferred within 30 days from
the date of the Company’s notice of its election to exercise its right. If the Grantee fails to transfer such Shares or other securities to the Company,
the Company, at the decision of the Committee, shall be entitled to forfeit or repurchase such Shares and to authorize any person to execute on
behalf of the Grantee any document necessary to effect such transfer, whether or not the share certificates are surrendered. The Company shall
have the right and authority to effect the above either by: (i) repurchasing all of such Shares or other securities held by the Grantee or by the
Trustee for the benefit of the Grantee, or designate the purchaser of all or any part of such Shares or other securities, for the Exercise Price paid for
such Shares, the nominal value of such Shares (if such Shares bear a nominal value) or for no payment or consideration whatsoever, as the
Committee deems fit; (ii) forfeiting all or any part of such Shares or other securities; (iii) redeeming all or any part of such Shares or other
securities, for the Exercise Price paid for such Shares, the nominal value of such Shares (if such Shares bear a nominal value) or for no payment or
consideration whatsoever, as the Committee deems fit; (iv) taking action in order to have all or any part of such Shares or other securities
converted into deferred shares entitling their holder only to their nominal value (if such Shares bear a nominal value) upon liquidation of the
Company; or (v) taking any other action which may be required in order to achieve similar results; all as shall be determined by the Committee, at
its sole and absolute discretion, and the Grantee is deemed to irrevocably empower the Company or any person which may be designated by it to
take any action by, in the name of or on behalf of the Grantee to comply with and give effect to such actions (including, voting such shares, filling
in, signing and delivering share transfer deeds, etc.).
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6.6.3 Notwithstanding anything to the contrary, the Committee, in its absolute discretion, may, on such terms and conditions as it may
determine appropriate, extend the periods for which Awards held by any Grantee may continue to vest and be exercisable; it being clarified that
such Awards may lose their entitlement to certain tax benefits under Applicable Law (including, without limitation, qualification of an Award as
an Incentive Stock Option) as a result of the modification of such Awards and/or in the event that the Award is exercised beyond the later of: (i)
three (3) months after the date of termination of the employment or service relationship; or (ii) the applicable period under Section 6.7 below with
respect to a termination of the employment or service relationship because of the death, Disability or Retirement of Grantee.
6.6.4 For purposes of this Plan:
6.6.4.1. A termination of employment or service of a Grantee shall not be deemed to occur (except to the extent required by the
Code with respect to the Incentive Stock Option status of an Option) in case of (i) a transition or transfer of a Grantee among the Company and its
Affiliates, (ii) a change in the capacity in which the Grantee is employed or renders service to the Company or any of its Affiliates or a change in
the identity of the employing or engagement entity among the Company and its Affiliates, provided, in case of the foregoing clauses (i) and (ii)
above, that the Grantee has remained continuously employed by and/or in the service of the Company and its Affiliates since the date of grant of
the Award and throughout the vesting period; or (iii) if the Grantee takes any unpaid leave as set forth in Section 6.8 below.
6.6.4.2. An entity or an Affiliate thereof assuming an Award or issuing in substitution thereof in a transaction to which
Section 424(a) of the Code applies or in a Merger/Sale in accordance with Section 14 shall be deemed as an Affiliate of the Company for purposes
of this Section 6.6, unless the Committee determines otherwise.
6.6.4.3. In the case of a Grantee whose principal employer or service recipient is a Subsidiary or other Affiliate thereof, the
Grantee’s employment shall also be deemed terminated for purposes of this Section 6.6 as of the date on which such principal employer or service
recipient ceases to be a Subsidiary or other Affiliate thereof.
6.6.4.4. The term “Cause” shall mean (irrespective of, and in addition to, any definition included in any other agreement or
instrument applicable to the Grantee, and unless otherwise determined by the Committee) any of the following: (i) any theft, fraud, embezzlement,
dishonesty, willful misconduct, breach of fiduciary duty for personal profit, falsification of any documents or records of the Company or any of its
Affiliates, felony or similar act by the Grantee (whether or not related to the Grantee’s relationship with the Company); (ii) an act of moral
turpitude by the Grantee, or any act that causes significant injury to, or is otherwise adversely affecting, the reputation, business, assets, operations
or business relationship of the Company (or a Subsidiary or other Affiliate thereof, when applicable); (iii) any breach by the Grantee of any
material agreement with or of any material duty of the Grantee to the Company or any Subsidiary or other Affiliate thereof (including breach of
confidentiality, non-disclosure, non-use non-competition or non-solicitation covenants towards the Company or any of its Affiliates) or failure to
abide by code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct);
(iv) any act which constitutes a breach of a Grantee’s fiduciary duty towards the Company or a Subsidiary or other Affiliate thereof, including
disclosure of confidential or proprietary information thereof or acceptance or solicitation to receive unauthorized or undisclosed benefits,
irrespective of their nature, or funds, or promises to receive either, from individuals, consultants or corporate entities with whom the Company or a
Subsidiary or other Affiliate thereof conducts business; (v) the Grantee’s unauthorized use, misappropriation, destruction, or diversion of any
tangible or intangible asset or corporate opportunity of the Company or any of its Affiliates (including, without limitation, the improper use or
disclosure of confidential or proprietary information); or (vi) any circumstances that constitute grounds for termination for cause under the
Grantee’s employment or service agreement with the Company or Affiliate, to the extent applicable. For the avoidance of doubt, the determination
as to whether a termination is for Cause for purposes of this Plan, shall be made in good faith by the Committee and shall be final and binding on
the Grantee.
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6.7. Death, Disability or Retirement of Grantee.
6.7.1 If a Grantee shall die while employed by, or performing service for, the Company or any of its Affiliates, or within the three (3)
month period (or such longer period of time as determined by the Board, in its discretion) after the date of termination of such Grantee’s
employment or service (or within such different period as the Committee may have provided pursuant to Section 6.6 hereof), or if the Grantee’s
employment or service with the Company or any of its Affiliates shall terminate by reason of Disability, all Awards theretofore granted to such
Grantee may (to the extent otherwise vested and exercisable and unless earlier terminated in accordance with their terms) be exercised by the
Grantee or by the Grantee’s estate or by a person who acquired the legal right to exercise such Awards by bequest or inheritance, or by a person
who acquired the legal right to exercise such Awards in accordance with applicable law in the case of Disability of the Grantee, as the case may
be, at any time within one (1) year (or such longer period of time as determined by the Committee, in its discretion) after the death or Disability of
the Grantee (or such different period as the Committee shall prescribe), but in any event no later than the date of expiration of the Award’s term as
set forth in the Award Agreement or pursuant to this Plan. In the event that an Award granted hereunder shall be exercised as set forth above by
any person other than the Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or proof
satisfactory to the Committee of the right of such person to exercise such Award.
6.7.2 In the event that the employment or service of a Grantee shall terminate on account of such Grantee’s Retirement, all Awards of
such Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any
time within the three (3) month period after the date of such Retirement (or such different period as the Committee shall prescribe).
6.8. Suspension of Vesting. Unless the Committee provides otherwise, vesting of Awards granted hereunder shall be suspended during any unpaid
leave of absence, other than in the case of any (i) leave of absence which was pre-approved by the Company explicitly for purposes of continuing the
vesting of Awards, or (ii) transfers between locations of the Company or any of its Affiliates, or between the Company and any of its Affiliates, or any
respective successor thereof. For clarity, for purposes of this Plan, military leave, statutory maternity or paternity leave or sick leave are not deemed unpaid
leave of absence, unless otherwise determined by the Committee.
6.9. Securities Law Restrictions. Except as otherwise provided in the applicable Award Agreement or other agreement between the Service
Provider and the Company, if the exercise of an Award following the termination of the Service Provider’s employment or service (other than for Cause)
would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act or equivalent
requirements under equivalent laws of other applicable jurisdictions, then the Award shall remain exercisable and terminate on the earlier of (i) the
expiration of a period of three (3) months (or such longer period of time as determined by the Board, in its discretion) after the termination of the Service
Provider’s employment or service during which the exercise of the Award would not be in such violation, or (ii) the expiration of the term of the Award as
set forth in the Award Agreement or pursuant to this Plan. In addition, unless otherwise provided in a Grantee’s Award Agreement, if the sale of any Shares
received upon exercise or (if applicable) vesting of an Award following the termination of the Grantee’s employment or service (other than for Cause)
would violate the Company’s insider trading policy, then the Award shall terminate on the earlier of (i) the expiration of a period equal to the applicable
post-termination exercise period after the termination of the Grantee’s employment or service during which the exercise of the Award would not be in
violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Award as set forth in the applicable Award Agreement or pursuant
to this Plan.
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6.10. Voting Proxy. Until immediately after the listing for trading on a stock exchange or market or trading system of the Company’s (or the
Successor Corporation’s) shares, the Shares subject to an Award or to be issued pursuant to an Award or any other Securities, shall, unless otherwise
determined by the Committee, be subject to an irrevocable proxy and power of attorney by the Grantee or the Trustee (if so requested from the Trustee), as
the case may be, to the Company, which shall designate such person or persons (with a right of substitution) from time to time as determined by the
Committee (and in the absence of such determination, the Chief Executive Officer of the Company or the Chairman of the Board, ex officio (or, in no
Chairman is in office, any other member designated by the Board)). The Trustee is deemed to be instructed by the Grantee to sign such proxy, as requested
by the Company. The proxy shall entitle the holder thereof to receive notices, vote and take such other actions in respect of the Shares or other Securities.
Any person holding or exercising such voting proxies shall do so solely in his capacity as the proxy holder and not individually. All Awards granted
hereunder shall be conditioned upon the execution of such irrevocable proxy in substantially the form prescribed by the Committee from time to time. So
long as any such Shares are subject to such irrevocable proxy and power of attorney or held by a Trustee (and unless a proxy was given by the Trustee as
aforesaid), (i) in any shareholders meeting or written consent in lieu thereof, such Shares shall be voted by the proxy holder (or the Trustee, as applicable),
unless directed otherwise by the Board, in the same proportion as the result of the vote at the shareholders’ meeting (or written consent in lieu thereof) in
respect of which the Shares are being voted (whether an extraordinary or annual meeting, and whether of the share capital as one class or of any class
thereof), and (ii) or in any act or consent of shareholders under the Company’s Articles of Association or otherwise, such Shares shall be cast by the proxy
holder (or the Trustee, as applicable), unless directed otherwise by the Board, in the same proportion as the result of the shareholders’ act or consent. The
provisions of this Section shall apply to the Grantee and to any purchaser, assignee or transferee of any Shares.
6.11. Other Provisions. The Award Agreement evidencing Awards under this Plan shall contain such other terms and conditions not inconsistent
with this Plan as the Committee may determine, at or after the date of grant, including provisions in connection with the restrictions on transferring the
Awards or Shares covered by such Awards, which shall be binding upon the Grantees and any purchaser, assignee or transferee of any Awards, and other
terms and conditions as the Committee shall deem appropriate.
7. NONQUALIFIED STOCK OPTIONS.
Awards granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject to the general terms and conditions
specified in Section 6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or
regulations. In the event of any inconsistency or contradictions between the provisions of this Section 7 and the other terms of this Plan, this Section 7 shall
prevail. However, if for any reason the Awards granted pursuant to this Section 7 (or portion thereof) does not qualify as an Incentive Stock Option, then, to
the extent of such non-qualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock Option granted under this Plan. In no event
will the Board, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Participant (or any other
person) due to the failure of the Option to qualify for any reason as an Incentive Stock Option.
7.1. Certain Limitations on Eligibility for Nonqualified Stock Options. Nonqualified Stock Options may not be granted to a Service Provider who
is deemed to be a resident of the United States for purposes of taxation or who is otherwise subject to United States federal income tax unless the Shares
underlying such Options constitute “service recipient stock” under Section 409A of the Code or unless such Options comply with the payment
requirements of Section 409A of the Code.
7.2. Exercise Price. The Exercise Price of a Nonqualified Stock Option shall not be less than 100% of the Fair Market Value of a Share on the date
of grant of such Option unless the Committee specifically indicates that the Awards will have a lower Exercise Price and the Award complies with
Section 409A of the Code. Notwithstanding the foregoing, a Nonqualified Stock Option may be granted with an exercise price lower than the minimum
exercise price set forth above if such Award is granted pursuant to an assumption or substitution for another option in a manner qualifying under the
provisions of that complies with Section 424(a) of the Code and 1.409A-1(b)(5)(v)(D) of the U.S. Treasury Regulations or any successor guidance.
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8. INCENTIVE STOCK OPTIONS.
Awards granted pursuant to this Section 8 are intended to constitute Incentive Stock Options and shall be granted subject to the following special terms and
conditions, the general terms and conditions specified in Section 6 hereof and other provisions of this Plan, except for any provisions of this Plan applying
to Awards under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section 8 and the other
terms of this Plan, this Section 8 shall prevail.
8.1. Eligibility for Incentive Stock Options. Incentive Stock Options may be granted only to Employees of the Company, or to Employees of a
Parent or Subsidiary, determined as of the date of grant of such Options. An Incentive Stock Option granted to a prospective Employee upon the condition
that such person become an Employee shall be deemed granted effective on the date such person commences employment, with an exercise price
determined as of such date in accordance with Section 8.2.
8.2. Exercise Price. The Exercise Price of an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of
the Shares covered by the Awards on the date of grant of such Option or such other price as may be determined pursuant to the Code. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Award is granted
pursuant to an assumption or substitution for another option in a manner that complies with the provisions of Section 424(a) of the Code.
8.3. Date of Grant. Notwithstanding any other provision of this Plan to the contrary, no Incentive Stock Option may be granted under this Plan
after 10 years from the date this Plan is adopted, or the date this Plan is approved by the shareholders, whichever is earlier.
8.4. Exercise Period. No Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such
Award, subject to Section 8.6. No Incentive Stock Option granted to a prospective Employee may become exercisable prior to the date on which such
person commences employment.
8.5. $100,000 Per Year Limitation. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the
Shares with respect to which all Incentive Stock Options granted under this Plan and all other “incentive stock option” plans of the Company, or of any
Parent or Subsidiary, become exercisable for the first time by each Grantee during any calendar year shall not exceed one hundred thousand United States
dollars ($100,000) with respect to such Grantee. To the extent that the aggregate Fair Market Value of Shares with respect to which such Incentive Stock
Options and any other such incentive stock options are exercisable for the first time by any Grantee during any calendar year exceeds one hundred thousand
United States dollars ($100,000), such options shall be treated as Nonqualified Stock Options. The foregoing shall be applied by taking options into
account in the order in which they were granted. If the Code is amended to provide for a different limitation from that set forth in this Section 8.5, such
different limitation shall be deemed incorporated herein effective as of the date and with respect to such Awards as required or permitted by such
amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonqualified Stock Option in part by reason of the limitation
set forth in this Section 8.5, the Grantee may designate which portion of such Option the Grantee is exercising. In the absence of such designation, the
Grantee shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion may
be issued upon the exercise of the Option.
8.6. Ten Percent Shareholder. In the case of an Incentive Stock Option granted to a Ten Percent Shareholder, notwithstanding the foregoing
provisions of this Section8, (i) the Exercise Price shall not be less than one hundred and ten percent (110%) of the Fair Market Value of a Share on the date
of grant of such Incentive Stock Option, and (ii) the Exercise Period shall not exceed five (5) years from the effective date of grant of such Incentive Stock
Option.
8.7. Payment of Exercise Price. Each Award Agreement evidencing an Incentive Stock Option shall state each alternative method by which the
Exercise Price thereof may be paid.
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8.8. Leave of Absence. Notwithstanding Section 6.8, a Grantee’s employment shall not be deemed to have terminated if the Grantee takes any
leave as set forth in Section 6.8(i); provided, however, that if any such leave exceeds three (3) months, on the day that is three (3) months following the
commencement of such leave any Incentive Stock Option held by the Grantee shall cease to be treated as an Incentive Stock Option and instead shall be
treated thereafter as a Nonqualified Stock Option, unless the Grantee’s right to return to employment is guaranteed by statute or contract.
8.9. Exercise Following Termination. Notwithstanding anything else in this Plan to the contrary, Incentive Stock Options that are not exercised
within three (3) months following termination of the Grantee’s employment with the Company or its Parent or Subsidiary or with a corporation (or a parent
or subsidiary of such corporation) issuing or assuming an Option of such Grantee in a transaction to which Section 424(a) of the Code applies, or within
one year in case of termination of the Grantee’s employment with the Company or its Parent or Subsidiary due to a Disability (within the meaning of
Section 22(e)(3) of the Code), shall be deemed to be Nonqualified Stock Options.
8.10. Notice to Company of Disqualifying Disposition. Each Grantee who receives an Incentive Stock Option must agree to notify the Company in
writing immediately after the Grantee makes a Disqualifying Disposition of any Shares received pursuant to the exercise of Incentive Stock Options. A
“Disqualifying Disposition” is any disposition (including any sale) of such Shares before the later of (i) two years after the date the Grantee was granted the
Incentive Stock Option, or (ii) one year after the date the Grantee acquired Shares by exercising the Incentive Stock Option. If the Grantee dies before such
Shares are sold, these holding period requirements do not apply and no disposition of the Shares will be deemed a Disqualifying Disposition.
9. 102 AWARDS.
Awards granted pursuant to this Section 9 are intended to constitute 102 Awards and shall be granted subject to the following special terms and conditions,
the general terms and conditions specified in Section 6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards
under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section 9 and the other terms of
this Plan, this Section 9 shall prevail.
9.1. Tracks. Awards granted pursuant to this Section 9 are intended to be granted pursuant to Section 102 of the Ordinance pursuant to either (i)
Section 102(b)(2) or (3) thereof (as applicable), under the capital gain track (“102 Capital Gain Track Awards”), or (ii) Section 102(b)(1) thereof under the
ordinary income track (“102 Ordinary Income Track Awards”, and together with 102 Capital Gain Track Awards, “102 Trustee Awards”). 102 Trustee
Awards shall be granted subject to the special terms and conditions contained in this Section 9, the general terms and conditions specified in Section 6
hereof and other provisions of this Plan, except for any provisions of this Plan applying to Options under different tax laws or regulations.
9.2. Election of Track. Subject to Applicable Law, the Company may grant only one type of 102 Trustee Awards at any given time to all Grantees
who are to be granted 102 Trustee Awards pursuant to this Plan, and shall file an election with the ITA regarding the type of 102 Trustee Awards it elects to
grant before the date of grant of any 102 Trustee Awards (the “Election”). Such Election shall also apply to any other securities, including bonus shares,
received by any Grantee as a result of holding the 102 Trustee Awards. The Company may change the type of 102 Trustee Awards that it elects to grant
only after the expiration of at least 12 months from the end of the year in which the first grant was made in accordance with the previous Election, or as
otherwise provided by Applicable Law. Any Election shall not prevent the Company from granting Awards, pursuant to Section 102(c) of the Ordinance
without a Trustee (“102 Non-Trustee Awards”).
9.3. Eligibility for Awards.
9.3.1 Subject to Applicable Law, 102 Awards may only be granted to an “employee” within the meaning of Section 102(a) of the
Ordinance (which as of the date of the adoption of this Plan means (i) individuals employed by an Israeli company being the Company or any of
its Affiliates, and (ii) individuals who are serving and are engaged personally (and not through an entity) as “office holders” by such an Israeli
company), but may not be granted to a Controlling Shareholder (“Eligible 102 Grantees”). Eligible 102 Grantees may receive only 102 Awards,
which may either be granted to a Trustee or granted under Section 102 of the Ordinance without a Trustee.
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9.4. 102 Award Grant Date.
9.4.1 Each 102 Award will be deemed granted on the date determined by the Committee, subject to Section 9.4.2, provided that (i) the
Grantee has signed all documents required by the Company or pursuant to Applicable Law, and (ii) with respect to 102 Trustee Award, the
Company has provided all applicable documents to the Trustee in accordance with the guidelines published by the ITA, and if an agreement is not
signed and delivered by the Grantee within 90 days from the date determined by the Committee (subject to Section 9.4.2), then such 102 Trustee
Award shall be deemed granted on such later date as such agreement is signed and delivered and on which the Company has provided all
applicable documents to the Trustee in accordance with the guidelines published by the ITA. In the case of any contradiction, this provision and
the date of grant determined pursuant hereto shall supersede and be deemed to amend any date of grant indicated in any corporate resolution or
Award Agreement.
9.4.2 Unless otherwise permitted by the Ordinance, any grants of 102 Trustee Awards that are made on or after the date of the adoption of
this Plan or an amendment to this Plan, as the case may be, that may become effective only at the expiration of thirty (30) days after the filing of
this Plan or any amendment thereof (as the case may be) with the ITA in accordance with the Ordinance shall be conditional upon the expiration of
such 30-day period, such condition shall be read and is incorporated by reference into any corporate resolutions approving such grants and into
any Award Agreement evidencing such grants (whether or not explicitly referring to such condition), and the date of grant shall be at the
expiration of such 30-day period, whether or not the date of grant indicated therein corresponds with this Section. In the case of any contradiction,
this provision and the date of grant determined pursuant hereto shall supersede and be deemed to amend any date of grant indicated in any
corporate resolution or Award Agreement.
9.5. 102 Trustee Awards.
9.5.1 Each 102 Trustee Award, each Share issued pursuant to the exercise of any 102 Trustee Award, and any rights granted thereunder,
including bonus shares, shall be issued to and registered in the name of the Trustee and shall be held in trust for the benefit of the Grantee for the
requisite period prescribed by the Ordinance (the “Required Holding Period”) or such longer period as set by the Committee. In the event that the
requirements under Section 102 of the Ordinance to qualify an Award as a 102 Trustee Award are not met, then the Award may be treated as a 102
Non-Trustee Award or 3(9) Award, all in accordance with the provisions of the Ordinance. After expiration of the Required Holding Period, the
Trustee may release such 102 Trustee Awards and any such Shares, provided that (i) the Trustee has received an acknowledgment from the ITA
that the Grantee has paid any applicable taxes due pursuant to the Ordinance, or (ii) the Trustee and/or the Company and/or the Employer
withholds all applicable taxes and compulsory payments due pursuant to the Ordinance arising from the 102 Trustee Awards and/or any Shares
issued upon exercise or (if applicable) vesting of such 102 Trustee Awards. The Trustee shall not release any 102 Trustee Awards or Shares issued
upon exercise or (if applicable) vesting thereof prior to the payment in full of the Grantee’s tax and compulsory payments arising from such 102
Trustee Awards and/or Shares or the withholding referred to in (ii) above.
9.5.2 Each 102 Trustee Award shall be subject to the relevant terms of the Ordinance, the Rules and any determinations, rulings or
approvals issued by the ITA, which shall be deemed an integral part of the 102 Trustee Awards and shall prevail over any term contained in this
Plan or Award Agreement that is not consistent therewith. Any provision of the Ordinance, the Rules and any determinations, rulings or approvals
by the ITA not expressly specified in this Plan or Award Agreement that are necessary to receive or maintain any tax benefit pursuant to
Section 102 of the Ordinance shall be binding on the Grantee. Any Grantee granted a 102 Trustee Awards shall comply with the Ordinance and the
terms and conditions of the trust agreement entered into between the Company and the Trustee. The Grantee shall execute any and all documents
that the Company and/or its Affiliates and/or the Trustee determine from time to time to be necessary in order to comply with the Ordinance and
the Rules.
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9.5.3 During the Required Holding Period, the Grantee shall not release from trust or sell, assign, transfer or give as collateral, the Shares
issuable upon the exercise or (if applicable) vesting of a 102 Trustee Awards and/or any securities issued or distributed with respect thereto, until
the expiration of the Required Holding Period. Notwithstanding the above, if any such sale, release or other action occurs during the Required
Holding Period it may result in adverse tax consequences to the Grantee under Section 102 of the Ordinance and the Rules, which shall apply to
and shall be borne solely by such Grantee. Subject to the foregoing, the Trustee may, pursuant to a written request from the Grantee, but subject to
the terms of this Plan, release and transfer such Shares to a designated third party, provided that both of the following conditions have been
fulfilled prior to such release or transfer: (i) payment has been made to the ITA of all taxes and compulsory payments required to be paid upon the
release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and the Company, and (ii) the Trustee has
received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of
the Company’s corporate documents, any agreement governing the Shares, this Plan, the Award Agreement and any Applicable Law.
9.5.4 If a 102 Trustee Award is exercised or (if applicable) vested, the Shares issued upon such exercise or (if applicable) vesting shall be
issued in the name of the Trustee for the benefit of the Grantee.
9.5.5 Upon or after receipt of a 102 Trustee Award, if required, the Grantee may be required to sign an undertaking to release the Trustee
from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to this Plan, or any 102
Trustee Awards or Share granted to such Grantee thereunder.
9.6. 102 Non-Trustee Awards. The foregoing provisions of this Section 9 relating to 102 Trustee Awards shall not apply with respect to 102 Non-
Trustee Awards, which shall, however, be subject to the relevant provisions of Section 102 of the Ordinance and the applicable Rules. The Committee may
determine that 102 Non-Trustee Awards, the Shares issuable upon the exercise or (if applicable) vesting of a 102 Non-Trustee Awards and/or any securities
issued or distributed with respect thereto, shall be allocated or issued to the Trustee, who shall hold such 102 Non-Trustee Awards and all accrued rights
thereon (if any), in trust for the benefit of the Grantee and/or the Company, as the case may be, until the full payment of tax arising from the 102 Non-
Trustee Awards, the Shares issuable upon the exercise or (if applicable) vesting of a 102 Non-Trustee Awards and/or any securities issued or distributed
with respect thereto. The Company may choose, alternatively, to force the Grantee to provide it with a guarantee or other security, to the satisfaction of
each of the Trustee and the Company, until the full payment of the applicable taxes.
9.7. Written Grantee Undertaking. To the extent and with respect to any 102 Trustee Award, and as required by Section 102 of the Ordinance and
the Rules, by virtue of the receipt of such Award, the Grantee is deemed to have provided, undertaken and confirmed the following written undertaking
(and such undertaking is deemed incorporated into any documents signed by the Grantee in connection with the employment or service of the Grantee
and/or the grant of such Award), which undertaking shall be deemed to apply and relate to all 102 Trustee Awards granted to the Grantee, whether under
this Plan or other plans maintained by the Company, and whether prior to or after the date hereof.
9.7.1 The Grantee shall comply with all terms and conditions set forth in Section 102 of the Ordinance with regard to the “Capital Gain
Track” or the “Ordinary Income Track”, as applicable, and the applicable rules and regulations promulgated thereunder, as amended from time to
time;
9.7.2 The Grantee is familiar with, and understands the provisions of, Section 102 of the Ordinance in general, and the tax arrangement
under the “Capital Gain Track” or the “Ordinary Income Track” in particular, and its tax consequences; the Grantee agrees that the 102 Trustee
Awards and Shares that may be issued upon exercise or (if applicable) vesting of the 102 Trustee Awards (or otherwise in relation to the 102
Trustee Awards), will be held by the Trustee appointed pursuant to Section 102 of the Ordinance for at least the duration of the “Holding Period”
(as such term is defined in Section 102) under the “Capital Gain Track” or the “Ordinary Income Track”, as applicable. The Grantee understands
that any release of such 102 Trustee Awards or Shares from trust, or any sale of the Share prior to the termination of the Holding Period, as defined
above, will result in taxation at marginal tax rate, in addition to deductions of appropriate social security, health tax contributions or other
compulsory payments; and
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9.7.3 The Grantee agrees to the trust agreement signed between the Company, the Employer and the Trustee appointed pursuant to
Section 102 of the Ordinance.
10. 3(I) AWARDS.
Awards granted pursuant to this Section 10 are intended to constitute 3(9) Awards and shall be granted subject to the general terms and conditions specified
in Section 6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or regulations. In
the event of any inconsistency or contradictions between the provisions of this Section 10 and the other terms of this Plan, this Section 10 shall prevail.
10.1. To the extent required by the Ordinance or the ITA or otherwise deemed by the Committee to be advisable, the 3(i) Awards and/or any shares
or other securities issued or distributed with respect thereto granted pursuant to this Plan shall be issued to a Trustee nominated by the Committee in
accordance with the provisions of the Ordinance or the terms of a trust agreement, as applicable. In such event, the Trustee shall hold such Awards and/or
other securities issued or distributed with respect thereto in trust, until exercised or (if applicable) vested by the Grantee and the full payment of tax arising
therefrom, pursuant to the Company’s instructions from time to time as set forth in a trust agreement, which will have been entered into between the
Company and the Trustee. If determined by the Board or the Committee, and subject to such trust agreement, the Trustee will also hold the shares issuable
upon exercise or (if applicable) vesting of the 3(i) Awards, as long as they are held by the Grantee. If determined by the Board or the Committee, and
subject to such trust agreement, the Trustee shall be responsible for withholding any taxes to which a Grantee may become liable upon issuance of Shares,
whether due to the exercise or (if applicable) vesting of Awards.
10.2. Shares pursuant to a 3(9) Award shall not be issued, unless the Grantee delivers to the Company payment in cash or by bank check or such
other form acceptable to the Committee of all withholding taxes due, if any, on account of the Grantee acquired Shares under the Award or gives other
assurance satisfactory to the Committee of the payment of those withholding taxes.
11. RESTRICTED SHARES.
The Committee may award Restricted Shares to any eligible Grantee, including under Section 102 of the Ordinance. Each Award of Restricted Shares
under this Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Restricted Share Agreement”), in such form as the
Committee shall from time to time approve. The Restricted Shares shall be subject to all applicable terms of this Plan, which in the case of Restricted
Shares granted under Section 102 of the Ordinance shall include Section 9 hereof, and may be subject to any other terms that are not inconsistent with this
Plan. The provisions of the various Restricted Shares Agreements entered into under this Plan need not be identical. The Restricted Share Agreement shall
comply with and be subject to Section 6 and the following terms and conditions, unless otherwise specifically provided in such Agreement and not
inconsistent with this Plan or Applicable Law:
11.1. Purchase Price. Section 6.4 shall not apply. Each Restricted Shares Agreement shall state an amount of Exercise Price to be paid by the
Grantee, if any, in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may include payment in cash or, subject
to the Committee’s approval, by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the
Committee.
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11.2. Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the
laws of descent and distribution (in which case they shall be transferred subject to all restrictions then or thereafter applicable thereto), until such Restricted
Shares shall have vested (the period from the date on which the Award is granted until the date of vesting of the Restricted Shares thereunder being referred
to herein as the “Restricted Period”). The Committee may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as
it deems appropriate, including the satisfaction of performance criteria (which, in case of 102 Trustee Awards, may be subject to obtaining a specific tax
ruling or determination from the ITA). Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on
investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee or pursuant to
the provisions of any Company policy required under mandatory provisions of Applicable Law. Certificates for shares issued pursuant to Restricted Shares
Awards, if issued, shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares in contravention of such
restrictions shall be null and void and without effect. Such certificates may, if so determined by the Committee, be held in escrow by an escrow agent
appointed by the Committee, or, if a Restricted Shares Award is made pursuant to Section 102 of the Ordinance, by the Trustee. In determining the
Restricted Period of an Award the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded
Restricted Shares on successive anniversaries of the date of such Award. To the extent required by the Ordinance or the ITA, the Restricted Shares issued
pursuant to Section 102 of the Ordinance shall be issued to the Trustee in accordance with the provisions of the Ordinance and the Restricted Shares shall
be held for the benefit of the Grantee for at least the Required Holding Period.
11.3. Forfeiture; Repurchase. Subject to such exceptions as may be determined by the Committee, if the Grantee’s continuous employment with or
service to the Company or any Affiliate thereof shall terminate (such that Grantee is no longer a Service Provider of neither the Company nor any Affiliate
thereof) for any reason prior to the expiration of the Restricted Period of an Award or prior to the timely payment in full of the Exercise Price of any
Restricted Shares, any Restricted Shares remaining subject to vesting or with respect to which the purchase price has not been paid in full, shall thereupon
be forfeited, transferred to, and redeemed, repurchased or cancelled by, as the case may be, in any manner as set forth in Section 6.6.2(i) through (v),
subject to Applicable Law and the Grantee shall have no further rights with respect to such Restricted Shares.
11.4. Ownership. During the Restricted Period the Grantee shall possess all incidents of ownership of such Restricted Shares, subject to
Section 6.10 and Section 11.2, including the right to vote and receive dividends with respect to such Shares. All securities, if any, received by a Grantee
with respect to Restricted Shares as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the
restrictions applicable to the original Award.
12. RESTRICTED SHARE UNITS.
An RSU is an Award covering a number of Shares that is settled, if vested and (if applicable) exercised, by issuance of those Shares. An RSU may be
awarded to any eligible Grantee, including under Section 102 of the Ordinance. The Award Agreement relating to the grant of RSUs under this Plan (the
“Restricted Share Unit Agreement”), shall be in such form as the Committee shall from time to time approve. The RSUs shall be subject to all applicable
terms of this Plan, which in the case of RSUs granted under Section 102 of the Ordinance shall include Section 9 hereof, and may be subject to any other
terms that are not inconsistent with this Plan. The provisions of the various Restricted Share Unit Agreements entered into under this Plan need not be
identical. RSUs may be granted in consideration of a reduction in the recipient’s other compensation.
12.1. Exercise Price. No payment of Exercise Price shall be required as consideration for RSUs, unless included in the Award Agreement or as
required by Applicable Law (including, Section 304 of the Companies Law), and Section 6.4 shall apply, if applicable.
12.2. Shareholders’ Rights. The Grantee shall not possess or own any ownership rights in the Shares underlying the RSUs and no rights as a
shareholder shall exist prior to the actual issuance of Shares in the name of the Grantee.
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12.3. Settlements of Awards. Settlement of vested RSUs shall be made in the form of Shares. Distribution to a Grantee of an amount (or amounts)
from settlement of vested RSUs can be deferred to a date after vesting as determined by the Committee. The amount of a deferred distribution may be
increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of Shares underlying such RSUs shall be subject to
adjustment pursuant hereto.
12.4. Section 409A Restrictions. Notwithstanding anything to the contrary set forth herein, any RSUs granted under this Plan that are not exempt
from the requirements of Section 409A of the Code shall contain such restrictions or other provisions so that such RSUs will comply with the requirements
of Section 409A of the Code, if applicable to the Company. Such restrictions, if any, shall be determined by the Committee and contained in the Restricted
Share Unit Agreement evidencing such RSU. For example, such restrictions may include a requirement that any Shares that are to be issued in a year
following the year in which the RSU vests must be issued in accordance with a fixed, pre-determined schedule.
13. OTHER SHARE OR SHARE-BASED AWARDS.
13.1. The Committee may grant other Awards under this Plan pursuant to which Shares (which may, but need not, be Restricted Shares pursuant to
Section 11 hereof), cash (in settlement of Share-based Awards) or a combination thereof, are or may in the future be acquired or received, or Awards
denominated in stock units, including units valued on the basis of measures other than market value.
13.2. The Committee may also grant stock appreciation rights without the grant of an accompanying option, which rights shall permit the Grantees
to receive, at the time of any exercise of such rights, cash equal to the amount by which the Fair Market Value of the Shares in respect to which the right
was granted is so exercised exceeds the exercise price thereof. The exercise price of any such stock appreciation right granted to a Grantee who is subject to
U.S. federal income tax shall be determined in compliance with Section 7.2.
13.3. Such other Share-based Awards as set forth above may be granted alone, in addition to, or in tandem with any Award of any type granted
under this Plan (without any obligation or assurance that that such Share-based Awards will be entitled to tax benefits under Applicable Law or to the same
tax treatment as other Awards under this Plan).
14. EFFECT OF CERTAIN CHANGES.
14.1. General. In the event of a division or subdivision of the outstanding share capital of the Company, any distribution of bonus shares (stock
split), consolidation or combination of share capital of the Company (reverse stock split), reclassification with respect to the Shares or any similar
recapitalization events (each, a “Recapitalization”), a merger (including, a reverse merger and a reverse triangular merger), consolidation, amalgamation or
like transaction of the Company with or into another corporation, a reorganization (which may include a combination or exchange of shares, spin-off or
other corporate divestiture or division, or other similar occurrences, the Committee shall make, without the need for a consent of any holder of an Award,
such adjustments as determined by the Committee to be appropriate, in its discretion, in order to adjust (i) the number and class of shares reserved and
available for grants of Awards, (ii) the number and class of shares covered by outstanding Awards, (iii) the Exercise Price per share covered by any Award,
(iv) the terms and conditions concerning vesting and exercisability and the term and duration of the outstanding Awards, and (v) the type or class of
security, asset or right underlying the Award (which need not be only that of the Company, and may be that of the surviving corporation or any affiliate
thereof or such other entity party to any of the above transactions), and (vi) any other terms of the Award that in the opinion of the Committee should be
adjusted. Any fractional shares resulting from such adjustment shall be treated as determined by the Committee, and in the absence of such determination
shall be rounded to the nearest whole share, and the Company shall have no obligation to make any cash or other payment with respect to such fractional
shares. No adjustment shall be made by reason of the distribution of subscription rights or rights offering to outstanding shares or other issuance of shares
by the Company, unless the Committee determines otherwise. The adjustments determined pursuant to this Section 14.1 (including a determination that no
adjustment is to be made) shall be final, binding and conclusive.
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14.2. Merger/Sale of Company. In the event of (i) a sale of all or substantially all of the assets of the Company, or a sale (including an exchange)
of all or substantially all of the shares of the Company, to any person, or a purchase by a shareholder of the Company or by an Affiliate of such shareholder,
of all the shares of the Company held by all or substantially all other shareholders or by other shareholders who are not Affiliated with such acquiring
party; (ii) a merger (including, a reverse merger and a reverse triangular merger), consolidation, amalgamation or like transaction of the Company with or
into another corporation; (iii) a scheme of arrangement for the purpose of effecting such sale, merger, consolidation, amalgamation or other transaction; (iv)
approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, or (v) such other transaction or set of circumstances
that is determined by the Board, in its discretion, to be a transaction subject to the provisions of this Section 14.2 excluding any of the foregoing
transactions in clauses (i) through (v) if the Board determines that such transaction should be excluded from the definition hereof and the applicability of
this Section 14.2 (each of the foregoing transactions, a “Merger/Sale”), then, without derogating from the general authority and power of the Board or the
Committee under this Plan, without the Grantee’s consent and action and without any prior notice requirement, the Committee may make, in its sole and
absolute discretion, any determination as to the treatment of Awards, as provided herein:
14.2.1 Unless otherwise determined by the Committee, any Award then outstanding shall be assumed or be substituted by the Company,
or by the successor corporation in such Merger/Sale or by any parent or Affiliate thereof, as determined by the Committee in its discretion (the
“Successor Corporation”), under terms as determined by the Committee or the terms of this Plan applied by the Successor Corporation to such
assumed or substituted Awards.
For the purposes of this Section 14.2.1, the Award shall be considered assumed or substituted if, following a Merger/Sale, the Award confers on
the holder thereof the right to purchase or receive, for each Share underlying an Award immediately prior to the Merger/Sale, either (i) the
consideration (whether shares or other securities, cash or other property, or rights, or any combination thereof) distributed to or received by
holders of Shares in the Merger/Sale for each Share held on the effective date of the Merger/Sale (and if holders were offered a choice or several
types of consideration, the type of consideration as determined by the Committee, which need not be the same type for all Grantees), or (ii)
regardless of the consideration received by the holders of Shares in the Merger/Sale, solely shares or any type of Awards (or their equivalent) of
the Successor Corporation at a value to be determined by the Committee in its discretion, or a certain type of consideration (whether shares or
other securities, cash or other property, or rights, or any combination thereof) as determined by the Committee. Any of the consideration referred
to in the foregoing clauses (i) and (ii) shall be subject to the same vesting and expiration terms of the Awards applying immediately prior to the
Merger/Sale, unless determined by the Committee in its discretion that the consideration shall be subject to different vesting and expiration terms,
or other terms, and the Committee may determine that it be subject to other or additional terms. The foregoing shall not limit the Committee’s
authority to determine, that in lieu of such assumption or substitution of Awards for Awards of the Successor Corporation, such Award will be
substituted for shares or other securities, cash or other property, or rights, or any combination thereof, including as set forth in Section 14.2.2
hereof.
14.2.2 Regardless of whether or not Awards are assumed or substituted, the Committee may (but shall not be obligated to):
14.2.2.1. provide for the Grantee to have the right to exercise the Award in respect of Shares covered by the Award which would
otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine, and the cancellation of all unexercised
Awards (whether vested or unvested) upon or immediately prior to the closing of the Merger/Sale, unless the Committee provides for the Grantee
to have the right to exercise the Award, or otherwise for the acceleration of vesting of such Award, as to all or part of the Shares covered by the
Award which would not otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine;
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14.2.2.2. provide for the cancellation of each outstanding Award at or immediately prior to the closing of such Merger/Sale, and
if and to what extent payment shall be made to the Grantee of an amount in, shares or other securities of the Company, the acquirer or of a
corporation or other business entity which is a party to the Merger/Sale, in cash or other property, in rights, or in any combination thereof, as
determined by the Committee to be fair in the circumstances, and subject to such terms and conditions as determined by the Committee. The
Committee shall have full authority to select the method for determining the payment (being the intrinsic (“spread”) value of the option, Black-
Scholes model or any other method). Inter alia, and without limitation of the following determination being made in other circumstances, the
Committee’s determination may provide that payment shall be set to zero if the value of the Shares is determined to be less than the Exercise
Price, or in respect of Shares covered by the Award which would not otherwise be exercisable or vested, or that payment may be made only in
excess of the Exercise Price; and/or
Committee to be fair in the circumstances.
14.2.2.3. provide that the terms of any Award shall be otherwise amended, modified or terminated, as determined by the
14.2.3 The Committee may, determine: (i) that any payments made in respect of Awards shall be made or delayed to the same extent that
payment of consideration to the holders of the Shares in connection with the Merger/Sale is made or delayed as a result of escrows,
indemnification, earn outs, holdbacks or any other contingencies or conditions; (ii) the terms and conditions applying to the payment made or
payable to the Grantees, including participation in escrow, indemnification, releases, earn-outs, holdbacks or any other contingencies; and (iii) that
any terms and conditions applying under the applicable definitive transaction agreements shall apply to the Grantees (including, appointment and
engagement of a shareholders or sellers representative, payment of fees or other costs and expenses associated with such services, indemnifying
such representative, and authorization to such representative within the scope of such representative’s authority in the applicable definitive
transaction agreements).
14.2.4 The Committee may, determine to suspend the Grantee’s rights to exercise any vested portion of an Award for a period of time
prior to the signing or consummation of a Merger/Sale transaction.
14.2.5 Without limiting the generality of this Section 14, if the consideration in exchange for Awards in a Merger/Sale includes any
securities and due receipt thereof by any Grantee (or by the Trustee for the benefit of such Grantee) may require under applicable law (i) the
registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (ii) the provision to
any Grantee of any information under the Securities Act or any other securities laws, then the Committee may determine that the Grantee shall be
paid in lieu thereof, against surrender of the Shares or cancellation of any other Awards, an amount in cash or other property, or rights, or any
combination thereof, as determined by the Committee to be fair in the circumstances, and subject to such terms and conditions as determined by
the Committee. Nothing herein shall entitle any Grantee to receive any form of consideration that such Grantee would be ineligible to receive as a
result of such Grantee’s failure to satisfy (in the Committee’s sole determination) any condition, requirement or limitation that is generally
applicable to the Company’s shareholders, or that is otherwise applicable under the terms of the Merger/Sale, and in such case, the Committee
shall determine the type of consideration and the terms applying to such Grantees.
14.2.6 Neither the authorities and powers of the Committee under this Section 14.2, nor the exercise or implementation thereof, shall (i)
be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as, inter
alia, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan,
nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or
determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan, and
may be effected without consent of any Grantee and without any liability to the Company or its Affiliates or to its or their respective officers,
directors, employees and representatives and the respective successors and assigns of any of the foregoing. The Committee need not take the same
action with respect to all Awards or with respect to all Service Providers. The Committee may take different actions with respect to the vested and
unvested portions of an Award. The Committee may determine an amount or type of consideration to be received or distributed in a Merger/Sale
which may differ as among the Grantees, and as between the Grantees and any other holders of shares of the Company.
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14.2.7 The Committee may determine that upon a Merger/Sale any Shares held by Grantees (or for Grantee’s benefit) are sold in
accordance with instructions issued by the Committee in connection with such Merger/Sale, which shall be final, conclusive and binding on all
Grantees.
14.2.8 All of the Committee’s determinations pursuant to this Section 14 shall be at its sole and absolute discretion, and shall be final,
conclusive and binding on all Grantees (including, for clarity, as it relates to Shares issued upon exercise or vesting of any Awards or that are
Awards, unless otherwise determined by the Committee) and without any liability to the Company or its Affiliates, or to their respective officers,
directors, employees, shareholders and representatives, and the respective successors and assigns of any of the foregoing, in connection with the
method of treatment, chosen course of action or determinations made hereunder.
14.2.9 If determined by the Committee, the Grantees shall be subject to the definitive agreement(s) in connection with the Merger/Sale as
applying to holders of Shares including, such terms, conditions, representations, undertakings, liabilities, limitations, releases, indemnities,
appointing and indemnifying shareholders/sellers representative, participating in transaction expenses, shareholders/sellers representative expense
fund and escrow arrangement, in each case as determined by the Committee. Each Grantee shall execute (and authorizes any person designated by
the Company to so execute, as well as (if applicable) the Trustee holding any Shares for the Grantee’s behalf) such separate agreement(s) or
instruments as may be requested by the Company, the Successor Corporation or the acquirer in connection with such in such Merger/Sale or
otherwise under or for the purpose of implementing this Section 14.2, and in the form required by them. The execution of such separate
agreement(s) may be a condition to the receipt of assumed or substituted Awards, payment in lieu of the Award, the exercise of any Award or
otherwise to be entitled to benefit from shares or other securities, cash or other property, or rights, or any combination thereof, pursuant to this
Section 14.2 (and the Company (and, if applicable, the Trustee) may exercise its authorization above and sign such agreement on behalf of the
Grantee or subject the Grantee to the provisions of such agreements). Without limitation of the foregoing, the proxy pursuant to Section 6.10
includes an authorization of the holder of such proxy to sign, by and on behalf of any Grantee, such documents and agreements required to be
signed under this Section 14.2.
14.3. Reservation of Rights. Except as expressly provided in this Section 14 (if any), the Grantee of an Award hereunder shall have no rights by
reason of any Recapitalization of shares of any class, any increase or decrease in the number of shares of any class, or any dissolution, liquidation,
reorganization (which may include a combination or exchange of shares, spin-off or other corporate divestiture or division, or other similar occurrences),
Merger/Sale. Any issue by the Company of shares of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number, type or price of shares subject to an Award. The grant of an Award pursuant to this Plan shall
not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business
structures or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets or engage in any similar transactions.
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15. NON-TRANSFERABILITY OF AWARDS; SURVIVING BENEFICIARY.
15.1. All Awards granted under this Plan by their terms shall not be transferable other than by will or by the laws of descent and distribution,
unless otherwise determined by the Committee or under this Plan, provided that with respect to Shares issued upon exercise of Awards, Shares issued upon
the vesting of Awards or Awards that are Shares, the restrictions on transfer shall be the restrictions referred to in Section 16 (Conditions upon Issuance of
Shares) hereof. Subject to the above provisions, the terms of such Award, this Plan and any applicable Award Agreement shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of such Grantee. Awards may be exercised or otherwise realized, during the lifetime of the
Grantee, only by the Grantee or by his guardian or legal representative, to the extent provided for herein. Any transfer of an Award not permitted hereunder
(including transfers pursuant to any decree of divorce, dissolution or separate maintenance, any property settlement, any separation agreement or any other
agreement with a spouse) and any grant of any interest in any Award to, or creation in any way of any direct or indirect interest in any Award by, any party
other than the Grantee shall be null and void and shall not confer upon any party or person, other than the Grantee, any rights. A Grantee may file with the
Committee a written designation of a beneficiary, who shall be permitted to exercise such Grantee’s Award or to whom any benefit under this Plan is to be
paid, in each case, in the event of the Grantee’s death before he or she fully exercises his or her Award or receives any or all of such benefit, on such form
as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Grantee,
the executor or administrator of the Grantee’s estate shall be deemed to be the Grantee’s beneficiary. Notwithstanding the foregoing, upon the request of the
Grantee and subject to Applicable Law the Committee, at its sole discretion, may permit the Grantee to transfer the Award to a trust whose beneficiaries are
the Grantee and/or the Grantee’s immediate family members (all or several of them).
15.2. Notwithstanding any other provisions of the Plan to the contrary, no Incentive Stock Option may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or in accordance with a beneficiary designation pursuant
to Section 15.1. Further, all Incentive Stock Options granted to a Grantee shall be exercisable during his or her lifetime only by such Grantee.
15.3. As long as the Shares are held by the Trustee in favor of the Grantee, all rights possessed by the Grantee over the Shares are personal, and
may not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.
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15.4. If and to the extent a Grantee is entitled to transfer an Award and/or Shares underlying an Award in accordance with the terms of the Plan
and any other applicable agreements, such transfer shall be subject (in addition, to any other conditions or terms applying thereto) to receipt by the
Company from such proposed transferee of a written instrument, on a form reasonably acceptable to the Company, pursuant to which such proposed
transferee agrees to be bound by all provisions of the Plan and any other applicable agreements, including without limitation, any restrictions on transfer of
the Award and/or Shares set forth herein (however, failure to so deliver such instrument to the Company as set forth above shall not derogate from all such
provisions applying on any transferee).
15.5. The provisions of this Section 15 shall apply to the Grantee and to any purchaser, assignee or transferee of any Shares.
16. CONDITIONS UPON ISSUANCE OF SHARES; GOVERNING PROVISIONS.
16.1. Legal Compliance. The grant of Awards and the issuance of Shares upon exercise or settlement of Awards shall be subject to compliance
with all Applicable Law as determined by the Company, including, applicable requirements of federal, state and foreign law with respect to such securities.
The Company shall have no obligations to issue Shares pursuant to the exercise or settlement of an Award and Awards may not be exercised or settled, if
the issuance of Shares upon exercise or settlement would constitute a violation of any Applicable Law as determined by the Company, including, applicable
federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may
then be listed. In addition, no Award may be exercised unless (i) a registration statement under the Securities Act or equivalent law in another jurisdiction
shall at the time of exercise or settlement of the Award be in effect with respect to the shares issuable upon exercise of the Award, or (ii) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Award may be issued in accordance with the terms of an applicable exemption from
the registration requirements of the Securities Act or equivalent law in another jurisdiction. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, if any, deemed by the Company to be necessary to the lawful issuance and sale of any Shares hereunder, and the
inability to issue Shares hereunder due to non-compliance with any Company policies with respect to the sale of Shares, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite authority or compliance shall not have been obtained or achieved. As
a condition to the exercise of an Award, the Company may require the person exercising such Award to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any Applicable Law or regulation and to make any representation or warranty with respect thereto as may be
requested by the Company, including to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, all in form and content specified by the Company.
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16.2. Provisions Governing Shares. Shares issued pursuant to an Award shall be subject to this Plan (unless otherwise determined by the
Committee), and shall be subject to the Articles of Association of the Company, any limitation, restriction or obligation included in any shareholders
agreement applicable to all or substantially all of the holders of shares (regardless of whether or not the Grantee is a formal party to such shareholders
agreement), any other governing documents of the Company, all policies, manuals and internal regulations adopted by the Company from time to time, in
each case, as may be amended from time to time, including any provisions included therein concerning restrictions or limitations on disposition of Shares
(such as, but not limited to, right of first refusal and lock up/market stand-off) or grant of any rights with respect thereto, forced sale and bring along/drag
along provisions, any provisions concerning restrictions on the use of inside information and other provisions deemed by the Company to be appropriate in
order to ensure compliance with Applicable Law. Each Grantee shall execute (and authorizes any person designated by the Company to so execute, as well
as (if applicable) the Trustee holding any Shares for the Grantee’s behalf) such separate agreement(s) as may be requested by the Company relating to
matters set forth in or otherwise for the purpose of implementing this Section 16.2. The execution of such separate agreement(s) may be a condition by the
Company to the exercise of any Award and the Company may exercise its authorization above and sign such agreement on behalf of the Grantee or subject
the Grantee to the provisions of such agreements.
16.3. Share Purchase Transactions; Forced Sale. In the event that the Board approves a Merger/Sale effected by way of a forced or compulsory
sale (whether pursuant to the Company’s Articles of Association or pursuant to Section 341 of the Companies Law or any Shareholders Agreement or
otherwise) or in the event of a transaction for the sale of all shares of the Company, then, without derogating from such provisions and in addition thereto,
the Grantee shall be obligated, and shall be deemed to have agreed to the offer to effect the Merger/Sale (and the Shares held by or for the benefit of the
Grantee shall be included in the shares of the Company approving the terms of such Merger/Sale for the purpose of satisfying the required majority), and
shall sell all of the Shares held by or for the benefit of the Grantee on the terms and conditions applying to the holders of Shares, in accordance with the
instructions then issued by the Board, whose determination shall be final. No Grantee shall contest, bring any claims or demands, or exercise any appraisal
or dissenters’ rights related to any of the foregoing. Each Grantee shall execute (and authorizes any person designated by the Company to so execute, as
well as (if applicable) the Trustee holding any Shares for the Grantee’s behalf) such documents and agreements, as may be requested by the Company
relating to matters set forth in or otherwise for the purpose of implementing this Section 16.3. The execution of such separate agreement(s) may be a
condition by the Company to the exercise of any Award and the Company (and, if applicable, the Trustee) may exercise its authorization above and sign
such agreement on behalf of the Grantee or subject the Grantee to the provisions of such agreements. Without limitation of the foregoing, the proxy
pursuant to Section 6.10 includes an authorization of the holder of such proxy to sign, by and on behalf of any Grantee, such documents and agreements as
are required to affect the sale of Shares in connection with such Merger/Sale and waivers of any contest, claims or demands, or any appraisal or dissenters’
rights.
16.4. Data Privacy; Data Transfer. Information related to Grantees and Awards hereunder, as shall be received from Grantee or others, and/or held
by, the Company or its Affiliates from time to time, and which information may include sensitive and personal information related to Grantees
(“Information”), will be used by the Company or its Affiliates (or third parties appointed by any of them, including the Trustee) to comply with any
applicable legal requirement, or for administration of the Plan as they deems necessary or advisable, or for the respective business purposes of the
Company or its Affiliates (including in connection with transactions related to any of them). The Company and its Affiliates shall be entitled to transfer the
Information among the Company or its Affiliates, and to third parties for the purposes set forth above, which may include persons located abroad
(including, any person administering the Plan or providing services in respect of the Plan or in order to comply with legal requirements, or the Trustee, their
respective officers, directors, employees and representatives, and the respective successors and assigns of any of the foregoing), and any person so
receiving Information shall be entitled to transfer it for the purposes set forth above. The Company shall use commercially reasonable efforts to ensure that
the transfer of such Information shall be limited to the reasonable and necessary scope. By receiving an Award hereunder, Grantee acknowledges and
agrees that the Information is provided at Grantee’s free will and Grantee consents to the storage and transfer of the Information as set forth above.
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17. MARKET STAND-OFF.
17.1. In connection with any underwritten public offering of equity securities of the Company pursuant to an effective registration statement filed
under the Securities Act or equivalent law of another jurisdiction, the Grantee shall not directly or indirectly, without the prior written consent of the
Company or its underwriters, (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares or other Awards, any securities of the
Company (whether or not such Shares were acquired under this Plan), or any securities convertible into or exercisable or exchangeable (directly or
indirectly) for Shares or securities of the Company and any other shares or securities issued or distributed in respect thereto or in substitution thereof
(collectively, “Securities”), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Securities, whether any such transaction described in clauses (i) or (ii) is to be settled by delivery of Securities, in cash or otherwise.
The foregoing provisions of this Section 17.1 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. Such
restrictions (the “Market Stand-Off”) shall be in effect for such period of time (the “Market Stand-Off Period”): (A) following the first public filing of the
registration statement relating to the underwritten public offering until the expiration of 180 days following the effective date of such registration statement
relating to the Company’s initial public offering or 90 days following the effective date of such registration statement relating to any other public offering,
in each case, provided, however, that if (1) during the last 17 days of the initial Market Stand-Off Period, the Company releases earnings results or
announces material news or a material event or (2) prior to the expiration of the initial Market Stand-Off Period, the Company announces that it will release
earnings results during the 15-day period following the last day of the initial Market Stand-Off Period, then in each case the Market Stand-Off Period will
be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the
material news or material event; or (B) such other period as shall be requested by the Company or the underwriters. Notwithstanding anything herein to the
contrary, if the underwriter(s) and the Company agree on a termination date of the Market Stand-Off Period in the event of failure to consummate a certain
public offering, then such termination shall apply also to the Market Stand-Off Period hereunder with respect to that particular public offering.
17.2. In the event of a subdivision of the outstanding share capital of the Company, the distribution of any securities (whether or not of the
Company), whether as bonus shares or otherwise, and whether as dividend or otherwise, a recapitalization, a reorganization (which may include a
combination or exchange of shares or a similar transaction affecting the Company’s outstanding securities without receipt of consideration), a
consolidation, a spin-off or other corporate divestiture or division, a reclassification or other similar occurrence, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off.
17.3. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this
Plan until the end of the applicable Market Stand-Off period.
17.4. The underwriters in connection with a registration statement so filed are intended third party beneficiaries of this Section 17 and shall have
the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Grantee shall execute such separate agreement(s) as
may be requested by the Company or the underwriters in connection with such registration statement and in the form required by them, relating to Market
Stand-Off (which need not be identical to the provisions of this Section 17, and may include such additional provisions and restrictions as the underwriters
deem advisable) or that are necessary to give further effect thereto. The execution of such separate agreement(s) may be a condition by the Company to the
exercise of any Award.
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17.5. Without derogating from the above provisions of this Section 17 or elsewhere in this Plan, the provisions of this Section 17 shall apply to the
Grantee and the Grantee’s heirs, legal representatives, successors, assigns, and to any purchaser, assignee or transferee of any Awards or Shares.
18. AGREEMENT REGARDING TAXES; DISCLAIMER.
18.1. If the Company shall so require, as a condition of exercise or (if applicable) vesting of an Award, the release of Shares by the Trustee or the
vesting or settlement of an Award, a Grantee shall agree that, no later than the date of such occurrence, the Grantee will pay to the Company (or the
Trustee, as applicable) or make arrangements satisfactory to the Company and the Trustee (if applicable) regarding payment of any applicable taxes and
compulsory payments of any kind required by Applicable Law to be withheld or paid.
18.2. TAX LIABILITY. ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE GRANT OF
ANY AWARDS OR THE EXERCISE OR (IF APPLICABLE) VESTING THEREOF, THE SALE OR DISPOSITION OF ANY SHARES GRANTED
HEREUNDER OR ISSUED UPON EXERCISE OR (IF APPLICABLE) THE VESTING OF ANY AWARD, THE ASSUMPTION, SUBSTITUTION,
CANCELLATION OR PAYMENT IN LIEU OF AWARDS OR FROM ANY OTHER ACTION IN CONNECTION WITH THE FOREGOING
(INCLUDING WITHOUT LIMITATION ANY TAXES AND COMPULSORY PAYMENTS, SUCH AS SOCIAL SECURITY OR HEALTH TAX
PAYABLE BY THE GRANTEE OR THE COMPANY IN CONNECTION THEREWITH) SHALL BE BORNE AND PAID SOLELY BY THE
GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY, ITS SUBSIDIARIES AND AFFILIATES AND THE TRUSTEE, AND
SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PAYMENT OR ANY PENALTY,
INTEREST OR INDEXATION THEREON. EACH GRANTEE AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY RULING,
SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT OR ARRANGEMENT WITH ANY TAX AUTHORITY IN
CONNECTION WITH THE FOREGOING WHICH IS APPROVED BY THE COMPANY.
18.3. NO TAX ADVICE. THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES OF RECEIVING, EXERCISING OR DISPOSING OF AWARDS HEREUNDER. THE COMPANY DOES NOT ASSUME ANY
RESPONSIBILITY TO ADVISE THE GRANTEE ON SUCH MATTERS, WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE
GRANTEE.
18.4. TAX TREATMENT. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE OR ASSUME
ANY LIABILITY OR RESPONSIBILITY TO THE EFFECT THAT ANY AWARD SHALL QUALIFY WITH ANY PARTICULAR TAX REGIME OR
RULES APPLYING TO PARTICULAR TAX TREATMENT, OR BENEFIT FROM ANY PARTICULAR TAX TREATMENT OR TAX ADVANTAGE
OF ANY TYPE AND THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) SHALL BEAR NO LIABILITY IN CONNECTION
WITH THE MANNER IN WHICH ANY AWARD IS EVENTUALLY TREATED FOR TAX PURPOSES, REGARDLESS OF WHETHER THE
AWARD WAS GRANTED OR WAS INTENDED TO QUALIFY UNDER ANY PARTICULAR TAX REGIME OR TREATMENT. THIS PROVISION
SHALL SUPERSEDE ANY TYPE OF AWARDS OR TAX QUALIFICATION INDICATED IN ANY CORPORATE RESOLUTION OR AWARD
AGREEMENT, WHICH SHALL AT ALL TIMES BE SUBJECT TO THE REQUIREMENTS OF APPLICABLE LAW. THE COMPANY AND ITS
AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE AND SHALL NOT BE REQUIRED TO TAKE ANY ACTION IN ORDER TO
QUALIFY ANY AWARD WITH THE REQUIREMENT OF ANY PARTICULAR TAX TREATMENT AND NO INDICATION IN ANY DOCUMENT
TO THE EFFECT THAT ANY AWARD IS INTENDED TO QUALIFY FOR ANY TAX TREATMENT SHALL IMPLY SUCH AN UNDERTAKING.
THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE TO REPORT FOR TAX PURPOSES ANY
AWARD IN ANY PARTICULAR MANNER, INCLUDING IN ANY MANNER CONSISTENT WITH ANY PARTICULAR TAX TREATMENT. NO
ASSURANCE IS MADE BY THE COMPANY OR ANY OF ITS AFFILIATES (INCLUDING THE EMPLOYER) THAT ANY PARTICULAR TAX
TREATMENT ON THE DATE OF GRANT WILL CONTINUE TO EXIST OR THAT THE AWARD WOULD QUALIFY AT THE TIME OF
EXERCISE, VESTING OR DISPOSITION THEREOF WITH ANY PARTICULAR TAX TREATMENT. THE COMPANY AND ITS AFFILIATES
(INCLUDING THE EMPLOYER) SHALL NOT HAVE ANY LIABILITY OR OBLIGATION OF ANY NATURE IN THE EVENT THAT AN AWARD
DOES NOT QUALIFY FOR ANY PARTICULAR TAX TREATMENT, REGARDLESS WHETHER THE COMPANY COULD HAVE OR SHOULD
HAVE TAKEN ANY ACTION TO CAUSE SUCH QUALIFICATION TO BE MET AND SUCH QUALIFICATION REMAINS AT ALL TIMES AND
UNDER ALL CIRCUMSTANCES AT THE RISK OF THE GRANTEE. THE COMPANY DOES NOT UNDERTAKE OR ASSUME ANY LIABILITY
TO CONTEST A DETERMINATION OR INTERPRETATION (WHETHER WRITTEN OR UNWRITTEN) OF ANY TAX AUTHORITIES,
INCLUDING IN RESPECT OF THE QUALIFICATION UNDER ANY PARTICULAR TAX REGIME OR RULES APPLYING TO PARTICULAR TAX
TREATMENT. IF THE AWARDS DO NOT QUALIFY UNDER ANY PARTICULAR TAX TREATMENT IT COULD RESULT IN ADVERSE TAX
CONSEQUENCES TO THE GRANTEE.
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18.5. The Company or any Subsidiary or other Affiliate thereof (including the Employer) may take such action as it may deem necessary or
appropriate, in its discretion, for the purpose of or in connection with withholding of any taxes and compulsory payments which the Trustee, the Company
or any Subsidiary or other Affiliate thereof (including the Employer) (or any applicable agent thereof) is required by any Applicable Law to withhold in
connection with any Awards, including, without limitations, any income tax, social benefits, social insurance, health tax, pension, payroll tax, fringe
benefits, excise tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and applicable by law to the
Participant (collectively, “Withholding Obligations”). Such actions may include (i) requiring a Grantees to remit to the Company or the Employer in cash
an amount sufficient to satisfy such Withholding Obligations and any other taxes and compulsory payments, payable by the Company or the Employer in
connection with the Award or the exercise or (if applicable) the vesting thereof; (ii) subject to Applicable Law, allowing the Grantees to surrender Shares to
the Company, in an amount that at such time, reflects a value that the Committee determines to be sufficient to satisfy such Withholding Obligations; (iii)
withholding Shares otherwise issuable upon the exercise of an Award at a value which is determined by the Company to be sufficient to satisfy such
Withholding Obligations; (iv) allowing Grantees to satisfy all or part of the Withholding Obligations by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the
Company or the Trustee; or (iv) any combination of the foregoing. The Company shall not be obligated to allow the exercise or vesting of any Award by or
on behalf of a Grantee until all tax consequences arising therefrom are resolved in a manner acceptable to the Company.
18.6. Each Grantee shall notify the Company in writing promptly and in any event within ten (10) days after the date on which such Grantee first
obtains knowledge of any tax authority inquiry, audit, assertion, determination, investigation, or question relating in any manner to the Awards granted or
received hereunder or Shares issued thereunder and shall continuously inform the Company of any developments, proceedings, discussions and
negotiations relating to such matter, and shall allow the Company and its representatives to participate in any proceedings and discussions concerning such
matters. Upon request, a Grantee shall provide to the Company any information or document relating to any matter described in the preceding sentence,
which the Company, in its discretion, requires.
18.7. With respect to 102 Non-Trustee Options, if the Grantee ceases to be employed by the Company, Parent, Subsidiary or any Affiliate
(including the Employer), the Grantee shall extend to the Company and/or the Employer a security or guarantee for the payment of taxes due at the time of
sale of Shares, all in accordance with the provisions of Section 102 of the Ordinance and the Rules.
18.8. If a Grantee makes an election under Section 83(b) of the Code to be taxed with respect to an Award as of the date of transfer of Shares
rather than as of the date or dates upon which the Grantee would otherwise be taxable under Section 83(a) of the Code, such Grantee shall deliver a copy of
such election to the Company upon or prior to the filing such election with the U.S. Internal Revenue Service. Neither the Company nor any Affiliate
(including the Employer) shall have any liability or responsibility relating to or arising out of the filing or not filing of any such election or any defects in
its construction.
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19. RIGHTS AS A SHAREHOLDER; VOTING AND DIVIDENDS.
19.1. Subject to Section 11.4, a Grantee shall have no rights as a shareholder of the Company with respect to any Shares covered by an Award
until the Grantee shall have exercised or (as applicable) vests in the Award, paid any Exercise Price therefor and becomes the record holder of the subject
Shares. In the case of 102 Awards, the Trustee shall have no rights as a shareholder of the Company with respect to the Shares covered by such Award until
the Trustee becomes the record holder for such Shares for the Grantee’s benefit, and the Grantee shall not be deemed to be a shareholder and shall have no
rights as a shareholder of the Company with respect to the Shares covered by the Award until the date of the release of such Shares from the Trustee to the
Grantee and the transfer of record ownership of such Shares to the Grantee (provided, however, that the Grantee shall be entitled to receive from the
Trustee any cash dividend or distribution made on account of the Shares held by the Trustee for such Grantee’s benefit, subject to any tax withholding and
compulsory payment). No adjustment shall be made for dividends (ordinary or extraordinary, whether in shares or other securities, cash or other property,
or rights, or any combination thereof) or distribution of other rights for which the record date is prior to the date on which the Grantee or Trustee (as
applicable) becomes the record holder of the Shares covered by an Award, except as provided in Section 14 hereof.
19.2. With respect to all Awards issued in the form of Shares hereunder or upon the exercise or (if applicable) the vesting of Awards hereunder,
any and all voting rights attached to such Shares shall be subject to Section 6.10, and the Grantee shall be entitled to receive dividends distributed with
respect to such Shares, subject to the provisions of the Company’s Articles of Association, as amended from time to time, and subject to any Applicable
Law.
19.3. The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other
Applicable Law.
20. NO REPRESENTATION BY COMPANY.
By granting the Awards, the Company is not, and shall not be deemed as, making any representation or warranties to the Grantee regarding the Company,
its business affairs, its prospects or the future value of its Shares and such representations and warranties are hereby disclaimed. The Company shall not be
required to provide to any Grantee any information, documents or material in connection with the Grantee’s considering an exercise of an Award. To the
extent that any information, documents or materials are provided, the Company shall have no liability with respect thereto. Any decision by a Grantee to
exercise an Award shall solely be at the risk of the Grantee.
21. NO RETENTION RIGHTS.
Nothing in this Plan, any Award Agreement or in any Award granted or agreement entered into pursuant hereto shall confer upon any Grantee the right to
continue in the employ of, or be in the service of the Company or any Subsidiary or other Affiliate thereof as a Service Provider or to be entitled to any
remuneration or benefits not set forth in this Plan or such agreement, or to interfere with or limit in any way the right of the Company or any such
Subsidiary or other Affiliate thereof to terminate such Grantee’s employment or service (including, any right of the Company or any of its Affiliates to
immediately cease the Grantee’s employment or service or to shorten all or part of the notice period, regardless of whether notice of termination was given
by the Company or its Affiliates or by the Grantee). Awards granted under this Plan shall not be affected by any change in duties or position of a Grantee,
subject to Sections 6.6 through 6.8. No Grantee shall be entitled to claim and the Grantee hereby waives any claim against the Company or any Subsidiary
or other Affiliate thereof that he or she was prevented from continuing to vest Awards as of the date of termination of his or her employment with, or
services to, the Company or any Subsidiary or other Affiliate thereof. No Grantee shall be entitled to any compensation in respect of the Awards which
would have vested had such Grantee’s employment or engagement with the Company (or any Subsidiary or other Affiliate thereof) not been terminated.
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22. PERIOD DURING WHICH AWARDS MAY BE GRANTED.
Awards may be granted pursuant to this Plan from time to time within a period of ten (10) years from the Effective Date, which period may be extended
from time to time by the Board. From and after such date (as extended) no grants of Awards may be made and this Plan shall continue to be in full force
and effect with respect to Awards or Shares issued thereunder that remain outstanding.
23. AMENDMENT OF THIS PLAN AND AWARDS.
23.1. The Board at any time and from time to time may suspend, terminate, modify or amend this Plan, whether retroactively or prospectively.
Any amendment effected in accordance with this Section shall be binding upon all Grantees and all Awards, whether granted prior to or after the date of
such amendment, and without the need to obtain the consent of any Grantee. No termination or amendment of this Plan shall affect any then outstanding
Award unless expressly provided by the Board.
23.2. Subject to changes in Applicable Law that would permit otherwise, without the approval of the Company’s shareholders, there shall be (i) no
increase in the maximum aggregate number of Shares that may be issued under this Plan as Incentive Stock Options (except by operation of the provisions
of Section 14.1), (ii) no change in the class of persons eligible to receive Incentive Stock Options, and (iii) no other amendment of this Plan that would
require approval of the Company’s shareholders under any Applicable Law. Unless not permitted by Applicable Law, if the grant of an Award is subject to
approval by shareholders, the date of grant of the Award shall be determined as if the Award had not been subject to such approval. Failure to obtain
approval by the shareholders shall not in any way derogate from the valid and binding effect of any grant of an Award that is not an Incentive Stock Option.
23.3. The Board or the Committee at any time and from time to time may modify or amend any Award theretofore granted, including any Award
Agreement, whether retroactively or prospectively.
24. APPROVAL.
24.1. This Plan shall take effect upon its adoption by the Board (the “Effective Date”).
24.2. Solely with respect to grants of Incentive Stock Options, this Plan shall also be subject to shareholders’ approval, within one year of the
Effective Date, by a majority of the votes cast on the proposal at a meeting or a written consent of shareholders (however, if the grant of an Award is
subject to approval by shareholders, the date of grant of the Award shall be determined as if the Award had not been subject to such approval). Failure to
obtain such approval by the shareholders within such period shall not in any way derogate from the valid and binding effect of any grant of an Award,
except that any Options previously granted under this Plan may not qualify as Incentive Stock Options but, rather, shall constitute Nonqualified Stock
Options. Upon approval of this Plan by the shareholders of the Company as set forth above, all Incentive Stock Options granted under this Plan on or after
the Effective Date shall be fully effective as if the shareholders of the Company had approved this Plan on the Effective Date.
24.3. 102 Awards are conditional upon the filing with or approval by the ITA, if required, as set forth in Section 9.4. Failure to so file or obtain
such approval shall not in any way derogate from the valid and binding effect of any grant of an Award, which is not a 102 Award.
25. RULES PARTICULAR TO SPECIFIC COUNTRIES; SECTION 409A.
25.1. Notwithstanding anything herein to the contrary, the terms and conditions of this Plan may be supplemented or amended with respect to a
particular country or tax regime by means of an appendix to this Plan, and to the extent that the terms and conditions set forth in any appendix conflict with
any provisions of this Plan, the provisions of such appendix shall govern. Terms and conditions set forth in such appendix shall apply only to Awards
granted to Grantees under the jurisdiction of the specific country or such other tax regime that is the subject of such appendix and shall not apply to Awards
issued to a Grantee not under the jurisdiction of such country or such other tax regime. The adoption of any such appendix shall be subject to the approval
of the Board or the Committee, and if determined by the Committee to be required in connection with the application of certain tax treatment, pursuant to
applicable stock exchange rules or regulations or otherwise, then also the approval of the shareholders of the Company at the required majority.
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25.2. This Section 25.2 shall only apply to Awards granted to Grantees who are subject to United States Federal income tax.
25.2.1 It is the intention of the Company that no Award shall be deferred compensation subject to Section 409A of the Code unless and to
the extent that the Committee specifically determines otherwise as provided in Section 25.2.2, and the Plan and the terms and conditions of all
Awards shall be interpreted and administered accordingly.
25.2.2 The terms and conditions governing any Awards that the Committee determines will be subject to Section 409A of the Code,
including any rules for payment or elective or mandatory deferral of the payment or delivery of Shares or cash pursuant thereto, and any rules
regarding treatment of such Awards in the event of a Change in Control, shall be set forth in the applicable Award Agreement and shall be
intended to comply in all respects with Section 409A of the Code, and the Plan and the terms and conditions of such Awards shall be interpreted
and administered accordingly.
25.2.3 The Company shall have complete discretion to interpret and construe the Plan and any Award Agreement in any manner that
establishes an exemption from (or compliance with) the requirements of Section 409A of the Code. If for any reason, such as imprecision in
drafting, any provision of the Plan and/or any Award Agreement does not accurately reflect its intended establishment of an exemption from (or
compliance with) Section 409A of the Code, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be
considered ambiguous as to its exemption from (or compliance with) Section 409A of the Code and shall be interpreted by the Company in a
manner consistent with such intent, as determined in the discretion of the Company. If, notwithstanding the foregoing provisions of this
Section 25.2.3, any provision of the Plan or any such agreement would cause a Grantee to incur any additional tax or interest under Section 409A
of the Code, the Company may reform such provision in a manner intended to avoid the incurrence by such Grantee of any such additional tax or
interest; provided that the Company shall maintain, to the extent reasonably practicable, the original intent and economic benefit to the Grantee of
the applicable provision without violating the provisions of Section 409A of the Code. For the avoidance of doubt, no provision of this Plan shall
be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from any Grantee or any other
individual to the Company or any of its affiliates, employees or agents.
25.2.4 Notwithstanding any other provision in the Plan, any Award Agreement, or any other written document establishing the terms and
conditions of an Award, if any Grantee is a “specified employee,” within the meaning of Section 409A of the Code, as of the date of his or her
“separation from service” (as defined under Section 409A of the Code), then, to the extent required by Treasury Regulation Section 1.409A-3(i)(2)
(or any successor provision), any payment made to such Grantee on account of his or her separation from service shall not be made before a date
that is six months after the date of his or her separation from service. The Committee may elect any of the methods of applying this rule that are
permitted under Treasury Regulation Section 1.409A-3(i)(2)(ii) (or any successor provision).
25.2.5 Notwithstanding any other provision of this Section 25.2 to the contrary, although the Company intends to administer the Plan so
that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local, or
non-United States law. The Company shall not be liable to any Grantee for any tax, interest, or penalties the Grantee might owe as a result of the
grant, holding, vesting, exercise, or payment of any Award under the Plan.
26. GOVERNING LAW; JURISDICTION.
This Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Israel, except with respect to matters
that are subject to tax laws, regulations and rules of any specific jurisdiction, which shall be governed by the respective laws, regulations and rules of such
jurisdiction. Certain definitions, which refer to laws other than the laws of such jurisdiction, shall be construed in accordance with such other laws. The
competent courts located in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan and any
Award granted hereunder. By signing any Award Agreement or any other agreement relating to an Award, each Grantee irrevocably submits to such
exclusive jurisdiction.
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27. NON-EXCLUSIVITY OF THIS PLAN.
The adoption of this Plan shall not be construed as creating any limitations on the power or authority of the Company to adopt such other or additional
incentive or other compensation arrangements of whatever nature as the Company may deem necessary or desirable or preclude or limit the continuation of
any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees,
which the Company or any Affiliate now has lawfully put into effect, including any retirement, pension, savings and stock purchase plan, insurance, death
and disability benefits and executive short-term or long-term incentive plans.
28. MISCELLANEOUS.
28.1. Survival. The Grantee shall be bound by and the Shares issued upon exercise or (if applicable) the vesting of any Awards granted hereunder
shall remain subject to this Plan after the exercise or (if applicable) the vesting of Awards, in accordance with the terms of this Plan, whether or not the
Grantee is then or at any time thereafter employed or engaged by the Company or any of its Affiliates.
28.2. Additional Terms. Each Award awarded under this Plan may contain such other terms and conditions not inconsistent with this Plan as may
be determined by the Committee, in its sole discretion.
28.3. Fractional Shares. No fractional Share shall be issuable upon exercise or vesting of any Award and the number of Shares to be issued shall be
rounded down to the nearest whole Share, with in any Share remaining at the last vesting date due to such rounding to be issued upon exercise at such last
vesting date.
28.4. Severability. If any provision of this Plan, any Award Agreement or any other agreement entered into in connection with an Award shall be
determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. In addition, if any particular provision
contained in this Plan, any Award Agreement or any other agreement entered into in connection with an Award shall for any reason be held to be
excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing such provision as to such
characteristic so that the provision is enforceable to fullest extent compatible with Applicable Law as it shall then appear.
28.5. Captions and Titles. The use of captions and titles in this Plan or any Award Agreement or any other agreement entered into in connection
with an Award is for the convenience of reference only and shall not affect the meaning or interpretation of any provision of this Plan or such agreement.
28.6. Prohibition on Executive Officer Loans. Notwithstanding any other provision of the Plan to the contrary, no Grantee who is a member of the
Board or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect
to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged
by the Company in violation of Section 13(k) of the Exchange Act.
28.7. Clawback Provisions. All Awards (including the gross amount of any proceeds, gains or other economic benefit the Grantee actually or
constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to recoupment by
the Company to the extent required to comply with Applicable Law or any policy of the Company (subject to Applicable Law) providing for the
reimbursement of incentive compensation, whether or not such policy was in place at the time of grant of an Award.
* * *
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Exhibit 10.15
November 20, 2017
Dr. Julian Adams
673 Boylston St.
Boston, MA 02116
Dear Julian,
On behalf of Gamida Cell Inc. (the “Company”), I am pleased to offer you the position of Chief Executive Officer. The Company’s offer, as set forth in this
letter agreement, is contingent upon your presentation to the Company of proof of your authorization to work in the United States and the approval of
applicable corporate organs.
The terms of your new position with the Company are as set forth below:
1. Position.
reporting directly to the Company’s Board of Directors (the “Board”).
a. You will be the Chief Executive Officer (“CEO”), responsible for managing the business affairs of the Company and its affiliates,
b. Your duties and responsibilities shall include those normally associated with role of a CEO of a privately held biotech company. Until
the establishment of the Company’s US East Coast Office, you will work from your home office, or at a location as otherwise agreed by you and the
Company, in the Commonwealth of Massachusetts. It is understood that this position will require you to travel regularly within the United States, and
periodically to the headquarters of the Company’s parent company, Gamida Cell Ltd. (the “Parent”).
c. You agree to the best of your ability and experience that you will at all times loyally and conscientiously perform all of the duties and
obligations required of and from you pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Board. It is understood that
by signing this letter agreement you confirm that you are not bound by an agreement, whether formal or informal, oral or written, which conflicts with the
terms of this letter agreement. You further agree that during the term of your employment with the Company, you will devote all of your business time and
attention to the business of the Company. Nothing in this letter agreement will prevent you from accepting speaking or presentation engagements in
exchange for honoraria, or from serving on boards of charitable organizations, provided that such activities do not materially interfere with your obligations
to the Company as described above.
2. Start Date. Subject to fulfillment of any conditions imposed by this letter agreement, you are expected to commence this position with the
Company on November 20, 2017 (as applicable, the “Start Date”).
3. Compensation. You will be paid a monthly gross salary of $41,667, which is equivalent to a gross salary of $500,000 on an annualized basis,
and such compensation shall be paid to you less required and authorized deductions and withholdings (the “Base Salary”). The Base Salary will be
reviewed annually as part of the Company’s normal salary review process.
4. Incentive Bonus. Effective as of January 1, 2018, for each full calendar year of employment, you will be eligible to receive a cash incentive
target gross bonus equal to 40% of your annual gross Base Salary (the “Incentive Bonus”). The Incentive Bonus will be based on the attainment of
performance goals and milestones as shall be determined by the Company’s Board of Directors and set forth in writing.
6. Stock Options.
a. Initial Option Grant. The Board of Directors of Gamida Cell Ltd. (the “Parent Board”), has adopted a Share Incentive Plan (the
“Plan”). The Parent Board will grant you options to purchase 596,574 Ordinary Shares of the Parent (“Options”). The exercise price of these Options will
be determined by the Board and will be equal to the fair market value on the date of the grant. 50% of these Options will vest on the 2-year anniversary of
your employment Start Date, with the balance of the Options vesting at the rate of 1/8th per quarter over the next 24 months following such 2-year
anniversary. Vesting will depend on your continued employment with the Company. The Options will be incentive stock options to the maximum extent
allowed by the United States Internal Revenue Code of 1986 and will be subject to the terms and conditions of a relevant stock option plan and of an
Option Agreement, in the form set forth by Parent Board and entered into between you and the Company.
b. Subsequent Option Grants. Subject to the sole discretion of the Parent Board, you may be eligible to receive additional grants of
stock options from time to time in the future, on such new terms and subject to such conditions as the Parent Board shall determine as of the date of any
such grant.
7. Benefits.
a. Paid-time-off. You will be entitled to take three weeks of paid time off in the form of vacation days per calendar year, prorated for
partial years of employment. Please note that accrued but unused vacation time may be carried over from one year into the following year, but at no time
may you accrue more than four weeks of vacation. In addition to such vacation days, the following Company-designated holidays shall be paid days off:
New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Eve, Christmas Day and New Year’s Eve, as well as 5
floating holidays of your choice in coordination with the Company. In addition to vacation days and holidays, you will be entitled to take off sick time in
accordance with Massachusetts law. Accrued but unused sick time may be carried over from one calendar year into the following calendar year, and you
may use up to a maximum of 40 hours per calendar year.
may be updated and amended from time to time.
b. 401K Plan- You will have the option to participate in a Company-sponsored 401k plan in accordance with the terms of such plan, as
c. Health Insurance. Upon the Company’s adoption of a health care plan, you will be eligible to participate in such plan in accordance
with the terms available to similarly situated employees. It is agreed that the Company’s plan shall be comparable to Blue Cross/ Blue Shield PPO
coverage.
d. Disability Coverage. You will be eligible for disability coverage in accordance with the terms of the Company’s applicable plan.
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e. Business Expenses. The Company shall reimburse you for necessary and customary business out-of-pocket expenses incurred by you,
including but not limited to approved home office expenses, in accordance with the Company’s business expense policy, as may be amended from time
to time. Please note that the Company will cover the cost of economy class for domestic travel, and business class for tran-Atlantic flights, in each case as
coordinated with the Company.
8. Any compensation to which you are entitled hereunder shall be paid to you less required and authorized deductions and withholdings.
9. Confidential Information and Invention Assignment Agreement. Your acceptance of this offer and commencement of employment with the
Company is contingent upon the execution, and delivery to me by no later than the Start Date, of the Company’s Confidentiality, Unfair Competition,
and Ownership of Inventions Undertaking, a copy of which is attached to this letter agreement as Schedule A (the “Confidentiality/IP Undertaking”).
10. Term of Employment. Your employment with the Company will be for an unspecified period of time. The Company and you acknowledge
and agree that your employment is and shall continue to be at-will, and that notwithstanding any other obligation under this letter agreement, your
employment with the Company may be terminated for any reason by either you or the Company at any time, upon one month’s written notice. It is
understood that the Company shall have the right to determine whether or not you will actively work for the Company during any relevant notice
period. Notwithstanding the foregoing to the contrary, the Company shall have the right to terminate your employment immediately without notice for
Cause. For purposes of this letter agreement, “Cause” shall be defined as: your (i) commission of fraud, embezzlement, gross negligence, malfeasance, an
act or acts constituting a felony under the laws of the United States or any state thereof, or a willful or negligent act or omission which results in an
assessment of a civil or criminal penalty against you, the Company or its affiliates; (ii) willful or continued failure to substantially perform your CEO duties
pursuant to this letter agreement, after having received written notice of such failure to perform, and (if curable) the opportunity to cure such failure for a
period of at least 30 days; or (iii) violation of the terms of this letter agreement or of the Confidentiality/IP Undertaking attached as Schedule A.
11. Post-Termination Severance Pay and Continued Health Coverage. Upon your termination of employment, you will be entitled to the
benefits below (i) for a period of eight months following the date on which your employment is terminated, if such termination is by the Company without
Cause, or if you resign from the Company on account of Good Reason (as defined below), and (ii) for a period of three months following the date on which
your employment is terminated, if you resign not for Good Reason after the one year anniversary of the Start Date:
(a) your annual cash incentive target gross bonus (pro-rated for the portion of that year until wyour last day of employment), and
(b) monthly payments equal to (x) the monthly rate of your Base Salary, and (y) the monthly rate of your health insurance premium
(including medical, dental and vision coverage, as applicable) and disability benefit premiums, in each case as in effect on the date of
your termination of employment (both such payments, collectively, the “Severance Pay”).
It is hereby clarified that you shall not be entitled to the Severance Pay in the event that the Company terminates your employment for Cause or if you
resign not for Good Reason on or prior to the one year anniversary of the Start Date. Your entitlement to the Severance Pay shall be dependent upon your
properly executing (and not revoking) a Separation and Release Agreement in a form set forth by the Board.
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12. Change of Control.
a. In the event of a Change of Control of the Company: if your employment is terminated by the Company at any time without Cause, or
if you resign on account of Good Reason, in each case within the 12 months following the closing of such Change in Control, then you will be entitled to a
bonus payment in a gross amount equal to your target annual bonus, to be paid to you within 30 days of your termination of employment, as well as to
accelerated vesting of any options previously granted to you as of such date of Change in Control. For purposes of this letter agreement, “Good
Reason” shall take place if, within 30 days of a material reduction in your duties and obligations at the Company, you notify the Company of such
circumstances qualifying as Good Reason, the Company fails to cure such circumstances within 30 days of receiving such written notice from you, and you
resign within 30 days following the deadline for the Company to cure such failure.
b. For purposes of this letter agreement, a “Change of Control” shall mean a sale of all or substantially all of the shares or assets of the
Company or a merger, consolidation or similar event pursuant to a transaction or series of related transactions in which a third party acquires more than
fifty percent (50%) of the voting power of the Company outstanding immediately prior to such event, and the stockholders of the Company immediately
prior to such event do not retain a majority of the voting power in the surviving corporation or in the parent company of the surviving entity (other than the
reincorporation of the Company and other than a direct equity investment in the Company resulting in a Change of Control).
c. Section 409A of the Internal Revenue Code of 1986, as amended. It is affirmed that with respect to any and all payments and benefits
under this letter agreement, the intent is that such payments and benefits either: (i) do not constitute “nonqualified deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A, (ii) are subject to a “substantial
risk of forfeiture” and are exempt from Section 409A under the “short−term deferral rule” set forth in Treasury Regulation §1.409A−1(b)(4), or (iii) are in
compliance with the requirements of Section 409A. In any event, it is further confirmed that the intent is to have all provisions of this letter agreement
construed, interpreted and administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
13. Arbitration. Any dispute, controversy or claim arising under or in connection with this Agreement or breach hereof, aside from with respect
to the Confidentiality/IP Undertaking attached as Schedule A, shall be settled via employment arbitration administered under Delaware law by the
American Arbitration Association (“AAA”) located in the State of Delaware, and conducted in accordance with the AAA’s Employment Arbitration Rules.
It is agreed that in such arbitration, the Company and you shall mutually agree upon a single arbitrator who (i) shall not amend or modify the terms of this
letter agreement or of any Company policy, and (ii) shall render a decision within ten (10) business days from the closing statements or submission of post-
hearing briefs by the parties to such arbitration. It is understood that (a) the arbitration award shall be final and binding, (b) any state or federal court shall
have jurisdiction to enter a judgment on such award, and (c) the prevailing party shall be entitled to fees and costs to be paid for by the non-prevailing
party. By signing this letter agreement, you and the Company confirm that the parties understand that they are waiving any right to a trial by jury, and are
forfeiting any right to bring claims related to your employment at the Company in a court of law (other than as set forth in Schedule A), regardless of
whether such claims would be based on federal, state or local law or regulations.
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We are all delighted to be able to extend you this offer and look forward to working with you in your new capacity.
To indicate your acceptance of the Company’s offer, please sign and date this letter agreement in the space provided below and return it to me, along with a
signed and dated copy of the Confidentiality/IP Undertaking. This letter agreement, together with the Confidentiality/IP Undertaking, sets forth the terms of
our proposal for your employment with the Company, and supersedes any prior representations, proposals or agreements, whether written or oral.
Very truly yours,
/s/ Yael Margolin
Yael Margolin
President, Gamida Cell Inc.
ACCEPTED AND AGREED:
/S/ Julian Adams
Dr. Julian Adams
Date: 12/06/2017
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SCHEDULE A: CONFIDENTIALITY, UNFAIR COMPETITION, AND OWNERSHIP OF INVENTIONS UNDERTAKING
This CONFIDENTIALITY, UNFAIR COMPETITION, AND OWNERSHIP OF INVENTIONS UNDERTAKING (“Undertaking”) is made and
given as of November 20, 2017, by Dr. Julian Adams, an individual residing at 673 Boylston Street, Boston, MA 02116, email: julian@gamida-cell.com
(the “Employee”).
WHEREAS, the Employee wishes to be employed with and provide services that are of particular and special value to Gamida Cell, Inc. (together
with its direct or indirect parent, subsidiary and affiliated companies, and its and their respective successors and assigns – the “Company”); and
WHEREAS, it is critical for the Company to preserve and protect its Confidential Information, and its rights in Inventions and in all related intellectual
property rights; NOW, THEREFORE, as a condition to Employee’s engagement with the Company, Employee hereby undertakes and warrants towards the
Company as follows:
1.
Confidentiality.
1.1 Employee acknowledges that during the term of the Employee’s engagement with the Company, and including any period during which the
Employee provided services to any Company entity at any time prior to the date hereof, the Employee may have (or may have had) access to information
that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third
parties with whom the Company agreed or may agree, from time to time, to hold information of such parties in confidence (the “Confidential
Information”). Confidential Information shall include, without limitation, information, whether or not marked or designated as confidential, concerning
technology, products, research and development, patents, copyrights, Inventions, trade secrets (as defined by the Defend Trade Secrets Act, 18 U.S.C. §
1833(b) and any applicable state law), test results, formulae, processes, data, know-how, marketing, promotion, business and financial plans, policies,
practices, strategies, surveys, analyses and forecasts, financial information, customer lists, agreements, transactions, undertakings and data concerning
employees, consultants, officers, directors, and shareholders. Confidential Information includes information in any form or media, whether documentary,
written, oral, magnetic, electronically transmitted, through presentation or demonstration or computer generated. Confidential Information shall not include
information that has become part of the public domain not as a result of a breach of any obligation owed to the Company by Employee or any third party.
1.2 Employee acknowledges and understands that the engagement of the Employee with the Company and the access to Confidential Information
creates a relationship of confidence and trust with respect to such Confidential Information.
1.3 During the term of Employee ’s engagement with the Company and at any time after termination or expiration thereof, for whatever reason,
subject to Section 1.4 below, Employee shall keep in strict confidence and trust, shall safeguard, and shall not disclose to any person or entity, nor use for
the benefit of any party other than the Company, any Confidential Information, other than with the prior express consent of the Company, unless the
Employee has an independent right or obligation to make such disclosure pursuant to applicable local, state or federal law, provided, that Employee
gives the Company prompt notice of such requirement to disclose so that the Company may seek a protective order or other appropriate remedy, and
provided further, that Employee shall furnish only that portion of the Confidential Information which is legally required to be disclosed, and shall exercise
all reasonable efforts to obtain confidential treatment for such information.
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1.4 Notice of Immunity: Employee acknowledges that via this paragraph the Company is providing the Employee with written notice that the
Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides immunity for the disclosure of a trade secret for the purpose of reporting a suspected violation of
law and/or in an anti-retaliation lawsuit, in that (i) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for
the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, in
each case solely for the purpose of reporting or investigating a suspected violation of law, or where such disclosure is made via a complaint or other
document filed in a lawsuit or other proceeding, as long as such filing is made under seal, and (ii) an individual who files a lawsuit for retaliation by an
employer or contracting party on account of the individual having reporting a suspected violation of law, may disclose the relevant trade secret to the
individual’s attorney and may use such trade secret information in the applicable court proceeding, as long as any document containing such trade secret is
filed under seal, and as long as the individual does not disclose such trade secret, except pursuant to court order.
1.5 All right, title and interest in and to Confidential Information are and shall remain the exclusive property solely of the Company or the
property of the third party providing such Confidential Information to the Company, as the case may be. Without limitation of the foregoing, Employee
agrees and acknowledges that all memoranda, books, notes, records, email transmissions, charts, formulae, specifications, lists and other documents
(contained on any media whatsoever) made, reproduced, compiled, received, held or used by Employee in connection with the engagement with the
Company or that otherwise relates to any Confidential Information (the “Confidential Materials”), shall be the exclusive property solely of the Company
and shall be deemed to be Confidential Information. All originals, copies, reproductions and summaries of the Confidential Materials shall be delivered by
Employee to the Company upon termination or expiration of Employee’s engagement with the Company for any reason, or at any earlier time at the request
of the Company, without Employee retaining any copies thereof.
1.6 During the term of Employee’s engagement with the Company, Employee shall not remove from the Company’s offices or premises any
Confidential Materials unless and to the extent necessary in connection with the duties and responsibilities of the Employee and permitted pursuant to the
then applicable policies and regulations of the Company. In the event that any such Confidential Materials are duly removed from the Company’s offices or
premises, Employee shall take all actions necessary in order to secure the safekeeping and confidentiality of such Confidential Materials and return the
Confidential Materials to their proper files or location as promptly as possible after such use.
1.7 During the term of Employee’s engagement with the Company, Employee will not improperly use or disclose any Confidential Information,
and will not bring onto the premises of the Company any unpublished documents or any property, in each case belonging to any former employer or any
other party to whom Employee has an obligation of confidentiality and/or non-use (including, without limitation, any academic institution or any entity
related thereto), unless generally available to the public or consented to by such third party in a writing addressed to the Company.
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2. Unfair Competition and Solicitation.
2.1 Employee undertakes that during the term of engagement with the Company and for a period of twelve (12) months thereafter, Employee shall
not, directly or on behalf of any other third party: (i) engage in or establish or otherwise become involved in, either as an employee, owner, partner, agent,
shareholder, director, consultant or otherwise, any business, occupation, work or any other activity which competes with the business of the Company as
conducted during the term of engagement or planned, during such term, to be conducted, or which will have the likely effect of reducing the business
volume or monetary profits of the Company; (ii) solicit, hire or retain as an employee, consultant or otherwise, any employee of the Company or induce or
attempt to induce any such employee to terminate or reduce the scope of such employee’s employment with the Company; and (iii) solicit or induce, or
attempt to solicit or induce, any employee, consultant, service provider, agent, distributor, supplier or customer of the Company, or any third party with
respect to which the Company took substantial steps to engage as an employee or as any of the foregoing capacities during the period of Employee’s
engagement with the Company, to terminate, reduce or modify the scope of its or their engagement with the Company or work for, in any capacity, a
competitor of the Company. By signing this Agreement, Employee represents and confirms that the restrictions set forth in this paragraph are not unduly
burdensome, financially or otherwise, for the Employee.
2.2 Employee acknowledges that in light of Employee’s position with the Company and in view of Employee’s exposure to, and involvement in,
the Company’s sensitive and valuable proprietary information, intellectual property and technologies, Confidential Information and Confidential Materials
(the “Company’s Material Assets”), the provisions of this Section 2 are reasonable and necessary to legitimately protect the Company’s Material Assets,
and are being undertaken by Employee as a condition to the engagement of Employee by the Company. Employee confirms that Employee has carefully
reviewed the provisions of this Section 2, fully understands the consequences thereof and has assessed the respective advantages and disadvantages to
Employee of entering into this Undertaking and, specifically, Section 2 hereof.
3. Ownership of Inventions.
3.1 Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information,
improvements, inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how and data, whether or not patentable or
registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by Employee, either alone or jointly with others,
during Employee’s engagement with the Company (including after hours, on weekends or during vacation time) (all such information, improvements,
inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how, and data are hereinafter referred to as the “Invention(s)”)
immediately upon discovery, receipt or invention as applicable.
3.2 Employee agrees that all of the Inventions are, upon creation, considered Inventions of the Company, shall be the exclusive property solely of
the Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights, trade secrets and all other rights of any
kind or nature, including moral rights, in connection with such Inventions. Employee hereby irrevocably and unconditionally assigns to the Company all
the following with respect to any and all Inventions: (i) title, rights and interest in and to such Inventions, (ii) title, rights and interest in and to any patents,
patent applications, and patent rights, including any and all continuations or extensions thereof; (iii) rights associated with works of authorship, including
copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iii) rights relating to the protection of trade secrets and
confidential information; (v) design rights and industrial property rights; (vi) any other proprietary rights relating to intangible property including
trademarks, service marks and applications therefor, trade names and packaging and all goodwill associated with the same; and (vii) all rights to sue for any
infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights.
Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even
after termination of Employee’s engagement with the Company. “Moral Rights” means any right to claim authorship of a work, any right to object to any
distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty. The Employee
further acknowledges and agrees that all copyrightable works included in the Inventions shall be “works made for hire” within the meaning of the
Copyright Act of 1976, as amended (17 U.S.C. §101) (the “Act”), and that the Company shall be the “author” within the meaning of the Act.
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3.3 Employee represents that there are no information, improvements, inventions, formulae, processes, techniques, know-how and data, whether
or not patentable or registerable under copyright or any similar laws, and whether or not reduced to practice, original works of authorship and trade secrets
made or conceived by or belonging to Employee (whether made solely by the Employee or jointly with others) that: (i) were developed by the Employee
prior to Employee’s engagement with the Company, (ii) relate to the Company’s actual or proposed business, products or research and development, and
(iii) are not assigned to the Company hereunder.
3.4 Employee further agrees to perform, during and after Employee’s engagement with the Company, all acts deemed reasonably necessary or
desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any
and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Employee
hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee’s agents and attorneys-in-fact to act for
and on Employee’s behalf and instead of Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above
purposes with the same legal force and effect as if executed by Employee.
3.5 Employee shall not be entitled, with respect to any and all of the above, to any monetary consideration or any other consideration except as
explicitly set forth in the engagement agreement between Employee and the Company. Without limitation of the foregoing, Employee irrevocably confirms
that the consideration explicitly set forth in Employee’s engagement agreement with the Company is in lieu of any rights for compensation that may arise
in connection with the Inventions under applicable law and waives any right to claim royalties or other consideration with respect to any Invention,
including under Section 134 of the Israeli Patent Law, 1967 (or any successor or equivalent law in any jurisdiction). With respect to any and all of the
above, any oral understanding, communication or agreement not memorialized in writing and duly signed by an authorized officer of the Company, shall be
void.
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4. General.
4.1 Employee represents that the performance of all the terms of this Undertaking and of all of Employee’s duties and services to the Company
does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or
rules, regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto).
Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in engaging Employee.
4.2 Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of Employee’s engagement with the
Company and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof. The
Employee hereby explicitly acknowledges that the restrictions set forth in this Undertaking are not greater than required and do not unduly burden the
Employee.
4.3 It is agreed and understood that if a court of law finds that the Employee has violated Section 2 of this Undertaking, then the restrictions set
forth in such section shall automatically be extended for any period of time for which the court finds that the Employee violated such restrictions.
4.4 Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by Employee, the Company
may suffer irreparable harm or damage and that under such circumstances monetary remedies would be inadequate to protect against any actual or
threatened breach of this Undertaking. Without prejudice to any other rights and/or remedies otherwise available to the Company, it is therefore agreed that
the Company will be entitled to the granting of equitable relief, including but not limited to injunctive relief and specific performance, in favor of the
Company without proof of actual damages to remedy or prevent any breach of this Undertaking (without limitation to any other remedy at law or in
equity).
4.5 This Undertaking shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any
conflict of laws principles which may result in the application of the laws of any other jurisdiction. Any and all disputes in connection with this
Undertaking shall be submitted to the exclusive jurisdiction of the competent courts or tribunals, as applicable, located in the State of Delaware. It is agreed
that each party irrevocably consents to the exercise of personal jurisdiction over such party by such court, agrees that venue shall be proper in such court,
and irrevocably waives and releases any and all defenses based on lack of personal jurisdiction, improper venue or Forum non conveniens.
4.6 If any provision of this Undertaking is determined by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced,
such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the
remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never
been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision
is enforceable to the fullest extent compatible with applicable law.
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4.7 The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the engagement
between the Company and Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of Employee’s
obligations and liabilities under any applicable law.
4.8 This Undertaking constitutes the entire agreement between Employee and the Company with respect to the subject matter hereof and
supersedes all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, with respect to the subject matter hereof. No
amendment, waiver or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by an authorized
officer of the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that
or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of
any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
4.9 All notices and other communications under this Undertaking shall be in writing and shall be given in person, by fax, electronic or certified or
registered mail, and shall be deemed to have been duly given twenty-four (24) hours after transmission of a fax or electronic email, three (3) days after
sending a notice by certified or registered mail, or immediately upon delivery in person or explicit confirmation of receipt.
4.10 This Undertaking, the rights of the Company hereunder, and the obligations of Employee hereunder, will be binding upon and inure to the
benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under
this Undertaking. Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior
written consent of an authorized officer of the Company.
IN WITNESS WHEREOF, the undersigned has executed and delivered this CONFIDENTIALITY, UNFAIR COMPETITION, AND
OWNERSHIP OF INVENTIONS UNDERTAKING effective as of the date first mentioned above.
Employee:
By:
/S/ Julian Adams
Dr. Julian Adams
Date:12/06/2017
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EMPLOYMENT AGREEMENT
Exhibit 10.16
This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of December 15, 2021 (the “Effective Date”) is by and between GAMIDA CELL,
INC., a Delaware Corporation (the “Company”), and SHAI LANKRY (the “Employee”) (individually, each a “Party” and collectively, the “Parties”).
WHEREAS, until immediately prior to the Effective Date, the Employee served in the capacity of Chief Financial Officer of the Company’s affiliate,
Gamida Cell Ltd., a company organized under the laws of the State of Israel, and following the termination of such employment the parties now desire that
Employee become an employee of the Company;
WHEREAS, in recognition of the Employee’s experience and abilities, the Company desires to assure itself of the employment of the Employee in
accordance with the terms and conditions provided herein; and
WHEREAS, the Employee seeks to be employed by the Company and to perform services for the Company and its affiliated entities in accordance
with the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the promises and the respective covenants and agreements of the Parties herein contained, and intending to
be legally bound hereby, the Parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to be employed by the Company and to
perform services for the Company, its subsidiaries and affiliates, on the terms and conditions set forth herein (the “Employment”).
2. Term. Unless otherwise mutually agreed by the Parties in writing, the Employment shall commence on November 1, 2021 (the “Start Date”),
and shall continue until terminated by either the Employee or the Company, pursuant to Section 7 hereof (the period of Employment pursuant to this
Agreement, the “Term”).
3. Position. During the Term, the Employee shall initially serve as the Company’s Chief Financial Officer and, from and after the Supervisor’s
written notice, as Vice President, Finance (the “Position”).
4. Duties and Reporting Relationship. During the Term, the Employee shall devote one hundred percent of the Employee’s regular business time
and, on a full-time basis, use the Employee’s skills and render services to the best of the Employee’s abilities on behalf of the Company. The Employee
shall report directly to the Chief Executive Officer of the Company or, following delivery of such written notice pursuant to Section 3 above, to any
successor Chief Financial Officer (the “Supervisor”). The Employee agrees that to the best of the Employee’s ability, the Employee will make all efforts to
loyally and conscientiously perform the duties and obligations required of and from the Employee pursuant to the terms of this Agreement. The Employee
shall be responsible for all duties reasonably associated with the Position, as determined by the Supervisor, or by the Supervisor’s designee, as may be
updated from time to time. The Employee shall comply with all of the lawful policies and procedures of the Company.
5. Place of Performance. The Parties agree that the Employee shall work from the Company’s Boston, Massachusetts office, or from the
Employee’s home office in the Boston area, in either case as determined appropriate by the Company. It is understood that for purposes of the Employment,
the Employee shall relocate from the State of Israel to the Boston, Massachusetts area. The Employee acknowledges and agrees that, in connection with the
Employment for the Company, on an as-needed basis, the Employee will be required to travel throughout North America as well as outside of the North
America geographical area, including but not limited to the State of Israel.
6. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, the Company shall pay to the Employee an annual base salary (the “Base Salary”) at a rate of
Three Hundred and Fifteen Thousand United States Dollars ($315,000), to be paid on a prorated basis in conformity with the Company’s payroll policies
relating to its employees, in each case less applicable withholdings and deductions, not less frequently than twice each month. The Position qualifies as
exempt from overtime payments for hours worked in excess of forty (40) per week, and the Employee will therefore not be entitled to any such overtime
compensation. Employee’s Base Salary shall be reviewed annually as part of the Company’s normal salary review process by the Company and may be
increased by the Company in its sole discretion. For the avoidance of doubt, any such increased annual base salary shall be considered Employee’s “Base
Salary” for all purposes of this Agreement.
(b) Annual Target Bonus. In addition to the compensation set forth above in Section 6(a), following each calendar year, the Employee shall
be eligible for an annual target bonus of up to thirty-five percent (35%) of the Base Salary as in effect at the start of that calendar year, upon the attainment
of goals and targets established in writing by the Company’s Board of Directors (the “Board”), with such annual target bonus (if earned and declared) to be
paid to the Employee in the payroll cycle for March of the year that immediately follows such calendar year, less applicable withholdings and deductions
(the “Annual Target Bonus”).
(c) Benefits. During the Term hereof, the Employee shall be entitled to the following benefits:
(i) Health Insurance. The Company shall make available to the Employee health insurance coverage for the Employee, in accordance
with the policies obtained by the Company on behalf of similarly situated employees. Such health insurance shall include medical,
dental and vision coverage.
(ii) 401(k). The Employee shall be eligible to participate in the Company’s 401(k) Plan, in accordance with the terms of such Plan.
(iii) Disability Coverage; D & O Insurance. The Employee shall be eligible for both short-term and long-term disability coverage in
accordance with the plans secured by the Company and made available to similarly situated employees. In addition, the Employee
will be insured under the Company’s D & O liability coverage, pursuant to the terms of such coverage.
(iv) Paid Time Off.
(1) Vacation. The Employee shall be entitled to take twenty (20) work days of vacation per calendar year, with such days to be
prorated for partial years of employment. It is agreed that the Employee shall coordinate the timing of taking such vacation
days with the Supervisor. The Employee shall be entitled to carry over accrued but unused vacation days from one calendar
year into the following calendar year, but at no time shall the Employee accrue more than twenty (20) work days of vacation.
(2) Holidays. In addition to vacation days, the Employee shall be entitled to take off the paid holidays that are published at the
start of each calendar year. The Company does not pay out worked holidays.
(3) Sick Time. The Employee will accrue 1 hour of paid sick time for every 30 hours worked, up to a maximum of forty (40)
hours paid sick time per calendar year. Accrued but unused paid sick time shall be carried over from one calendar year to the
following calendar year, with a maximum of forty (40) hours to be used for purposes of sick time in any given calendar year.
(4) Separation from the Company. Upon the Employee’s termination of employment by the Company or the Employee’s
resignation, the Employee
will be entitled to the payout of any accrued but unused vacation days, but will not be eligible for payout on account of
unused sick time or worked holidays.
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(v) Company Property. The Company shall provide the Employee with Company property, including but not limited to a laptop, which
shall remain at all times the property of the Company, to be used by the Employee in accordance with Company guidelines. Upon
the Employee’s termination of employment for any reason, the Employee will be obligated to immediately return the laptop to the
Company.
(vi) Business Expenses. The Employee will be eligible for reimbursement of preapproved reasonable business expenses, including cell
phone expenses as per a mutually agreed upon cell phone plan, as well as other expenses incurred in accordance with the
Company’s business expense reimbursement policies, as may be updated from time to time by the Company.
(v)
Immigration Visa. It is agreed that the Company shall cover the expenses and fees associated with the application and securing of
the Employee’s immigration visa for purposes of the Employee’s authorization to work in the United States.
(vi) Relocation Expenses. The Employee will be eligible for reimbursement of expenses incurred on account of the relocation of the
Employee, the Employee’s spouse and the Employee’s children to the United States (the “Relocation Reimbursement”). Such
Relocation Reimbursement shall be capped at a maximum sum of $100,000 and shall cover the cost of one-way airfare from the
State of Israel to the City of Boston, Massachusetts for the Employee, the Employee’s spouse and the Employee’s children, as well
as shipping of the Employee’s family belongings to the United States and a realtor fee.
(d) Section 409A of the Internal Revenue Code of 1986, as amended. The Parties hereby affirm that with respect to any and all payments
and benefits under this Agreement, the intent is that such payments and benefits either: (i) do not constitute “nonqualified deferred compensation” within
the meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A, (ii) are subject to a “substantial
risk of forfeiture” and are exempt from Section 409A under the “short–term deferral rule” set forth in Treasury Regulation §1.409–1(b)(4), or (iii) are in
compliance with Section 409A. In any event, the Parties further confirm that they intend to have all provisions of this Agreement construed, interpreted and
administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(e) The Employee shall be responsible for the payment of applicable taxes and other compulsory payments imposed by law on the Employee,
in respect of, or resulting from, the compensation and the benefits paid or granted to, or received by the Employee, or contributed by the Company, or to
which the Employee is or may be entitled, pursuant to this Agreement or the Employee’s employment with the Company. The Company shall withhold or
deduct from any payment or compensation to which the Employee is entitled, applicable amounts as required by law.
7. Termination. The Employee’s Employment hereunder may be terminated without breach of this Agreement as set forth below:
(a) Death; Disability. The Employee’s Employment hereunder shall terminate upon the Employee’s death or “Disability” (as hereafter
defined). Upon any such termination, the Employee (or, in the event of the Employee’s death, the Employee’s estate) shall receive the Base Salary through
the “Date of Termination” (as hereafter defined), as well as reimbursement for unpaid business expenses through such date. The Employee (and, in the
event of the Employee’s death, the Employee’s estate) shall not be entitled to any other amounts or benefits from the Company or otherwise. For purposes
of this Agreement, “Disability” shall mean the inability of the Employee to perform the Employee’s duties on account of a physical or mental illness for a
period of sixty (60) consecutive days, or for ninety (90) days in any six (6) month period. Notwithstanding anything contained herein to the contrary, during
any
period of Disability, the Company shall not be obligated to pay any compensation or other amounts to the Employee, except as mandated by applicable law.
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(b) Cause. The Company may terminate the Employee’s Employment hereunder for Cause at any time upon written notice to Employee.
(i)
For purposes of this Agreement, the Company shall have “Cause” to terminate the Employee’s Employment hereunder upon the
Employee’s:
(1) commission of fraud, embezzlement, gross negligence, malfeasance, an act or acts constituting a felony under the laws of the
United States or any state thereof, or a willful or grossly negligent act or omission which results in an assessment of a civil or
criminal penalty against the Employee, or the Company or its affiliates;
(2) willful or continued failure to substantially perform the Employee’s duties as directed by the Company; or
(3) violation of the terms of this Agreement or of the Undertaking (as defined below) attached hereto as Schedule A in any material
respect.
(ii) A purported termination of Employee’s employment for Cause shall not be effective unless (A) the Company provides written notice
to Employee of the facts alleged by the Company to constitute Cause and such notice is delivered to Employee no more than 90 days
after the Company has actual knowledge of such facts and (B) Employee has been given an opportunity of no less than 10 days after
receipt of such notice to cure the circumstances alleged to give rise to Cause, and the Company has cooperated in good faith with
Employee’s efforts to cure such condition or circumstance, but only to the extent that such circumstances are reasonably curable.
(iii) In the event that the Company terminates the Employee’s Employment for Cause, the Employee shall receive the Base Salary through
the Date of Termination, as well as reimbursement for approved but unpaid business expenses through such date. The Employee shall
not be entitled to any other amounts or benefits from the Company.
(c) Termination without Cause/Resignation. The Employee’s Employment hereunder may be terminated (i) following the twelve (12) month
anniversary of the Start Date, by the Company at any time, or, (ii) following the twelve (12) month anniversary of the Start Date, by the Employee upon the
Employee’s resignation. In the event of the termination of the Employee’s Employment by the Company for any reason (other than a termination for
Cause), the Company will give Employee six (6) months’ notice of such termination in accordance with Section 7(e) hereunder, and in the event of the
Employee’s resignation for any reason, Employee shall give the Company one (1) months’ notice of such termination in accordance with Section 7(e)
hereunder. In the event of the Company’s termination of Employee’s Employment for any reason (other than a termination for Cause) or Employee’s
resignation for any reason: (i) the Employee shall receive the Base Salary through the Date of Termination, reimbursement for approved but unpaid
business expenses through the Date of Termination, and any fully earned and declared but unpaid Annual Target Bonus as of the Date of Termination, and
(ii) the Company shall have the right to determine whether or not the Employee will actively work during the notice period.
(d) Termination upon Lack of Work Authorization. It is understood and agreed that in the event that the Employee’s work authorization lapses
and is not renewed, or the Employee’s work authorization status is rescinded or ceases for any reason, the Employee’s Employment shall immediately
terminate.
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(e) Notice of Termination. Any termination of the Employee’s Employment by the Company or by the Employee (other than termination
upon the death of the Employee) shall be communicated by written Notice of Termination by such Party to the other in accordance with Section 9 of this
Agreement. Such Notice of Termination shall specify the last day of the Employee’s Employment with the Company.
(f) Date of Termination. “Date of Termination” shall mean: (i) if the Employee’s Employment is terminated by the Employee’s death, the
date of the Employee’s death, or (ii) if the Employee’s Employment is terminated pursuant to any of the other terms set forth herein, the date specified in
the Notice of Termination.
(g) Transition. Regardless of the circumstances surrounding the Employee’s termination of Employment, the Employee hereby agrees that
upon the Employee’s termination of Employment, the Employee will return to the Company all Company property and will make reasonable efforts to
facilitate the orderly transition of the Employee’s duties and responsibilities. Any such transition assistance following Employee’s last day of employment
with the Company, shall be at no out-of-pocket cost or expense to the Employee and shall be subject to Employee’s commitments to any new employer.
8. Employee Representations.
(a) The Employee hereby represents and warrants that the Employee’s performance of the terms of this Agreement will not breach any
written or oral agreement entered into by the Employee with a former employer or with any other third party. The Employee further represents and warrants
that the Employee will not engage in additional employment or recreational activities that would in any way pose a conflict of interest with the
Employment.
(b) The Employee hereby confirms that the Employee is not owed any amounts or entitled to any benefits from the Company and/or its
affiliates for any period of employment, consulting or services provided by the Employee prior to the Effective Date, whether to the Company or to any of
its affiliated entities, and that the Employee has been paid in full any amounts which may be due to the Employee on the part of the Company and/or its
affiliates on account of any such period of employment, consulting or services provided.
(c) The Employee hereby acknowledges that the Employee’s signing of the Confidentiality, Non-Solicitation and Ownership of Inventions
Undertaking attached hereto as Schedule A (the “Undertaking”) constitutes a precondition of the Employment. The Employee further affirms that this
Agreement and the Undertaking constitute the entire understanding of the Parties with respect to the subject matter hereof and supersede any understanding
or agreement, whether oral or written, between the Company and the Employee, including without limitation, that certain letter agreement between the
Parties dated March 20, 2018.
(d) The Employee understands that the Employment and obligations of the Company pursuant to this Agreement are conditioned upon the
Employee’s presenting to the Company and maintaining, in each case as required by applicable law, authorization to work in the United States. It is
understood that absent such work authorization, the terms of this Agreement shall be null and void, and the Company shall have no obligations hereunder.
In the event that the Employee is actively employed by the Company at the time of a lapse in the Employee’s work authorization for any reason, the
Employment shall immediately terminate and the Company shall have no obligations with respect to the Employee or pursuant to this Agreement.
(e) The Employee acknowledges that the Employee has been advised to obtain independent counsel to evaluate the terms, conditions and
covenants set forth in this Agreement and its attached Schedule A, and the Employee has been afforded ample opportunity to obtain such independent
advice and evaluation. The Employee warrants to the Company that the Employee has relied upon such independent counsel and not upon any
representation (legal or otherwise), statement or advice said or offered by the Company or the Company’s counsel in connection with this Agreement.
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9. Notices. All notices and other communications under this Agreement shall be in writing and shall be given by email or first-class mail, certified
or registered, and shall be deemed to have been duly given three (3) days after mailing, twenty-four (24) hours after transmission of email, or immediately
upon acknowledgement of receipt, as follows:
If to the Company: GAMIDA CELL, INC.
Attention: Julian Adams, CEO
673 Boylson St., Boston MA
Julian@Gamida-cell.com
If to the Employee: SHAI LANKRY
[***]
or as otherwise indicated as per the Company’s personnel records for the Employee.
10. Remedies of the Company. Upon any termination of the Employment for Cause, the reasons for which may cause irreparable harm to the
Company, the Company shall be entitled to institute and prosecute proceedings to obtain injunctive relief and damages, costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses.
11. Arbitration. Except as set forth above in Section 10 above and as set forth in the Undertaking, the Employee and the Company agree that any
claim, controversy or dispute between the Employee and the Company (including, without limitation, its affiliates, officers, Employees, representative or
agents) arising out of or relating to this Agreement, the Employment of the Employee, the cessation of Employment of the Employee, or any matter relating
to the foregoing shall be submitted to and settled by arbitration pursuant to the Federal Arbitration Act in a forum of the American Arbitration Association
(“AAA”) located in the Commonwealth of Massachusetts and applying the substantive law of the Commonwealth of Massachusetts, unless otherwise
mutually agreed upon by the Parties, and conducted in accordance with the National Rules for the Resolution of Employment Disputes. In such arbitration,
the Parties shall agree upon a single arbitrator, who shall: (i) agree to treat as confidential evidence and other information presented by the Parties to the
same extent as Confidential Information under the Undertaking must be held confidential by the Employee, (ii) have no authority to amend or modify any
of the terms of this Agreement, and (iii) have ten (10) business days from the closing statements or submission of post-hearing briefs by the Parties to
render his or her decision. Any arbitration award shall be final and binding upon the Parties, and any court, state or federal, having jurisdiction may enter a
judgment on the award.
12. Enforceability of this Agreement.
(a) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision
hereunder. If a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy only the portions
of this Agreement that violate such statute or public policy shall be stricken, and all other portions of this Agreement that do not violate any statute or
public policy shall continue in full force and effect. Further, if any one or more of the provisions contained in this Agreement is determined by a court of
competent jurisdiction in any State to be excessively broad as to duration, scope, activity or subject, or is unreasonable or unenforceable under the laws of
such State, such provisions will be construed by limiting, reducing, modifying or amending them so as to be enforceable to the maximum extent permitted
by the law of that State. If the Agreement is held unenforceable in any jurisdiction, such holding will not impair the enforceability of the Agreement in any
other jurisdiction.
(b) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
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(c) No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Employee and the Company. No waiver by either Party hereto at any time or any breach by the other Party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
(d) The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of
Massachusetts without regard to its conflicts of law principles, unless otherwise mutually agreed upon by the Parties.
(e) The Company shall have the right to assign its rights and obligations under this Agreement to any individual, entity, corporation or
partnership that succeeds to all or a portion of the relevant business or assets of the Company. This Agreement is personal to the Employee, and the
Employee may not assign the Employee’s rights and obligations under this Agreement to any third party.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Employment Agreement as set forth below.
GAMIDA CELL, INC.
Date: December 21, 2021
By:
/s/ Julian Adams
Julian Adams,
Chief Executive Officer
SHAI LANKRY
/s/ Shai Lankry
Date: December 21, 2021
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SCHEDULE A:
CONFIDENTIALITY, NON-SOLICITATION
AND OWNERSHIP OF INVENTIONS UNDERTAKING
This CONFIDENTIALITY, NON-SOLICITATION AND OWNERSHIP OF INVENTIONS UNDERTAKING (“Undertaking”) is made and given
effective as of November 1, 2021 by SHAI LANKRY (the “Employee”).
WHEREAS, the Employee wishes to be employed with and provide services that are of particular and special value to Gamida Cell, Inc. (together
with its direct or indirect parent, subsidiary and affiliated companies, and its and their respective successors and assigns – the “Company”); and
WHEREAS, it is critical for the Company to preserve and protect its Confidential Information, and its rights in Inventions and in all related
intellectual property rights; and
WHEREAS, this Undertaking is a condition to Employee’s employment with the Company pursuant to that certain Employment Agreement dated
December 15, 2021 between Employee and the Company (as may be amended from time to time, the “Employment Agreement”).
NOW, THEREFORE, as a condition to Employee’s engagement with the Company, Employee hereby undertakes and warrants towards the
Company as follows:
1.
Confidentiality.
1.1. Employee acknowledges that during the term of the Employee’s engagement with the Company, and including any period during which the
Employee provided services to any Company entity at any time prior to the date hereof, the Employee may have (or may have had) access to information
that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third
parties with whom the Company agreed or may agree, from time to time, to hold information of such parties in confidence (the “Confidential
Information”). Confidential Information shall include, without limitation, information, whether or not marked or designated as confidential, concerning
technology, products, research and development, patents, copyrights, Inventions, trade secrets (as defined by the Defend Trade Secrets Act, 18 U.S.C. §
1839(3) and any applicable state law), test results, formulae, processes, data, know-how, marketing, promotion, business and financial plans, policies,
practices, strategies, surveys, analyses and forecasts, financial information, customer lists, agreements, transactions, undertakings and data concerning
employees, consultants, officers, directors, and shareholders. Confidential Information includes information in any form or media, whether documentary,
written, oral, magnetic, electronically transmitted, through presentation or demonstration or computer generated. Confidential Information shall not include
information that has become part of the public domain not as a result of a breach of any obligation owed to the Company by Employee or any third party.
1.2. Employee acknowledges and understands that the engagement of the Employee with the Company and the access to Confidential Information
creates a relationship of confidence and trust with respect to such Confidential Information.
1.3. During the term of Employee ’s engagement with the Company and at any time after termination or expiration thereof, for whatever reason,
subject to Section 1.4 below, Employee shall keep in strict confidence and trust, shall safeguard, and shall not disclose to any person or entity, nor use for
the benefit of any party other than the Company, any Confidential Information, other than with the prior express consent of the Company, unless the
Employee has an independent right or obligation to make such disclosure pursuant to applicable local, state or federal law, provided, that Employee gives
the Company prompt notice of such requirement to disclose so that the Company may seek a protective order or other appropriate remedy, and provided
further, that Employee shall furnish only that portion of the Confidential Information which is legally required to be disclosed, and shall exercise all
reasonable efforts to obtain confidential treatment for such information.
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1.4. Notice of Immunity: Employee acknowledges that via this paragraph the Company is providing the Employee with written notice that the
Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides immunity for the disclosure of a trade secret for the purpose of reporting a suspected violation of
law and/or in an anti-retaliation lawsuit, in that (i) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for
the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, in
each case solely for the purpose of reporting or investigating a suspected violation of law, or where such disclosure is made via a complaint or other
document filed in a lawsuit or other proceeding, as long as such filing is made under seal, and (ii) an individual who files a lawsuit for retaliation by an
employer or contracting party on account of the individual having reporting a suspected violation of law, may disclose the relevant trade secret to the
individual’s attorney and may use such trade secret information in the applicable court proceeding, as long as any document containing such trade secret is
filed under seal, and as long as the individual does not disclose such trade secret, except pursuant to court order.
1.5. All right, title and interest in and to Confidential Information are and shall remain the exclusive property solely of the Company or the
property of the third party providing such Confidential Information to the Company, as the case may be. Without limitation of the foregoing, Employee
agrees and acknowledges that all memoranda, books, notes, records, email transmissions, charts, formulae, specifications, lists and other documents
(contained on any media whatsoever) made, reproduced, compiled, received, held or used by Employee in connection with the engagement with the
Company or that otherwise relates to any Confidential Information (the “Confidential Materials”), shall be the exclusive property solely of the Company
and shall be deemed to be Confidential Information. All originals, copies, reproductions and summaries of the Confidential Materials shall be delivered by
Employee to the Company upon termination or expiration of Employee’s engagement with the Company for any reason, or at any earlier time at the request
of the Company, without Employee retaining any copies thereof.
1.6. During the term of Employee’s engagement with the Company, Employee shall not remove from the Company’s offices or premises any
Confidential Materials unless and to the extent necessary in connection with the duties and responsibilities of the Employee and permitted pursuant to the
then applicable policies and regulations of the Company. In the event that any such Confidential Materials are duly removed from the Company’s offices or
premises, Employee shall take all actions necessary in order to secure the safekeeping and confidentiality of such Confidential Materials and return the
Confidential Materials to their proper files or location as promptly as possible after such use.
1.7. During the term of Employee’s engagement with the Company, Employee will not improperly use or disclose any Confidential Information,
and will not bring onto the premises of the Company any unpublished documents or any property, in each case belonging to any former employer or any
other party to whom Employee has an obligation of confidentiality and/or non-use (including, without limitation, any academic institution or any entity
related thereto), unless generally available to the public or consented to by such third party in a writing addressed to the Company.
2.
Non-Solicitation.
2.1. Employee undertakes that during the term of engagement with the Company and for a period of eighteen (18) months thereafter, regardless of
the reason for Employee’s separation from Company, Employee shall not, directly or on behalf of any other third party: (i) solicit, hire or retain as an
employee, consultant or otherwise, any officer or other employee of the Company or induce or attempt to induce any such employee to terminate or reduce
the scope of such employee’s employment with the Company; and (ii) solicit or induce, or attempt to solicit or induce, any employee, consultant, service
provider, business partner, agent, distributor, supplier or customer of the Company, or any third party with respect to which the Company took substantial
steps to engage as an employee or as any of the foregoing capacities during the period of Employee’s engagement with the Company, to terminate, reduce
or modify the scope of its or their engagement with the Company or work for, in any capacity, a competitor of the Company. By signing this Undertaking,
Employee represents and confirms that the restrictions set forth in this paragraph are not unduly burdensome, financially or otherwise, for the Employee.
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2.2. Employee acknowledges that in light of Employee’s position at the Company and in view of Employee’s exposure to, and involvement in, the
Company’s sensitive and valuable proprietary information, intellectual property and technologies, Confidential Information and Confidential Materials (the
“Company’s Material Assets”), the provisions of this Section 2 are reasonable and necessary to legitimately protect the Company’s Material Assets, and are
being undertaken by Employee as a condition to the engagement of Employee by the Company. Employee confirms that Employee has carefully reviewed
the provisions of this Section 2, fully understands the consequences thereof and has assessed the respective advantages and disadvantages to Employee of
entering into this Undertaking and, specifically, Section 2 hereof. Employee understands that, Employee has the right to consult with counsel prior to
signing this Undertaking. By signing this Undertaking, Employee confirms that Employee has had ample time to exercise such right.
2.3. Employee acknowledges that the scope and period of restrictions and the geographical area to which the restrictions apply are fair and
reasonable and are reasonably required for the protection of the legitimate business interests of the Company.
2.4. Employee acknowledges and agrees that the enforcement of the covenants in this Section 2, and otherwise in this Undertaking, is not
contingent upon the payment of any additional cash consideration, and that good and valid consideration exists for the covenants herein apart from any cash
consideration, and that such covenants are separately justified, appropriate and based on legitimate business reasons, regardless of the circumstances
surrounding Employee’s separation from the Company.
3.
Ownership of Inventions.
3.1. Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information,
improvements, inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how and data, whether or not patentable or
registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by Employee, either alone or jointly with others,
during Employee’s engagement with the Company (including after hours, on weekends or during vacation time) (all such information, improvements,
inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how, and data are hereinafter referred to as the “Invention(s)”)
immediately upon discovery, receipt or invention as applicable.
3.2. Employee agrees that all of the Inventions are, upon creation, considered Inventions of the Company, shall be the exclusive property solely of
the Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights, trade secrets and all other rights of any
kind or nature, including moral rights, in connection with such Inventions. Employee hereby irrevocably and unconditionally assigns to the Company all
the following with respect to any and all Inventions: (i) title, rights and interest in and to such Inventions, (ii) title, rights and interest in and to any patents,
patent applications, and patent rights, including any and all continuations or extensions thereof; (iii) rights associated with works of authorship, including
copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iv) rights relating to the protection of trade secrets and
confidential information; (v) design rights and industrial property rights; (vi) any other proprietary rights relating to intangible property including
trademarks, service marks and applications therefor, trade names and packaging and all goodwill associated with the same; and (vii) all rights to sue for any
infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights.
Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even
after termination of Employee’s engagement with the Company. “Moral Rights” means any right to claim authorship of a work, any right to object to any
distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty. The Employee
further acknowledges and agrees that all copyrightable works included in the Inventions shall be “works made for hire” within the meaning of the
Copyright Act of 1976, as amended (17 U.S.C. §101) (the “Act”), and that the Company shall be the “author” within the meaning of the Act.
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3.3. Employee represents that there are no information, improvements, inventions, formulae, processes, techniques, know-how and data, whether
or not patentable or registerable under copyright or any similar laws, and whether or not reduced to practice, original works of authorship and trade secrets
made or conceived by or belonging to Employee (whether made solely by the Employee or jointly with others) that: (i) were developed by the Employee
prior to Employee’s engagement with the Company, (ii) relate to the Company’s actual or proposed business, products or research and development, and
(iii) are not assigned to the Company hereunder.
3.4. Employee further agrees to perform, during and after Employee’s engagement with the Company, all acts deemed reasonably necessary or
desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and
all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee’s agents and attorneys-in-fact to act for and on
Employee’s behalf and instead of Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes
with the same legal force and effect as if executed by Employee.
3.5. Employee shall not be entitled, with respect to any and all of the above, to any monetary consideration or any other consideration except as
explicitly set forth in the Employment Agreement. Without limitation of the foregoing, Employee irrevocably confirms that the consideration explicitly set
forth in the Employment Agreement is in lieu of any rights for compensation that may arise in connection with the Inventions under applicable law and
waives any right to claim royalties or other consideration with respect to any Invention, including under Section 134 of the Israeli Patent Law, 1967 (or any
successor or equivalent law in any jurisdiction). With respect to any and all of the above, any oral understanding, communication or agreement not
memorialized in writing and duly signed by an authorized officer of the Company, shall be void.
4.
General.
4.1. Employee represents that the performance of all the terms of this Undertaking and of all of Employee’s duties and services to the Company
does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or rules,
regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto).
Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in engaging Employee.
4.2. Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of Employee’s engagement with the
Company and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof. The
Employee hereby explicitly acknowledges that the restrictions set forth in this Undertaking are not greater than required and do not unduly burden the
Employee.
4.3. It is agreed and understood that if a court of law finds that the Employee has violated Section 2 of this Undertaking, then the restrictions set
forth in such section shall automatically be extended for any period of time for which the court finds that the Employee violated such restrictions.
4.4. Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by Employee, the Company
may suffer irreparable harm or damage and that under such circumstances monetary remedies would be inadequate to protect against any actual or
threatened breach of this Undertaking. Without prejudice to any other rights and/or remedies otherwise available to the Company, it is therefore agreed that
the Company will be entitled to the granting of equitable relief, including but not limited to injunctive relief and specific performance, in favor of the
Company without proof of actual damages to remedy or prevent any breach of this Undertaking (without limitation to any other remedy at law or in
equity).
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4.5. This Undertaking shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to any conflict of laws principles which may result in the application of the laws of any other jurisdiction. Any and all disputes in connection with
this Undertaking shall be submitted to the exclusive jurisdiction of the competent courts or tribunals, as applicable, located in the Commonwealth of
Massachusetts. It is agreed that each party irrevocably consents to the exercise of personal jurisdiction over such party by such court, agrees that venue
shall be proper in such court, and irrevocably waives and releases any and all defenses based on lack of personal jurisdiction, improper venue or forum non
conveniens.
4.6. If any provision of this Undertaking is determined by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced,
such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the
remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never
been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision
is enforceable to the fullest extent compatible with applicable law.
4.7. The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the
engagement between the Company and Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of
Employee’s obligations and liabilities under any applicable law.
4.8. This Undertaking constitutes the entire agreement between Employee and the Company with respect to the subject matter hereof and
supersedes all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, with respect to the subject matter hereof. No
amendment, waiver or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by an authorized
officer of the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that
or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of
any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
4.9. All notices and other communications under this Undertaking shall be in writing and shall be given in person, by fax, electronic or certified or
registered mail, and shall be deemed to have been duly given twenty-four (24) hours after transmission of a fax or electronic email, three (3) days after
sending a notice by certified or registered mail, or immediately upon delivery in person or explicit confirmation of receipt.
4.10. This Undertaking, the rights of the Company hereunder, and the obligations of Employee hereunder, will be binding upon and inure to the
benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under
this Undertaking. Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior
written consent of an authorized officer of the Company.
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IN WITNESS WHEREOF, the undersigned has executed and delivered this CONFIDENTIALITY, NON-SOLICITATION AND OWNERSHIP OF
INVENTIONS UNDERTAKING effective as of the date first mentioned above.
Employee:
By:
/s/ Shai Lankry
SHAI LANKRY
Date: December 21, 2021
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EMPLOYMENT AGREEMENT
Exhibit 10.17
This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of July 20, 2020 (the “Effective Date”) is by and between GAMIDA CELL,
INC., a Delaware Corporation (the “Company”), and MICHELE KORFIN (the “Employee”) (individually, each a “Party” and collectively, the “Parties”).
WHEREAS, in recognition of the Employee’s experience and abilities, the Company desires to assure itself of the employment of the Employee in
accordance with the terms and conditions provided herein; and
WHEREAS, the Employee seeks to be employed by the Company and to perform services for the Company and its affiliated entities in accordance
with the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the promises and the respective covenants and agreements of the Parties herein contained, and intending to
be legally bound hereby, the Parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Employee, and the Employee hereby agrees to be employed by the Company and to
perform services for the Company, its subsidiaries and affiliates, on the terms and conditions set forth herein (the “Employment”).
2. Term. Unless otherwise mutually agreed by the Parties in writing, the Employment shall commence on August 15, 2020 (the “Start Date”), and
shall continue until terminated by either the Employee or the Company, pursuant to Section 7 hereof (the period of Employment pursuant to this
Agreement, the “Term”). Notwithstanding the foregoing, if Tyme Technologies, Inc., Employee’s current employer (“Tyme”), requires Employee to
continue to provide full-time services to Tyme after August 15, 2020 because the current annual “Employment Period” under Employee’s agreement with
Tyme does not expire until October 9, 2020, Employee shall have the right to delay the Start Date until the date that is one (1) business day after
Employee’s last day as an employee at Tyme, but in no event shall the Start Date be later than October 10, 2020.
3. Positions. During the Term, the Employee shall serve as the Company’s Chief Commercial Officer and Chief Operating Officer (the
“Positions”).
4. Duties and Reporting Relationship. During the Term, the Employee shall devote one hundred percent of the Employee’s regular business time
and, on a full-time basis, use the Employee’s skills and render services to the best of the Employee’s abilities on behalf of the Company. The Employee
shall report directly to the Chief Executive Officer of the Company (the “Supervisor”). The Employee agrees that to the best of the Employee’s ability, the
Employee will make all efforts to loyally and conscientiously perform the duties and obligations required of and from the Employee pursuant to the terms
of this Agreement. The Employee shall be responsible for all duties reasonably associated with the Positions, as determined by the Supervisor, as may be
updated from time to time. The Employee shall comply with all of the lawful policies and procedures of the Company.
5. Place of Performance. The Parties agree that the Employee shall work from the Employee’s home office in New Jersey and travel to the
Company’s Boston, Massachusetts office on an as-needed basis, as determined reasonably appropriate by the Company. The Employee acknowledges and
agrees that, in connection with the Employment for the Company, on an as-needed basis, the Employee will be required to travel throughout North America
as well as outside of the North America geographical area, including but not limited to the State of Israel.
6. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, the Company shall pay to the Employee an annual base salary (the “Base Salary”) at a rate of
Four Hundred and Twenty-Five Thousand United States Dollars ($425,000), to be paid on a prorated basis in conformity with the Company’s payroll
policies relating to its employees, in each case less applicable withholdings and deductions, not less frequently than twice each month. The Positions
qualify as exempt from overtime payments for hours worked in excess of forty (40) per week, and the Employee will therefore not be entitled to any such
overtime compensation. Employee’s Base Salary shall be reviewed annually as part of the Company’s normal salary review process by the Company and
may be increased by the Company in its sole discretion. For the avoidance of doubt, any such increased annual base salary shall be considered Employee’s
“Base Salary” for all purposes of this Agreement.
(b) Annual Target Bonus. In addition to the compensation set forth above in Section 6(a), following each calendar year, the Employee
shall be eligible for an annual target bonus of up to Forty Percent (40%) of the Base Salary as in effect at the start of that calendar year, upon the attainment
of goals and targets established in writing by the Company’s Board of Directors (the “Board”), with such annual target bonus (if earned and declared) to be
paid to the Employee in the payroll cycle for March of the year that immediately follows such calendar year, less applicable withholdings and deductions
(the “Annual Target Bonus”).
(c) Benefits. During the Term hereof, the Employee shall be entitled to the following benefits:
(i) Health Insurance. The Company shall make available to the Employee health insurance coverage for the Employee, in accordance
with the policies obtained by the Company on behalf of similarly situated employees. Such health insurance shall include medical,
dental and vision coverage.
(ii) 401(k). The Employee shall be eligible to participate in the Company’s 401(k) Plan, in accordance with the terms of such Plan.
(iii) Disability Coverage; D & O Insurance. The Employee shall be eligible for both short-term and long-term disability coverage in
accordance with the plans secured by the Company and made available to similarly situated employees. In addition, the Employee
will be insured under the Company’s D & O liability coverage, pursuant to the terms of such coverage.
(iv) Stock Options. The Company shall recommend to the Board of Directors of Gamida Cell Ltd., the Company’s parent entity (the “Board” and the
“Parent”, respectively), that the Employee be granted - within ten (10) business days after the Start Date - options to purchase 500,000 ordinary shares of
the Parent (the “Options”), pursuant to the terms of the Parent’s Stock Incentive Plan and applicable grant agreements, as approved and adopted by the
Board (all applicable agreements, collectively, the “Plans”), which Options, except as provided in Section 7(g)(v) below, shall vest as follows: 25%of the
Options on the first anniversary of the Start Date and additional 6.25% of the Options at the end of each subsequent three-month period thereafter over the
course of the following three (3) years, provided that the Employee remains employed by the Company or its subsidiary on such vesting dates. All matters
related to such Options, including but not limited to the exercise price and the required execution of any governing agreement and/or other documentation,
shall be subject to the sole discretion of the Board. It is understood that nothing herein is intended to constitute a grant of, or right to, any share capital of
the Company, and it is hereby confirmed that the Employee shall be solely responsible for any tax liability incurred in connection with the Options,
including but not limited to with respect to the grant, exercise, and/or sale of such Options.
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(v) Paid Time Off.
(1) Vacation. The Employee shall be entitled to take twenty (20) days of vacation per calendar year, with such days to be
prorated for partial years of employment. It is agreed that the Employee shall coordinate the timing of taking such vacation
days with the Supervisor. The Employee shall be entitled to carry over accrued but unused vacation days from one calendar
year into the following calendar year, but at no time shall the Employee accrue more than twenty (20) days of vacation.
(2) Holidays. In addition to vacation days, the Employee shall be entitled to take off the following paid holidays each calendar
year: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Eve, Christmas Day
and New Year’s Eve. The Company does not pay out worked holidays.
(3) Sick Time. The Employee will be eligible to take paid sick time off from work, in accordance with applicable law, up to a
maximum of forty (40) hours per calendar year. Accrued but unused sick time shall be carried over from one calendar year
to the following calendar year, with a maximum of forty (40) hours to be used for purposes of sick time in any given
calendar year.
(4) Separation from the Company. Upon the Employee’s termination of employment by the Company or the Employee’s
resignation, the Employee will be entitled to the payout of any accrued but unused vacation days, but will not be eligible for
payout on account of unused sick time or worked holidays.
(vi) Company Property. The Company shall provide the Employee with Company property, including but not limited to a laptop,
which shall remain at all times the property of the Company, to be used by the Employee in accordance with Company guidelines.
Upon the Employee’s termination of employment for any reason, the Employee will be obligated to immediately return the laptop
to the Company.
(vii)Business Expenses. The Employee will be eligible for reimbursement of preapproved reasonable business expenses, including cell
phone expenses as per a mutually agreed upon cell phone plan, as well as other expenses incurred in accordance with the
Company’s business expense reimbursement policies, as may be updated from time to time by the Company.
(d) Section 409A of the Internal Revenue Code of 1986, as amended. The Parties hereby affirm that with respect to any and all payments
and benefits under this Agreement, the intent is that such payments and benefits either: (i) do not constitute “nonqualified deferred compensation” within
the meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A, (ii) are subject to a “substantial
risk of forfeiture” and are exempt from Section 409A under the “short−term deferral rule” set forth in Treasury Regulation §1.409A−1(b)(4), or (iii) are in
compliance with Section 409A. In any event, the Parties further confirm that they intend to have all provisions of this Agreement construed, interpreted and
administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(e) The Employee shall be responsible for the payment of applicable taxes and other compulsory payments imposed by law on the
Employee, in respect of, or resulting from, the compensation and the benefits paid or granted to, or received by the Employee, or contributed by the
Company, or to which the Employee is or may be entitled, pursuant to this Agreement or the Employee’s employment with the Company. The Company
shall withhold or deduct from any payment or compensation to which the Employee is entitled, applicable amounts as required by law.
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7. Termination. The Employee’s Employment hereunder may be terminated without breach of this Agreement as set forth below:
(a) Death; Disability. The Employee’s Employment hereunder shall terminate upon the Employee’s death or “Disability” (as hereafter
defined). Upon any such termination, the Employee (or, in the event of the Employee’s death, the Employee’s estate) shall receive the Base Salary through
the “Date of Termination” (as hereafter defined), as well as (i) reimbursement for unpaid business expenses through such date and (ii) any fully earned and
declared but unpaid Annual Target Bonus as of the Date of Termination. The Employee (and, in the event of the Employee’s death, the Employee’s estate)
shall not be entitled to any other amounts or benefits from the Company or otherwise. For purposes of this Agreement, “Disability” shall mean the inability
of the Employee to perform the Employee’s duties on account of a physical or mental illness for a period of sixty (60) consecutive days, or for ninety (90)
days in any six (6) month period. Notwithstanding anything contained herein to the contrary, during any period of Disability, the Company shall not be
obligated to pay any compensation or other amounts to the Employee, except as mandated by applicable law.
(b) Cause. The Company may terminate the Employee’s Employment hereunder for Cause at any time upon written notice to Employee.
(i) For purposes of this Agreement, the Company shall have “Cause” to terminate the Employee’s Employment hereunder upon the
Employee’s:
(1) commission of fraud, embezzlement, gross negligence, an act or acts constituting a felony under the laws of the United
States or any state thereof, or a willful or grossly negligent act or omission which results in an assessment of a civil or
criminal penalty against the Employee, or the Company or its affiliates;
(2) willful or continued failure to substantially perform the Employee’s duties as directed by the Company; or
(3) violation of the terms of this Agreement or of the Undertaking (as defined below) attached hereto as Schedule A in any
material respect.
(ii) A purported termination of Employee’s employment for Cause shall not be effective unless (A) the Company provides written
notice to Employee of the facts alleged by the Company to constitute Cause and such notice is delivered to Employee no more
than 90 days after the Company has actual knowledge of such facts and (B) Employee has been given an opportunity of no less
than 10 days after receipt of such notice to cure the circumstances alleged to give rise to Cause, and the Company has cooperated
in good faith with Employee’s efforts to cure such condition or circumstance, but only to the extent that such circumstances are
reasonably curable.
(iii) In the event that the Company terminates the Employee’s Employment for Cause, the Employee shall receive the Base Salary
through the Date of Termination, as well as reimbursement for approved but unpaid business expenses through such date. The
Employee shall not be entitled to any other amounts or benefits from the Company.
(c) Termination without Cause/Resignation. The Employee’s Employment hereunder may be terminated (i) following the three (3) month
anniversary of the Start Date, by the Company at any time, or, (ii) following the three (3) month anniversary of the Start Date, by the Employee upon the
Employee’s resignation. In the event of the termination of the Employee’s Employment by the Company for any reason (other than a termination for
Cause), or the Employee’s resignation for any reason, it is agreed that one Party shall give the other Party one (1) month’s notice of such termination in
accordance with Section 7(d) hereunder. In the event of the Company’s termination of Employee’s Employment for any reason (other than a termination for
Cause) or Employee’s resignation for any reason: (i) the Employee shall receive the Base Salary through the Date of Termination, reimbursement for
approved but unpaid business expenses through the Date of Termination, any fully earned and declared but unpaid Annual Target Bonus as of the Date of
Termination, and, if applicable, the separation benefits described in Section 7(g), and (ii) the Company shall have the right to determine whether or not the
Employee will actively work during the notice period.
(d) Notice of Termination. Any termination of the Employee’s Employment by the Company or by the Employee (other than termination
upon the death of the Employee) shall be communicated by written Notice of Termination by such Party to the other in accordance with Section 9 of this
Agreement. Such Notice of Termination shall specify the last day of the Employee’s Employment with the Company.
(e) Date of Termination. “Date of Termination” shall mean: (i) if the Employee’s Employment is terminated by the Employee’s death, the
date of the Employee’s death, or (ii) if the Employee’s Employment is terminated pursuant to any of the other terms set forth herein, the date specified in
the Notice of Termination.
(f) Transition. Regardless of the circumstances surrounding the Employee’s termination of Employment, the Employee hereby agrees that
upon the Employee’s termination of Employment, the Employee will return to the Company all Company property and will make reasonable efforts to
facilitate the orderly transition of the Employee’s duties and responsibilities. Any such transition assistance following Employee’s last day of employment
with the Company, shall be at no out-of-pocket cost or expense to the Employee and shall be subject to Employee’s commitments to any new employer.
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(g) Separation Benefits.
(i) Severance and Non-Compete Payments and COBRA Coverage after Termination by the Company not for Cause. In the event of
the Company’s termination of Employee’s Employment not for Cause, (a) the Employee shall be entitled to a lump sum severance
payment equal to six (6) months’ Base Salary, less applicable deductions and withholdings, (b) the Employee shall be entitled to
payment during the first six (6) months of the noncompetition period as set forth in Section 2.1 of the Confidentiality and
Ownership of Inventions, Unfair Competition, and Non-Solicitation Undertaking attached hereto, at the same rate as the Base
Salary, less applicable deductions and withholdings, and (c) the Company shall reimburse Employee for the payments Employee
makes for COBRA coverage for a period of six (6) months following the date upon which the Release (defined below) becomes
effective, provided Employee timely elects and pays for COBRA coverage. COBRA reimbursements shall be made by the
Company to Employee consistent with the Company’s normal expense reimbursement policy, provided that Employee submits
documentation to the Company substantiating Employee’s payments for COBRA coverage.
(ii) Severance and Non-Compete Payments and COBRA Coverage after Employee’s Resignation from Employment for Good Reason.
In the event of the Employee’s resignation from Employment for Good Reason, (a) the Employee shall be entitled to a lump sum
severance payment equal to six (6) months’ Base Salary, less applicable deductions and withholdings, (b) the Employee shall be
entitled to payment during the first six (6) months of the noncompetition period as set forth in Section 2.1 of the Confidentiality
and Ownership of Inventions, Unfair Competition, and Non-Solicitation Undertaking attached hereto, at the same rate as the Base
Salary, less applicable deductions and withholdings, and (c) the Company shall reimburse Employee for the payments Employee
makes for COBRA coverage for a period of six (6) months following the date upon which the Release becomes effective, provided
Employee timely elects and pays for COBRA coverage. COBRA reimbursements shall be made by the Company to Employee
consistent with the Company’s normal expense reimbursement policy, provided that Employee submits documentation to the
Company substantiating Employee’s payments for COBRA coverage.
(iii) For purposes of this Agreement, “Good Reason” means (i) a material reduction in the Employee’s title, duties or obligations at the
Company (unless such material reduction takes place within twelve (12) months following a Change in Control, in which case
such material reduction shall not qualify as Good Reason), (ii) relocation of Employee’s primary place of work to a location more
than 25 miles from Employee’s home, or (iii) a violation of the terms of this Agreement by the Company in any material respect,
or (iv) solely for purpose of Section 7(g)(v) below – the expiration of a 12-month period following a Change in Control (as defined
below) if Employee has continuously been employed with the Company until such time. A purported resignation by Employee for
Good Reason shall not be effective unless (A) Employee provides written notice to the Company of the circumstances alleged by
Employee to constitute Good Reason and such notice is delivered to the Company no more than 30 days after the occurrence of
such circumstances and (B) Employee has cooperated in good faith with Company’s efforts to cure such circumstance, and the
Company fails to cure such circumstances within thirty (30) days of receiving such written notice from the Employee.
(iv) For purposes of this Agreement, a “Change in Control” shall mean a sale of all or substantially all of the shares or assets of the
Parent, or a merger, consolidation or similar event pursuant to a transaction or series of related transactions in which a third party
acquires more than fifty percent (50%) of the voting power of the Parent immediately prior to such event, and the stockholders of
the Parent immediately prior to such event do not retain a majority of the voting power in the surviving corporation or in the parent
company of the surviving entity (other than the reincorporation of the Company Parent and other than a direct equity investment in
the Parent).
(v) Acceleration of Options. In the event of a Change in Control, (i) 50% of the then unvested Options and 50% of any other then
unvested equity awards of the Company held by Employee shall fully vest as of immediately prior to such Change in Control,
provided that the Employee signs (and does not revoke, as applicable) the Release (as defined and otherwise set forth below). In
addition, if the Employee’s Employment is terminated by the Company without Cause or the Employee resigns from Employment
for Good Reason, in either case, within twelve (12) months following a Change in Control, or if Employee is continuously
employed with the Company until expiration of a twelve (12)-month period following a Change in Control, then any Options and
other equity awards of the Company that have been granted to the Employee as of the Date of Termination shall fully vest and
become exercisable on such date in accordance with the terms of the applicable Plans, provided that the Employee signs (and does
not revoke, as applicable) the Release. The provisions of this Section 7(g)(v) shall apply only if and to the extent permitted by the
Compensation Policy of the Parent as in effect from time to time. The Company agrees that the Parent will seek shareholder
approval at the 2020 annual shareholders’ meeting of Parent for an amendment of the Compensation Policy to permit the
foregoing, yet such approval is not assured.
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(vi) Conditions Precedent. Any severance payments, benefits, or acceleration contemplated by this Section 7(g) are conditional on
Employee: (i) continuing to comply with the terms of this Agreement and the Undertaking; and (ii) signing and not revoking a
separation agreement and release of known and unknown claims in the form provided by the Company (including
nondisparagement and no cooperation provisions) (the “Release”) and provided that such Release becomes effective and
irrevocable no later than sixty (60) days following the termination date or such earlier date required by the release (such deadline,
the “Release Deadline”). If the Release does not become effective by the Release Deadline, Employee will forfeit any rights to
severance payments, benefits, or acceleration under this Section 7(g) or elsewhere in this Agreement. Any severance payments
under this Agreement that would not be considered deferred compensation subject to Section 409A will be paid on, or, in the case
of installments, will not commence until, the first payroll date that occurs on or after the date the Release becomes effective.
(vii)Deferred Compensation. Notwithstanding anything in this Agreement to the contrary, no amount deemed deferred compensation
subject to Section 409A that is designated to be paid upon the Employee’s termination of employment shall be payable pursuant to
this Agreement unless the Employee’s termination of employment constitutes a “separation from service” with the Company
within the meaning of Section 409A (a “Separation from Service”). Notwithstanding anything in this Agreement to the contrary, if
the Employee is deemed by the Company at the time of the Employee’s Separation from Service to be a “specified employee” for
purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which the Employee is entitled
under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of the Employee’s
benefits shall not be provided to the Employee prior to the earlier of (A) the expiration of the six-month period measured from the
date of the Employee’s Separation from Service with the Company or (B) the date of the Employee’s death. Upon the first business
day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence will
be paid in a lump-sum to the Employee (or the Employee’s estate or beneficiaries), and any remaining payments due to the
Employee under this Agreement shall be paid as otherwise provided herein. For purposes of Section 409A, the Employee’s right to
receive any installment payments under this Agreement will be treated as a right to receive a series of separate payments and,
accordingly, each such installment payment shall at all times be considered a separate and distinct payment.
8. Employee Representations.
(a) The Employee hereby represents and warrants that the Employee’s performance of the terms of this Agreement will not breach any
written or oral agreement entered into by the Employee with a former employer or with any other third party. The Employee further represents and warrants
that the Employee will not engage in additional employment or recreational activities that would in any way pose a conflict of interest with the
Employment.
(b) The Employee hereby confirms that the Employee is not owed any amounts or entitled to any benefits from the Company and/or its
affiliates for any period of employment, consulting or services provided by the Employee prior to the Effective Date, whether to the Company or to any of
its affiliated entities, and that the Employee has been paid in full any amounts which may be due to the Employee on the part of the Company and/or its
affiliates on account of any such period of employment, consulting or services provided.
(c) The Employee hereby acknowledges that the Employee’s signing of the Confidentiality, and Ownership of Inventions, Unfair
Competition and Non-Solicitation Undertaking attached hereto as Schedule A (the “Undertaking”) constitutes a precondition of the Employment. The
Employee further affirms that this Agreement and the Undertaking constitute the entire understanding of the Parties with respect to the subject matter
hereof and supersede any understanding or agreement, whether oral or written between the Company and the Employee.
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(d) The Employee understands that the Employment and obligations of the Company pursuant to this Agreement are conditioned upon
the Employee’s presenting to the Company and maintaining, in each case as required by applicable law, authorization to work in the United States. It is
understood that absent such work authorization, the terms of this Agreement shall be null and void, and the Company shall have no obligations hereunder.
In the event that the Employee is actively employed by the Company at the time of a lapse in the Employee’s work authorization for any reason, the
Employment shall immediately terminate and the Company shall have no obligations with respect to the Employee or pursuant to this Agreement.
(e) The Employee acknowledges that the Employee has been advised to obtain independent counsel to evaluate the terms, conditions and
covenants set forth in this Agreement and its attached Schedule A, and the Employee has been afforded ample opportunity to obtain such independent
advice and evaluation. The Employee warrants to the Company that the Employee has relied upon such independent counsel and not upon any
representation (legal or otherwise), statement or advice said or offered by the Company or the Company’s counsel in connection with this Agreement.
9. Notices. All notices and other communications under this Agreement shall be in writing and shall be given by email or first-class mail, certified
or registered, and shall be deemed to have been duly given three (3) days after mailing, twenty-four (24) hours after transmission of email, or immediately
upon acknowledgement of receipt, as follows:
If to the Company:
GAMIDA CELL, INC.
Attention: Julian Adams, CEO
673 Boylson St., Boston MA
Julian@Gamida-cell.com
If to the Employee:
MICHELE KORFIN
[***]
or as otherwise indicated as per the Company’s personnel records for the Employee.
10. Remedies of the Company. Upon any termination of the Employment for Cause, the reasons for which may cause irreparable harm to the
Company, the Company shall be entitled to institute and prosecute proceedings to obtain injunctive relief and damages, costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses.
11. Attorneys Fees. In any proceeding to enforce the terms and conditions of this Agreement or the Undertaking, the prevailing party (as
determined by the applicable court or arbitrator) shall be entitled to reimbursement for its reasonable attorneys’ fees and expenses.
12. Arbitration. Except as set forth above in Section 10 above and as set forth in the Undertaking, the Employee and the Company agree that any
claim, controversy or dispute between the Employee and the Company (including, without limitation, its affiliates, officers, Employees, representative or
agents) arising out of or relating to this Agreement, the Employment of the Employee, the cessation of Employment of the Employee, or any matter relating
to the foregoing shall be submitted to and settled by arbitration pursuant to the Federal Arbitration Act in a forum of the American Arbitration Association
(“AAA”) located in the State of New York and applying the substantive law of the State of Delaware, unless otherwise mutually agreed upon by the Parties,
and conducted in accordance with the National Rules for the Resolution of Employment Disputes. In such arbitration, the Parties shall agree upon a single
arbitrator, who shall: (i) agree to treat as confidential evidence and other information presented by the Parties to the same extent as Confidential
Information under the Undertaking must be held confidential by the Employee, (ii) have no authority to amend or modify any of the terms of this
Agreement, and (iii) have ten (10) business days from the closing statements or submission of post-hearing briefs by the Parties to render his or her
decision. Any arbitration award shall be final and binding upon the Parties, and any court, state or federal, having jurisdiction may enter a judgment on the
award.
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13. Enforceability of this Agreement.
(a) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other
provision hereunder. If a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy only
the portions of this Agreement that violate such statute or public policy shall be stricken, and all other portions of this Agreement that do not violate any
statute or public policy shall continue in full force and effect. Further, if any one or more of the provisions contained in this Agreement is determined by a
court of competent jurisdiction in any State to be excessively broad as to duration, scope, activity or subject, or is unreasonable or unenforceable under the
laws of such State, such provisions will be construed by limiting, reducing, modifying or amending them so as to be enforceable to the maximum extent
permitted by the law of that State. If the Agreement is held unenforceable in any jurisdiction, such holding will not impair the enforceability of the
Agreement in any other jurisdiction.
together will constitute one and the same instrument.
(b) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which
(c) No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Employee and the Company. No waiver by either Party hereto at any time or any breach by the other Party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
without regard to its conflicts of law principles, unless otherwise mutually agreed upon by the Parties.
(d) The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware
(e) The Company shall have the right to assign its rights and obligations under this Agreement to any individual, entity, corporation or
partnership that succeeds to all or a portion of the relevant business or assets of the Company. This Agreement is personal to the Employee, and the
Employee may not assign the Employee’s rights and obligations under this Agreement to any third party.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Employment Agreement as set forth below.
GAMIDA CELL, INC.
Date:
July 16, 2020
By:
/s/ Julian Adams
Julian Adams, Chief Executive Officer
MICHELE KORFIN
/s/ Michele Korfin
Dated: July 20, 2020
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SCHEDULE A:
CONFIDENTIALITY AND OWNERSHIP OF INVENTIONS, UNFAIR COMPETITION AND NON-SOLICITATION UNDERTAKING
This CONFIDENTIALITY AND OWNERSHIP OF INVENTIONS, UNFAIR COMPETITION AND NON-SOLICITATION UNDERTAKING
(“Undertaking”) is made and given as of July 20, 2020 by MICHELE KORFIN (the “Employee”).
WHEREAS, the Employee wishes to be employed with and provide services that are of particular and special value to Gamida Cell, Inc. (together
with its direct or indirect parent, subsidiary and affiliated companies, and its and their respective successors and assigns – the “Company”); and
WHEREAS, it is critical for the Company to preserve and protect its Confidential Information, and its rights in Inventions and in all related
intellectual property rights; and
WHEREAS, this Undertaking is a condition to Employee’s employment with the Company pursuant to that certain Employment Agreement dated
July 20, 2020, between Employee and the Company (as may be amended from time to time, the “Employment Agreement”).
NOW, THEREFORE, as a condition to Employee’s engagement with the Company, Employee hereby undertakes and warrants towards the
Company as follows:
1.
Confidentiality.
1.1 Employee acknowledges that during the term of the Employee’s engagement with the Company, and including any period during which the
Employee provided services to any Company entity at any time prior to the date hereof, the Employee may have (or may have had) access to information
that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third
parties with whom the Company agreed or may agree, from time to time, to hold information of such parties in confidence (the “Confidential
Information”). Confidential Information shall include, without limitation, information, whether or not marked or designated as confidential, concerning
technology, products, research and development, patents, copyrights, Inventions, trade secrets (as defined by the Defend Trade Secrets Act, 18 U.S.C. §
1839(3) and any applicable state law), test results, formulae, processes, data, know-how, marketing, promotion, business and financial plans, policies,
practices, strategies, surveys, analyses and forecasts, financial information, customer lists, agreements, transactions, undertakings and data concerning
employees, consultants, officers, directors, and shareholders. Confidential Information includes information in any form or media, whether documentary,
written, oral, magnetic, electronically transmitted, through presentation or demonstration or computer generated. Confidential Information shall not include
information that has become part of the public domain not as a result of a breach of any obligation owed to the Company by Employee or any third party.
1.2 Employee acknowledges and understands that the engagement of the Employee with the Company and the access to Confidential Information
creates a relationship of confidence and trust with respect to such Confidential Information.
1.3 During the term of Employee’s engagement with the Company and at any time after termination or expiration thereof, for whatever reason,
subject to Section 1.4 below, Employee shall keep in strict confidence and trust, shall safeguard, and shall not disclose to any person or entity, nor use for
the benefit of any party other than the Company, any Confidential Information, other than with the prior express consent of the Company, unless the
Employee has an independent right or obligation to make such disclosure pursuant to applicable local, state or federal law, provided, that Employee gives
the Company prompt notice of such requirement to disclose so that the Company may seek a protective order or other appropriate remedy, and provided
further, that Employee shall furnish only that portion of the Confidential Information which is legally required to be disclosed, and shall exercise all
reasonable efforts to obtain confidential treatment for such information.
1.4 Notice of Immunity: Employee acknowledges that via this paragraph the Company is providing the Employee with written notice that the
Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides immunity for the disclosure of a trade secret for the purpose of reporting a suspected violation of
law and/or in an anti-retaliation lawsuit, in that (i) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for
the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, in
each case solely for the purpose of reporting or investigating a suspected violation of law, or where such disclosure is made via a complaint or other
document filed in a lawsuit or other proceeding, as long as such filing is made under seal, and (ii) an individual who files a lawsuit for retaliation by an
employer or contracting party on account of the individual having reporting a suspected violation of law, may disclose the relevant trade secret to the
individual’s attorney and may use such trade secret information in the applicable court proceeding, as long as any document containing such trade secret is
filed under seal, and as long as the individual does not disclose such trade secret, except pursuant to court order.
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1.5 All right, title and interest in and to Confidential Information are and shall remain the exclusive property solely of the Company or the property
of the third party providing such Confidential Information to the Company, as the case may be. Without limitation of the foregoing, Employee agrees and
acknowledges that all memoranda, books, notes, records, email transmissions, charts, formulae, specifications, lists and other documents (contained on any
media whatsoever) made, reproduced, compiled, received, held or used by Employee in connection with the engagement with the Company or that
otherwise relates to any Confidential Information (the “Confidential Materials”), shall be the exclusive property solely of the Company and shall be
deemed to be Confidential Information. All originals, copies, reproductions and summaries of the Confidential Materials shall be delivered by Employee to
the Company upon termination or expiration of Employee’s engagement with the Company for any reason, or at any earlier time at the request of the
Company, without Employee retaining any copies thereof.
1.6 During the term of Employee’s engagement with the Company, Employee shall not remove from the Company’s offices or premises any
Confidential Materials unless and to the extent necessary in connection with the duties and responsibilities of the Employee and permitted pursuant to the
then applicable policies and regulations of the Company. In the event that any such Confidential Materials are duly removed from the Company’s offices or
premises, Employee shall take all actions necessary in order to secure the safekeeping and confidentiality of such Confidential Materials and return the
Confidential Materials to their proper files or location as promptly as possible after such use.
1.7 During the term of Employee’s engagement with the Company, Employee will not improperly use or disclose any Confidential Information,
and will not bring onto the premises of the Company any unpublished documents or any property, in each case belonging to any former employer or any
other party to whom Employee has an obligation of confidentiality and/or non-use (including, without limitation, any academic institution or any entity
related thereto), unless generally available to the public or consented to by such third party in a writing addressed to the Company.
2.
Unfair Competition and Non-Solicitation.
2.1 Employee undertakes that during the term of engagement with the Company and the Tail Period (as defined below), regardless of the reason
for Employee’s separation from Company, Employee shall not, directly or on behalf of any other third party: (i) engage in or establish or otherwise become
involved in, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, any business, occupation, work or any other
activity involving stem cell therapies and/or NK cells, in each case relating to the treatment of cancer; (ii) solicit, hire or retain as an employee, consultant
or otherwise, any employee of the Company or induce or attempt to induce any such employee to terminate or reduce the scope of such employee’s
employment with the Company; and (iii) solicit or induce, or attempt to solicit or induce, any employee, consultant, service provider, business partner,
agent, distributor, supplier or customer of the Company, or any third party with respect to which the Company took substantial steps to engage as an
employee or as any of the foregoing capacities during the period of Employee’s engagement with the Company, to terminate, reduce or modify the scope of
its or their engagement with the Company or work for, in any capacity, a competitor of the Company. It is understood that the restrictions set forth in
Section 2.1(i) above shall apply only to those geographical areas in which the Company actively conducts, or takes meaningful steps to actively conduct its
business during the period of Employee’s employment at the Company. By signing this Undertaking, Employee represents and confirms that the restrictions
set forth in this paragraph are not unduly burdensome, financially or otherwise, for the Employee. For purposes of this Undertaking, the “Tail Period”
means (i) in the event Employee’s separation from the Company arises from a termination by the Company not for Cause (as defined in the Employment
Agreement) or a resignation by the Employee for Good Reason (as defined in the Employment Agreement), eighteen (18) months provided that the
severance pursuant to Section 7(g) of the Employment Agreement shall have been duly paid to the Employee, and (ii) in the event Employee’s separation
from the Company arises from any other reason, a period equal to twelve (12) months.
2.2 Employee acknowledges that in light of Employee’s positions at the Company and in view of Employee’s exposure to, and involvement in, the
Company’s sensitive and valuable proprietary information, intellectual property and technologies, Confidential Information and Confidential Materials (the
“Company’s Material Assets”), the provisions of this Section Error! Reference source not found. are reasonable and necessary to legitimately protect the
Company’s Material Assets, and are being undertaken by Employee as a condition to the engagement of Employee by the Company. Employee confirms
that Employee has carefully reviewed the provisions of this Section 2, fully understands the consequences thereof and has assessed the respective
advantages and disadvantages to Employee of entering into this Undertaking and, specifically, Section 2 hereof. Employee understands that, Employee has
the right to consult with counsel prior to signing this Undertaking. By signing this Undertaking, Employee confirms that Employee has had ample time to
exercise such right.
2.3 Employee acknowledges and agrees that the enforcement of the covenants in this Section 2, and otherwise in this Undertaking, is not
contingent upon the payment of any additional cash consideration, and that any payments (if any) made to Employee by the Company during the post-
termination period set forth in Section 2.1 above (such as severance or non-compete payments, on certain circumstances) shall not limit or otherwise affect
the enforceability of the covenants for the entire period set forth above, and that good and valid consideration exists for the covenants herein apart from any
cash consideration, and that such covenants are separately justified, appropriate and based on legitimate business reasons, regardless of the circumstances
surrounding Employee’s separation from the Company.
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3.
Ownership of Inventions.
3.1 Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information,
improvements, inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how and data, whether or not patentable or
registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by Employee, either alone or jointly with others,
during Employee’s engagement with the Company (including after hours, on weekends or during vacation time) (all such information, improvements,
inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how, and data are hereinafter referred to as the “Invention(s)”)
immediately upon discovery, receipt or invention as applicable.
3.2 Employee agrees that all of the Inventions are, upon creation, considered Inventions of the Company, shall be the exclusive property solely of
the Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights, trade secrets and all other rights of any
kind or nature, including moral rights, in connection with such Inventions. Employee hereby irrevocably and unconditionally assigns to the Company all
the following with respect to any and all Inventions: (i) title, rights and interest in and to such Inventions, (ii) title, rights and interest in and to any patents,
patent applications, and patent rights, including any and all continuations or extensions thereof; (iii) rights associated with works of authorship, including
copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iv) rights relating to the protection of trade secrets and
confidential information; (v) design rights and industrial property rights; (vi) any other proprietary rights relating to intangible property including
trademarks, service marks and applications therefor, trade names and packaging and all goodwill associated with the same; and (vii) all rights to sue for any
infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights.
Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even
after termination of Employee’s engagement with the Company. “Moral Rights” means any right to claim authorship of a work, any right to object to any
distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty. The Employee
further acknowledges and agrees that all copyrightable works included in the Inventions shall be “works made for hire” within the meaning of the
Copyright Act of 1976, as amended (17 U.S.C. §101) (the “Act”), and that the Company shall be the “author” within the meaning of the Act.
3.3 Employee represents that there are no information, improvements, inventions, formulae, processes, techniques, know-how and data, whether
or not patentable or registerable under copyright or any similar laws, and whether or not reduced to practice, original works of authorship and trade secrets
made or conceived by or belonging to Employee (whether made solely by the Employee or jointly with others) that: (i) were developed by the Employee
prior to Employee’s engagement with the Company, (ii) relate to the Company’s actual or proposed business, products or research and development, and
(iii) are not assigned to the Company hereunder.
3.4 Employee further agrees to perform, during and after Employee’s engagement with the Company, all acts deemed reasonably necessary or
desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and
all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee’s agents and attorneys-in-fact to act for and on
Employee’s behalf and instead of Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes
with the same legal force and effect as if executed by Employee.
3.5 Employee shall not be entitled, with respect to any and all of the above, to any monetary consideration or any other consideration except as
explicitly set forth in the Employment Agreement. Without limitation of the foregoing, Employee irrevocably confirms that the consideration explicitly set
forth in the Employment Agreement is in lieu of any rights for compensation that may arise in connection with the Inventions under applicable law and
waives any right to claim royalties or other consideration with respect to any Invention, including under Section 134 of the Israeli Patent Law, 1967 (or any
successor or equivalent law in any jurisdiction). With respect to any and all of the above, any oral understanding, communication or agreement not
memorialized in writing and duly signed by an authorized officer of the Company, shall be void.
4.
General.
4.1 Employee represents that the performance of all the terms of this Undertaking and of all of Employee’s duties and services to the Company
does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or rules,
regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto).
Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in engaging Employee.
4.2 Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of Employee’s engagement with the
Company and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof. The
Employee hereby explicitly acknowledges that the restrictions set forth in this Undertaking are not greater than required and do not unduly burden the
Employee.
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4.3 It is agreed and understood that if a court of law finds that the Employee has violated Section 2 of this Undertaking, then the restrictions set
forth in such section shall automatically be extended for any period of time for which the court finds that the Employee violated such restrictions.
4.4 Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by Employee, the Company
may suffer irreparable harm or damage and that under such circumstances monetary remedies would be inadequate to protect against any actual or
threatened breach of this Undertaking. Without prejudice to any other rights and/or remedies otherwise available to the Company, it is therefore agreed that
the Company will be entitled to the granting of equitable relief, including but not limited to injunctive relief and specific performance, in favor of the
Company without proof of actual damages to remedy or prevent any breach of this Undertaking (without limitation to any other remedy at law or in
equity).
4.5 This Undertaking shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any
conflict of laws principles which may result in the application of the laws of any other jurisdiction. Any and all disputes in connection with this
Undertaking shall be submitted to the exclusive jurisdiction of the competent courts or tribunals, as applicable, located in the State of New York. It is
agreed that each party irrevocably consents to the exercise of personal jurisdiction over such party by such court, agrees that venue shall be proper in such
court, and irrevocably waives and releases any and all defenses based on lack of personal jurisdiction, improper venue or Forum non conveniens.
4.6 If any provision of this Undertaking is determined by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced,
such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the
remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never
been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision
is enforceable to the fullest extent compatible with applicable law.
4.7 The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the engagement
between the Company and Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of Employee’s
obligations and liabilities under any applicable law.
4.8 This Undertaking constitutes the entire agreement between Employee and the Company with respect to the subject matter hereof and
supersedes all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, with respect to the subject matter hereof. No
amendment, waiver or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by an authorized
officer of the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that
or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of
any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
4.9 All notices and other communications under this Undertaking shall be in writing and shall be given in person, by fax, electronic or certified or
registered mail, and shall be deemed to have been duly given twenty-four (24) hours after transmission of a fax or electronic email, three (3) days after
sending a notice by certified or registered mail, or immediately upon delivery in person or explicit confirmation of receipt.
4.10 This Undertaking, the rights of the Company hereunder, and the obligations of Employee hereunder, will be binding upon and inure to the
benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under
this Undertaking. Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior
written consent of an authorized officer of the Company.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has executed and delivered this CONFIDENTIALITY AND OWNERSHIP OF INVENTIONS, UNFAIR
COMPETITION AND NON-SOLICITATION UNDERTAKING effective as of the date first mentioned above.
Employee:
/s/ Michele Korfin
MICHELE KORFIN
Date: July 20, 2020
Exhibit 10.18
April 30, 2017
Ronit Simantov
500 East 85th Street Apt 7H
New York, NY 10028
Dear Ronit,
On behalf of Gamida Cell Inc. (the “Company”), I am pleased to offer you the position of Chief Medical Officer (“CMO”). The Company’s offer, as set
forth in this letter agreement, is contingent upon your presentation to the Company of proof of your authorization to work in the United States and the
approval of the Board of Directors of the Company.
The terms of your new position with the Company are as set forth below:
1. Position. You will be the CMO reporting directly to the Chief Executive Officer (“CEO”). You will be responsible for the Clinical and Regulatory
affairs Departments, and will hire additional staff for the Company and its affiliates as agreed with the CEO.
a. Your duties and responsibilities shall include those normally associated with role of a CMO of a privately held biotech company. Until
the establishment of the Company’s US East Coast Office, you will work from your home office in the State of New York. It is
understood that this position will require you to travel regularly within the United States, and periodically to the Company’s headquarters
in Israel.
b. You agree to the best of your ability and experience that you will at all times loyally and conscientiously perform all of the duties and
obligations required of and from you pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the CEO. It is
understood that by signing this letter agreement you confirm that you are not bound by an agreement, whether formal or informal, oral or
written, which conflicts with the terms of this letter agreement. You further agree that during the term of your employment with the
Company, you will devote all of your business time and attention to the business of the Company. Nothing in this letter agreement will
prevent you from accepting speaking or presentation engagements in exchange for honoraria, or from serving on boards of charitable
organizations, provided that such activities do not materially interfere with your obligations to the Company as described above.
2. Start Date. Subject to fulfillment of any conditions imposed by this letter agreement, you are expected to commence this new position with the
Company on or before June 1, 2017 (as applicable, the “Start Date”).
3. Compensation. You will be paid at a monthly gross salary rate of no less than $28,333 which is equivalent to a gross salary rate of $340,000 on
an annualized basis, and such compensation shall be paid to you less required and authorized deductions and withholdings (the “Base Salary”).
The Base Salary will be reviewed annually as part of the Company’s normal salary review process.
4.
Incentive Bonus. You will be eligible to receive an annual cash incentive target bonus equal to 35% of your annual Base Salary. The bonus will
be based on the attainment of performance goals and milestones as shall be determined by the Company’s Board of Directors, as shall be set forth
in writing.
5. One-Time Sign-On Bonus. In addition to your regular annual compensation, not later than 45 days after your Start Date, you will be given a one-
time sign-on bonus in the amount of $50,000 which will be paid in accordance with the Company’s normal payroll procedures, and subject to the
usual required withholdings and deductions. You understand and agree that you will reimburse the Company within 30 days of termination for the
full sign-on bonus amount in the event that you resign, or your employment is terminated by the Company for Cause (as defined below), in either
case prior to the one-year anniversary of the Start Date, provided that if you resign on account of Good Reason you shall not be obligated to repay
the Sign-On Bonus. For purposes of this letter agreement, “Good Reason” shall take place if, within 30 days of a material reduction in your duties
and obligations at the Company, you notify the Company of such circumstances qualifying as Good Reason, and the Company fails to cure such
circumstances within 30 days of receiving such written notice from you.
6. Stock Options.
a.
Initial Option Grant. The Board of Directors of Gamida Cell Ltd. (the “Board”), the parent company of the Company (the “Parent”) has
adopted a Share Incentive Plan (the “Plan”). The Board will grant you options to purchase 186,574 Ordinary Shares of the Parent
(“Options”). The exercise price of these Options will be determined by the Board and will be equal to the fair market value on the date of
the grant. 25% of these Options will vest on the anniversary of your employment Start Date, with the balance of the Options vesting at
the rate of 1/12th per quarter over the next thirty-six months following such 1-year anniversary. Vesting will depend on your continued
employment with the Company. The Options will be incentive stock options to the maximum extent allowed by the United States Internal
Revenue Code of 1986 and will be subject to the terms and conditions of the Plan and of an Option Agreement to be entered into between
you and the Company.
b. Subsequent Option Grants. Subject to the sole discretion of the Board, you may be eligible to receive additional grants of stock options
from time to time in the future, on such new terms and subject to such conditions as the Board shall determine as of the date of any such
grant.
7. Benefits.
a. Paid-time-off. You will be entitled to take three weeks of paid time off in the form of vacation days per calendar year, prorated for partial
years of employment. It is agreed that for the period commencing on the Start Date and ending on December 31, 2017, you will be
entitled to take a full three weeks of vacation, despite not being employed for the full 2017 calendar year. Please note that accrued but
unused vacation time may be carried over from one year into the following year, but at no time may you accrue more than four weeks of
vacation. In addition to such vacation days, the following Company-designated holidays shall be paid days off: New Year’s Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Eve, Christmas Day and New Year’s Eve and 5 floating
holidays of your choice in coordination with the Company.
b.
In addition to vacation days and holidays, you will be entitled to take sick days off in accordance with New York City law. Accrued but
unused sick time may be carried over from one calendar year into the following calendar year, and you may use up to a maximum of 40
hours per calendar year.
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c. Retirement Plan. 401K plan- The Company shall contribute funds to the Company sponsored 401k plan in accordance with the terms of
such plan, as may be updated and amended from time to time. Subject to the terms of such plan, the Company will match your own
contribution up to a rate of 5% of the Base Salary, subject to the applicable ceiling under law and subject to the following ratio: for the
first 3% of your contribution, or part of it as applicable, the Company shall match your contribution based on a 1:1 ratio; for the
additional 2% of the Company’s contribution, or part of it, as and if applicable, the Company shall match your contribution based on a
1:2 ratio (the lesser part being the Company’s contribution).
d. Health Care Insurance. Prior to the establishment of a Company healthcare plan in the US (which is expected to be established subject
to applicable law and regulations within 6 months after your Start Date), you may elect to maintain your current coverage (including
medical, dental and vision coverage, as in effect pursuant to your current employer’s plan(s) as of the date of this letter agreement) via
COBRA, or the New York State mini-COBRA law, and the Company shall cover the employer portion of the monthly premium fee for
such coverage.
e. Disability Coverage. You will be eligible for disability coverage in accordance with the terms of the Company’s applicable plan.
f. Business Expenses. The Company shall reimburse you for necessary and customary business out-of-pocket expenses incurred by you,
including but not limited to approved home office expenses, in accordance with the Company’s business expense policy, as may be
amended from time to time. Please note that the Company will cover the cost of economy class for domestic travel, and business class for
tran-Atlantic flights, in each case as coordinated with the Company.
8. Confidential Information and Invention Assignment Agreement. Your acceptance of this offer and commencement of employment with the
Company is contingent upon the execution, and delivery to me by no later than the Start Date, of the Company’s Confidential Information and
Invention Assignment Agreement, a copy of which is attached to this letter agreement as Schedule A (the “Confidentiality Agreement”).
9. Term of Employment. Your employment with the Company will be for an unspecified period of time. The Company and you acknowledge and
agree that your employment is and shall continue to be at-will, and that notwithstanding any other obligation under this letter agreement, your
employment with the Company may be terminated for any reason by either you or the Company at any time, upon one month’s written notice. In
addition, the Company shall have the right to terminate your employment immediately without notice for Cause. For purposes of this letter
agreement, “Cause” shall be defined as: your (i) commission of fraud, embezzlement, gross negligence, malfeasance, an act or acts constituting a
felony under the laws of the United States or any state thereof, or a willful or negligent act or omission which results in an assessment of a civil or
criminal penalty against you, the Company or its affiliates; (ii) willful or continued failure to substantially perform your CMO duties pursuant to
this letter agreement, after having received written notice of such failure to perform, and the opportunity to cure such failure for a period of at least
30 days; or (iii) violation of the terms of this letter agreement or of the Confidentiality Agreement attached as Schedule A.
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10. Post-Termination Severance Pay and Continued Health Coverage. In the event that your employment is terminated by the Company without
Cause, or you resign from the Company on account of Good Reason (as defined above)[, for a period of 6 months following the date on which
your employment is terminated, you will be entitled to receive monthly payments equal to (i) the monthly rate of your Base Salary, and (ii) the
monthly rate of your health insurance premium (including medical, dental and vision coverage, as applicable), in each case as in effect on the date
of your termination of employment (both such payments, collectively, the “Severance Pay”). Your entitlement to the Severance Pay shall be
dependent upon your properly executing a “Separation and Release Agreement,” in a form which is materially comparable to the Separation and
Release Agreement attached as Schedule B, as approved by the Company’s Board of Directors.
11. Change of Control.
a.
In the event of a Change of Control of the Company: if your employment is terminated by the Company at any time without Cause
within the 12 months following the closing of such Change in Control, then for a period of 6 months following such termination, you
will be entitled to the continuation of Base Salary payments and the monetary value of health care (including medical, dental and
vision coverage, as applicable) and disability benefit premiums, in each case as in effect at the time of your termination, as well as
accelerated vesting of any options previously granted to you as of such date of Change in Control.
b. For purposes of this letter agreement, a “Change of Control” shall mean a sale of all or substantially all of the shares or assets of the
Company or a merger, consolidation or similar event pursuant to a transaction or series of related transactions in which a third party
acquires more than fifty percent (50%) of the voting power of the Company outstanding immediately prior to such event, and the
stockholders of the Company immediately prior to such event do not retain a majority of the voting power in the surviving
corporation or in the parent company of the surviving entity (other than the reincorporation of the Company and other than a direct
equity investment in the Company resulting in a Change of Control).
12. Section 409A of the Internal Revenue Code of 1986, as amended. It is affirmed that with respect to any and all payments and benefits under this
letter agreement, the intent is that such payments and benefits either: (i) do not constitute “nonqualified deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A, (ii) are subject to a
“substantial risk of forfeiture” and are exempt from Section 409A under the “short-term deferral rule” set forth in Treasury Regulation §1.409A-
1(b)(4), or (iii) are in compliance with the requirements of Section 409A. In any event, it is further confirmed that the intent is to have all
provisions of this letter agreement construed, interpreted and administered in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A.
13. Arbitration. Any dispute, controversy or claim arising under or in connection with this Agreement or breach hereof, aside from with respect to
the Confidentiality Agreement attached as Schedule A, shall be settled via employment arbitration administered under New York law by the
American Arbitration Association (“AAA”) located in the City of New York in the State of New York, and conducted in accordance with the
AAA’s Employment Arbitration Rules. It is agreed that in such arbitration, the Company and you shall mutually agree upon a single arbitrator who
(i) shall not amend or modify the terms of this letter agreement or of any Company policy, and (ii) shall render a decision within ten (10) business
days from the closing statements or submission of post-hearing briefs by the parties to such arbitration. It is understood that (a) the arbitration
award shall be final and binding, (b) any state or federal court shall have jurisdiction to enter a judgment on such award, and (c) the prevailing
party shall be entitled to fees and costs to be paid for by the non-prevailing party. By signing this letter agreement, you and the Company confirm
that the parties understand that they are waiving any right to a trial by jury, and are forfeiting any right to bring claims related to your employment
at the Company in a court of law (other than as set forth in Schedule A), regardless of whether such claims would be based on federal, state or
local law or regulations.
4
We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company’s offer, please
sign and date this letter in the space provided below and return it to me, along with a signed and dated copy of the Confidentiality Agreement, by not later
than April 30, 2017 (absent which, all proposals contained herein shall expire, and the terms of this letter agreement shall be null and void). This letter
agreement, together with the Confidentiality Agreement, sets forth the terms of our proposal for your employment with the Company, and supersedes any
prior representations, proposals or agreements, whether written or oral.
Very truly yours,
/s/ Yael Margolin
Yael Margolin
President & CEO, Gamida Cell Inc.
ACCEPTED AND AGREED:
/s/ Ronit Simantov
Ronit Simantov
Date: 30 April 2017
5
SCHEDULE A: CONFIDENTIALITY AGREEMENT AND INVENTION ASSIGNMENT AGREEMENT
THIS CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT (“Confidentiality Agreement”) is entered into as of
the 30th day of April 2017, by Ronit Simantov, an individual residing at [***] (the “Employee”).
WHEREAS,
the Employee wishes to be employed by Gamida Cell Inc. (collectively, with Gamida Cell Ltd., the parent company - the “Company”);
and
WHEREAS,
it is critical for the Company to preserve and protect its Confidential Information (as defined below), its rights in Inventions (as defined
below) and in all related intellectual property rights, and the Employee is entering into this Confidentiality Agreement as a condition to
the Employee’s employment with the Company.
NOW, THEREFORE, the Employee undertakes and warrants towards the Company as follows:
References herein to the term “Company” hereafter shall include any of the Company’s direct or indirect parent, subsidiary and affiliated companies, and
their respective successors and assigns.
I. Confidentiality.
a. The Employee acknowledges that the Employee may have access to information that relates to the Company, its business, assets, financial
condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third parties with whom the Company agreed or
agrees, from time to time, to hold information of such party in confidence (the “Confidential Information”). Confidential Information shall
include, without limitation, information, whether or not marked or designated as confidential, concerning technology, products, research and
development, patents, copyrights, Inventions, trade secrets (as defined by the Defend Trade Secrets Act, 18 U.S.C. § 1833(b) and any
applicable state law), test results, formulae, processes, data, know-how, marketing, promotion, business and financial plans, policies,
practices, strategies, surveys, analyses and forecasts, financial information, customer lists, agreements, transactions, undertakings and data
concerning employees, consultants, officers, directors, and shareholders. Confidential Information includes information in any form or media,
whether documentary, written, oral, magnetic, electronically transmitted, through presentation or demonstration or computer generated.
Confidential Information shall not include information that has become part of the public domain not as a result of a breach of any obligation
owed by the Employee or any other third party to the Company.
b. The Employee acknowledges and understands that the employment by the Company and the access to Confidential Information creates a
relationship of confidence and trust with respect to such Confidential Information.
c. During the term of the Employee’s employment and at any time after termination or expiration thereof, for any reason, the Employee shall
keep in strict confidence and trust, shall safeguard, and shall not disclose to any person or entity, nor use for the benefit of any party other than
the Company, any Confidential Information, other than with the prior express consent of the Company, unless the Employee has an
independent right or obligation to make such disclosure pursuant to applicable local, state or federal law, or pursuant to the paragraph below.
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Notice of Immunity: The Employee acknowledges that via this paragraph the Company is providing the Employee with written notice that the
Defend Trade Secrets Act, 18 U.S.C. § I 833(b), provides immunity for the disclosure of a trade secret for the purpose of reporting a suspected
violation of law and/or in an anti-retaliation lawsuit, in that (i) an individual shall not be held criminally or civilly liable under any federal or
state trade secret law for the disclosure of a trade secret that is made in confidence to a federal. state. or local government official, either directly
or indirectly, or to an attorney, in each case solely for the purpose of reporting or investigating a suspected violation of law. or where such
disclosure is made via a complaint or other document filed in a lawsuit or other proceeding, as long as such filing is made under seal, and (ii) an
individual who files a lawsuit for retaliation by an employer or contracting party on account of the individual having reporting a suspected
violation of law, may disclose the relevant trade secret to the individual’s attorney and may use such trade secret information in the applicable
court proceeding, as long as any document containing such trade secret is filed under seal, and as long as the individual docs not disclose such
trade secret, except pursuant to court order.
d. All right, title and interest in and to Confidential Information arc and shall remain the sole and exclusive property or the Company or the third
party providing such Confidential Information to the Company. as the case may be. Without limitation of the foregoing. the Employee agrees
and acknowledges that all memoranda. books, notes. records. email transmissions, charts, formulae. specifications. lists and other documents
(contained on any media whatsoever) made, reproduced. compiled, received, held or used by the Employee in connection with the
employment by the Company or that otherwise relates to any Confidential Information (the “Confidential Materials”), shall be the
Company’s sole and exclusive property and shall be deemed to be Confidential Information. J\11 originals, copies, reproductions and
summaries of the Confidential Materials shall be delivered by the Employee to the Company upon termination or expiration of the
Employee’s employment for any reason, or at any earlier time at the request of the Company, without the Employee retaining any copies
thereof.
e. During the term of the Employee’s employment with the Company, the Employee shall not remove from the Company’s offices or premises
any Confidential Materials unless and to the extent necessary in connection with the duties and responsibilities of the Employee and permitted
pursuant to the then applicable policies and regulations of the Company. In the event that any such Confidential Materials are duly removed
from the Company’s offices or premises, the Employee shall take all actions necessary in order to secure the safekeeping and confidentiality
or such Confidential Materials and return the Confidential Materials to their proper files or location as promptly as possible after such use.
f. During the term of the Employee’s employment with the Company. the Employee will not improperly use or disclose any Confidential
Information. and will not bring onto the premises of the Company any unpublished documents or any property, in each case belonging to any
former employer or any other party to whom the Employee has an obligation of confidentiality and/or non-use (including, without limitation.
any academic institution or any entity related thereto), unless generally available to the public or consented to in writing by such third party.
2. Unfair Competition and Solicitation. The Employee undertakes that during the term of employment with the Company and for a period or twelve
(12) months thereafter: the Employee shall not, directly or indirectly, (i) engage or establish, either as an employee. owner, partner, agent, shareholder.
director, consultant or otherwise, in any business, occupation, work or any other activity which competes with the then existing or planned business of
the Company; (ii) solicit, hire or retain as an employee, consultant or otherwise, any employee or the Company or induce or attempt to induce any such
employee to terminate or reduce the scope of such employee’s employment with the Company; and/or (iii) solicit or induce, or attempt to solicit or
induce, any employee, consultant, service provider, agent, distributor, supplier or customer or the Company, or third party with respect to which the
Company took substantial steps to engage as a customer during the period of the Employee’s employment at the Company, to terminate. reduce or
modify the scope of their engagement with the Company.
7
The Employee acknowledges that in light of the Employee’s position with the Company and in view of the Employee’s exposure to, and involvement
in, the Company’s sensitive and valuable proprietary information, intellectual property and technologies, Confidential Information and Confidential
Materials (the “Company’s Major Assets”), the provisions of this Section O above are reasonable and necessary to legitimately protect the
Company’s Major Assets. and are being undertaken by the Employee as a condition to the employment of the Employee by the Company. The
Employee confirms that the Employee has carefully reviewed the provisions or this Section 2, fully understands the consequences thereof and has
assessed the respective advantages and disadvantages to the Employee of entering into this Confidentiality Agreement and, specifically, Section 2
hereof.
3. Ownership of Inventions.
a. The Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all
information. improvements, inventions, formulae, processes, techniques, know-how and data, whether or not patentable or registerable under
copyright or any similar laws. made or conceived or reduced to practice or learned by the Employee, either alone or jointly with others, during
the Employee’s employment with the Company (including after hours, on weekends or during vacation time) (all such information.
improvements, inventions. formulae. processes. techniques. know-how. and data arc hereinafter referred to as the “lnvention(s)”) immediately
upon discovery, receipt or invention as applicable.
b. The Employee agrees that all of the Inventions arc, upon creation, considered Inventions of the Company, shall be the sole property of the
Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights. trade secret and all other
rights or any kind or nature, including moral rights, in connection with such Inventions. The Employee hereby irrevocably and
unconditionally assigns to the Company all the following with respect to any and all Inventions: (i) patents. patent applications, and patent
rights, including any and all continuations or extensions thereof; (ii) rights associated with works of authorship. including copyrights and
copyright applications, Moral Rights (as defined below) and mask work rights; (iii) rights relating to the protection of trade secrets and
confidential information; (iv) design rights and industrial property rights; (v) any other proprietary rights relating to intangible property
including trademarks, service marks and applications thereto for, trade names and packaging and all goodwill associated with the same; and
(vi) all rights to sue for any infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with
respect to any of the foregoing rights. The Employee also hereby forever waives and agrees never to assert any and all Moral Rights the
Employee may have in or with respect to any Inventions. even alter termination of employment on behalf of the Company. “Moral Rights”
means any right to claim authorship of a work. any right to object to any distortion or other modification of a work, and any similar right.
existing under the law of any country in the world, or under any treaty. The Employee further acknowledges and agrees that all copyrightable
works included in the Inventions shall be “works made for hire” within the meaning or the Copyright Act of 1976, as amended (17 U.S.C.
§IOI) (the “Act”), and that the Company shall be the “author” within the meaning of the Act.
8
c. The Employee further agrees to perform, during and after employment. all acts deemed reasonably necessary or desirable by the Company to
permit and assist it. at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and all countries.
Such acts may include, but are not limited to. execution of documents and assistance or cooperation in legal proceedings. The Employee
hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Employee’s agents and attorneys-
in-fact to act for and on the Employee’s behalf and instead of the Employee, to execute and file any documents and to do all other lawfully
permitted acts to further the above purposes with the same legal force and effect as if executed by the Employee.
d. The Employee shall not be entitled. with respect to all or the above. to any monetary consideration or any other consideration except as
explicitly set forth in the employment agreement between the Employee and the Company. Without limitation of the foregoing. the Employee
irrevocably confirms that the consideration explicitly set forth in the employment agreement is in lieu of any rights for compensation that may
arise in connection with the Inventions under applicable law and waives any right to claim royalties or other consideration with respect to any
Invention. With respect to all of the above any, any oral understanding, communication or agreement not memorialized in writing and duly
signed by an authorized officer of the Company shall be void.
4. General.
a. The Employee represents that the performance of all the terms of this Confidentiality Agreement and the Employee’s duties as an employee of
the Company does not and will not breach any invention assignment. proprietary information. non-compete. confidentiality or similar
agreements with, or rules, regulations or policies of. any former employer or other party (including. without limitation. any academic
institution or any entity related thereto). The Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such
representations in employing the Employee.
b. The Employee acknowledges that the provisions of this Confidentiality Agreement serve as an integral part of the terms of the Employee’s
employment and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject
mailer hereof. The Employee hereby explicitly acknowledges that the restrictions set forth in this Confidentiality Agreement arc not greater
than required and do not unduly burden the Employee.
c.
It is agreed and understood that if a court of law finds that the Employee has violated Section 2 of this Confidentiality Agreement, then the
restrictions set forth in such section shall automatically be extended for any period of time for which the court finds that the Employee
violated such restrictions.
d. The Employee recognizes and acknowledges that in the event or a breach or threatened breach of this Confidentiality Agreement by the
Employee, the Company may suffer irreparable harm or damage and that under such circumstances monetary remedies would be inadequate
to protect against any actual or threatened breach of this Confidentiality Agreement. Without prejudice to any other rights and/or remedies
otherwise available to the Company, it is therefore agreement that the Company will be entitled to the granting of equitable relict: including
but not limited lo injunctive relief and specific performance. in favor of the Company without proof of actual damages to remedy or prevent
any breach of this Confidentiality Agreement (without limitation to any other remedy at law or in equity).
e. This Confidentiality Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving
effect to its laws pertaining to conflict of laws. Any and all disputes in connection with this Confidentiality Agreement shall be submitted to
the exclusive jurisdiction of the competent courts located in New York County. It is agreed that each party irrevocably consents to the exercise
of personal jurisdiction over such party by such court, agrees that venue shall be proper in such court. and irrevocably waives and releases any
and all defenses based on lack of personal jurisdiction, improper venue or forum non conveniens.
9
f.
If any provision of this Confidentiality Agreement is determined by any court of competent jurisdiction to be invalid, illegal or unenforceable
in any respect. such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this Confidentiality Agreement only with respect to such jurisdiction in
which such clause or provision cannot be enforced, and the remainder of this Confidentiality Agreement shall be enforced as if such invalid,
illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Confidentiality Agreement. In
addition, if any particular provision contained in this Confidentiality Agreement shall for any reason be held to be excessively broad as to
duration. geographical scope, activity or subject. it shall be construed by limiting and reducing the scope of such provision so that the
provision is enforceable to the fullest extent compatible with applicable law.
g. The provisions of this Confidentiality Agreement shall continue and remain in full force and effect following the termination or expiration of
the employment relationship between the Company and the Employee, for whatever reason. This Confidentiality Agreement shall not serve in
any manner so as to derogate from any of the Employee’s obligations and liabilities under any applicable law.
h. This Confidentiality Agreement constitutes the entire agreement between the Employee and the Company with respect to the subject matter
hereof and supersede all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, with respect to the
subject matter hereof. No amendment of or waiver of or modification of any obligation under this Confidentiality Agreement will be
enforceable unless set forth in a writing signed by an authorized officer of the Company. No delay or failure to require performance of any
provision of this Confidentiality Agreement shall constitute a waiver of that provision as to that or any other instance. No waiver granted
under this Confidentiality Agreement as to any one provision herein shall constitute a subsequent waiver of such provision or of any other
provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
i. All notices and other communications under this Confidentiality Agreement shall be in writing and shall be given in person, by fax, electronic
or certified or registered mail, and shall be deemed to have been duly given twenty-four (24) hours after transmission of a fax or electronic
email, three (3) days after sending a notice by certified or registered mail. or immediately upon delivery in person or explicit confirmation of
receipt.
j.
This Confidentiality Agreement, the rights of the Company hereunder, and the obligations of the Employee hereunder, will be binding upon
and inure to the benefit of their respective successors, assigns. heirs. executors. administrators and legal representatives. The Company may
assign any of its rights under this Confidentiality Agreement. The Employee may not assign, whether voluntarily or by operation of law, any
or its obligations under this Confidentiality Agreement, except with the prior written consent of an authorized officer of the Company.
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IN WITNESS WHEREOF, the undersigned, has executed this Confidentiality Agreement and Invention Assignment Agreement as of the date first
mentioned above.
/s/ Ronit Simantov
Ronit Simantov
Date: 30 April 2017
11
Exhibit 10.19
DATED
07 January
2020
GAMIDA CELL LIMITED
and
UPPAL HEALTHCARE LIMITED
CONSULTANCY AGREEMENT
(1)
(2)
DATE OF AGREEMENT
PARTIES
2020
(1)
(2)
GAMIDA CELL LIMITED, a company registered in Israel whose registered office is at 5th Nahum Hefzadi st. Jerusalem, Israel (“We” or the
“Company”)
UPPAL HEALTHCARE LIMITED (Company Number 08321724) whose registered office is at Kingswood House, 35 Orchehill Avenue,
Gerrards Cross, Buckinghamshire, SL9 8QE, UK (“You”)
IT IS AGREED THAT:
1.
1.1
DEFINITIONS
In this agreement the following words, phrases and expressions shall have the following meaning:
“Commencement Date” means 01 January 2020.
“Group” means the Company, its subsidiaries, any holding company of the Company and any subsidiary of such holding company (all as defined
in section 1159 of the Companies Act 2006) and any associated company (which expression shall mean any other company of which the Company
or its holding company or any subsidiary of the Company or its holding company beneficially holds not less than 20% of the equity share capital)
and any reference to “Group Company” shall be construed accordingly.
“Intellectual Property Rights” means any copyrights, database rights, rights in designs, registered designs, trademarks, trade names, service
marks, the goodwill in any trade marks together with rights in get-up and trade dress (including the right to sue for passing off), rights in
confidential information (including, without limitation, know-how and trade secrets), rights in and to any inventions, improvements, patents
(whether pending or duly registered), design patents, utility patents and the right to apply for and be granted any of these rights and the right to
claim priority from any such application and any other intellectual property rights, including, without limitation, any rights in source code,
software, domain names and social media accounts, in each case whether registered or unregistered and including all applications and rights to
apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of
protection which subsist or will subsist now or in the future in any part of the world.
“Off-Payroll Rules” means Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003.
“Services” means the consultancy services set out in Schedule 1.
1.2
Any reference in this agreement to a statutory provision includes all re-enactments and modifications of that provision and any regulations made
under it or them.
1.3
The headings in this agreement are for convenience only. They do not form part of this agreement and do not affect its interpretation.
2
2.
2.1
2.2
APPOINTMENT
You agree to provide the Services to the Company from the Commencement Date. Additional services may be agreed between us if required.
The Services shall be provided by the staff employed by you or otherwise contracted to work for you. At the date of this agreement the number
and identity of the staff who shall be providing the Services are as set out in Schedule 2. These may change from time to time with the agreement
of the parties.
2.3
You acknowledge and warrant that:
(a)
by entering into this agreement and fulfilling your obligations under it, you (and any staff working for you) are not in breach of any
obligations to any third party.
2.4
3.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
In the event of a breach of clause 2.3 above, we may terminate this agreement with immediate effect.
YOUR OBLIGATIONS
You shall procure that any staff supplied by you to provide the Services do so to the best of their skill and ability.
We shall agree with you on a monthly basis the number of days on which you will provide the Services the following month.
If requested, at any time during or within one month of the end of this agreement, you shall provide us with a written report setting out the
Services you have provided or answering any questions we may have.
You shall provide the Services at 35 Orchehill Avenue, Gearrrads Cross, Bucks, SL9 8QE, U.K. or at any other place in the United Kingdom as
we may from time to time require, whether on a permanent or temporary basis.
You shall procure that any staff employed or contracted by you to provide the Services will, whilst present on our premises, comply with the same
standards and rules that apply to our staff and other visitors to our premises. These include any Company policies relating to health and safety,
security, equal opportunities, data protection, social media and anti-bribery.
You shall notify us as far as possible in advance if any of your staff are unable to provide the Services to us due to illness, injury or for any other
reason. For the avoidance of doubt, you will not receive any fees for any period during which the Services are not being provided.
You must have the benefit of appropriate insurance cover in place in respect of any loss or damage caused to the Company (or our employees,
customers or suppliers) by you or any of your staff in providing the Services. You must ensure that any insurance policies are taken out with
reputable insurers and that the level of cover and other terms of insurance are acceptable to, and agreed by, us. Such insurance cover may be
capped at no less than £1,000,000 in respect of each policy or, if greater. such minimum amount as may be required by law. You must comply (and
ensure that your staff comply) with all terms and conditions of the insurance policies at any time. An excess is permissible under the insurance,
subject to you agreeing this with us in writing in advance. On demand you must provide us with a copy of any insurance policies.
3
3.8
3.9
3.10
3.11
You must not, without our prior written consent, incur any expenditure in the name of or for the account of the Company or hold themselves out as
having any authority to bind the Company.
Nothing in this agreement prevents you from providing any consultancy services (or any other services, including employment services) to any
third party at any time, provided that the provision of those services does not entail or is not reasonably likely to lead to a breach of any of your (or
their) obligations under this agreement, in particular the confidentiality obligations under clause 5 below or in any way interfere with the full and
efficient performance of your obligations under this agreement.
If you are offered any position (including any consultancy) in any business which is similar to or in any way competitive with the business of the
Company or which could, if accepted, put you in breach of clause 3.9 above, you must notify us in writing of the proposed terms, giving sufficient
detail of the nature of the duties to be carried out by you so that we can satisfy ourselves that there will be no breach of any of your obligations
under this agreement.
You may, at your own expense, substitute any member of staff set out in Schedule 2 with another person to provide the Services, provided that we
agree first (such agreement not to be unreasonably withheld) that the substitute has the necessary skills, expertise, qualifications and experience to
provide the Services, and subject to all the other terms of this agreement.
3.12 We can require you to remove anyone who works for you from our premises at any time and not allow them to provide any services to us again. If
the reason for removal relates to the capability or conduct of the individual, you shall as soon as is reasonably practicable replace that individual
with somebody else who is acceptable to us. If you are unable to supply an acceptable replacement to us, we have the right to terminate this
agreement with immediate effect.
3.13 We acknowledge that you have autonomy over your working methods and that we have no right to, nor shall we seek to, exercise any direction,
control or supervision over you (or any of your staff) as to the manner in which the Services are to be provided. This is subject at all times to our
right to provide you and your staff with guidance and feedback to ensure the Services meet the Company’s requirements and expectations.
3.14 We are under no obligation to offer further contracts or services to you, nor are you under an obligation to accept such contracts or services if
offered. You are not obliged to make your services available except for the performance of your obligations.
4.
4.1
4.2
4.3
PAYMENTS
We will pay to you a consultancy fee of£ 1,150 per day exclusive of VAT, provided that the parties acknowledge and agree that VAT will not be
chargeable at any time during which the Company (as the customer) belongs in Israel for the purpose of determining the place of supply of the
Services for VAT.
On the last working day of each month, you must provide us with an invoice setting out the number of days worked that month, the Services
provided and the amount of any fee payable (plus VAT, if applicable) in respect of that period.
If VAT is due on the Services provided under this agreement, you shall ensure that the invoice provided under clause 4.2 and/or under clause 4.5
below complies with the statutory requirements concerning VAT invoices.
4
4.4
4.5
4.6
4.7
4.8
4.9
5.
5.1
Within 10 days of receipt of a valid invoice we will pay to you the consultancy fee due in respect of that period.
You will also be eligible to receive an additional discretionary success fee subject to such terms as the Company shall at its sole discretion
determine. The potential amount of such success fee shall be notified to you separately. For the avoidance of doubt the Company’s decision as to
whether or not to pay you a success fee and, if so, the amount of such success fee shall be final. In the event that the Company exercises its
discretion to pay you a success fee, we will notify you of this fact and the amount of the success fee. The success fee will then be paid to you
within 14 days of the Company receiving from you a valid invoice in respect of the same. Receipt of a discretionary success fee one year creates
neither right to nor legitimate expectation of any success fee in the next year.
We will reimburse you for any pre-approved disbursements (including any VAT that you are unable to recover) incurred by your staff in providing
the Services, subject to you producing receipts or other appropriate evidence of payment if required and to your including them in your invoice
within two months of their being incurred.
We are entitled to deduct from the fees due to you any sums which you or your staff may owe to the Company.
Where this agreement is terminated by either party before the end of a fee period, then the consultancy fee will be reduced pro rata.
Upon termination of this agreement for any reason, any outstanding fees payable to you will be subject to you complying with your obligations in
clauses 9.3 and 9.4.
CONFIDENTIAL INFORMATION
During the course of this agreement you and any staff supplied by you to provide the Services (including any of your employees, agents,
representatives, advisers and officers), will have access to information that is secret, confidential or commercially sensitive and which if disclosed
or used for purposes other than those of the Company or the Group will cause significant harm to the Company and any Group Company. In this
agreement such information, whether communicated to you in writing, electronically or in any other medium (and whether or not it is marked
confidential) before or after the date of this agreement, is referred to as “Confidential Information” and includes without limitation:
(a)
(b)
(c)
the fact that discussions and negotiations are taking place concerning the Services and the status of those discussions and negotiations;
the existence and terms of this agreement;
details of how the Company and the Group prices its products or services. including any discounts or non-standard terms offered to any
clients;
5
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
the Company’s and the Group’s Intellectual Property Rights. including any processes, methods, inventions, designs. techniques, know-
how, discoveries, technical specifications, formulas, prototypes, computer programs and other technical information, records, data, ideas,
techniques. projections. plans, analyses, notes, legal documents and other data in whatever form relating to the creation, production or
supply of any past, present or future product or service of the Company and the Group;
information relating to or belonging to the Company’s and the Group’s suppliers and the terms and conditions (including any prices and
discounts) agreed with them;
information relating to or belonging to the Company’s and the Group’s clients or customers and the terms and conditions (including any
prices and discounts) agreed with them;
research and development projects of the Company and the Group;
the Company’s and the Group’s marketing and sales strategies and plans, which includes business plans and business opportunities;
potential acquisitions and disposals by the Company and the Group;
the Company’s and the Group’s financial and sales performance, which includes financial statements;
;
any information, findings, data or analysis derived from Confidential Information;
(m)
any information in respect of which the Company and/or the Group owes an obligation of confidentiality to any third party; and
(n)
any other categories of confidential information that we want to protect and which we notify to you in writing as being confidential.
6
5.2
You must not (and you must procure that your staff do not) during the term of this agreement or afterwards use, copy, disclose or permit to be used
or disclosed (unless this is strictly necessary in connection with the provision of the Services) any Confidential Information. You shall apply the
same security measures and degree of care to the Confidential Information as you apply to your own confidential information, which you warrant
as providing adequate protection from unauthorised disclosure, copying or use.
5.4
You may disclose the Company’s Confidential Information to those of your staff who need to know this Confidential Information for the Services,
provided that:
5.3
(a)
(b)
(c)
you inform your staff of the confidential nature of the Confidential Information before disclosure; and
such persons are bound by terms similar to those contained in this agreement; and
you shall at all times be liable for the failure of any staff to comply with the terms of this agreement.
5.5
5.6
5.7
5.8
5.9
6.
6.1
The restrictions contained in this clause 5 do not apply to any information which, otherwise than through your (or your staff’s) own unauthorised
disclosure or breach of confidence, (i) is already in or comes into the public domain, (ii) the disclosure of which is ordered by a court of competent
jurisdiction; provided however, that you shall promptly notify the Company of such court order or requirement, (iii) where you have obtained the
Company’s prior written approval to such disclosure, or (iv) you can demonstrate in your records to have independently developed, without the
use of or reference to, the Confidential Information.
The provisions of this agreement relating to Confidential Information are without prejudice to any duties and obligations of confidentiality to
which you and your staff may be subject at common law or equity.
If any Confidential Information is wrongfully misused and/or disclosed, you must notify us as soon as reasonably practicable after becoming
aware of it and shall provide us with all the information relating to such misuse or disclosure, including how the misuse or disclosure occurred.
The obligations set forth in this clause 5 shall commence on the Commencement Date and shall continue until such time as the information no
longer qualifies as Confidential Information.
On termination of this agreement and at the request of the Company, you shall destroy, erase (to the extent technically possible) or return to the
Company all documents and materials (and any copies) containing, reflecting, incorporating or based on the Company’s Confidential Information.
The Company may request that you certify in writing that such actions have been completed.
INTELLECTUAL PROPERTY
You must disclose to us in writing full details of any works of any nature created by you or your staff in the course of providing the Services. Any
Intellectual Property Rights existing (or which may in the future exist) in any works that are created by you or your staff either during the course
of providing the Services or by using materials, tools, information or opportunities made available by us to you to provide the Services shall
automatically upon their creation vest in the Company. To the extent such rights do not vest in the Company, you hereby assign to the Company all
existing and future Intellectual Property Rights in any such works, free from all encumbrances and with full title guarantee.
7
6.2
6.3
6.4
6.5
6.6
6.7
6.8
7.
7.1
7.2
7.3
You agree to do all such things as we may require (including but not limited to the signing of documents), both during and after the term of this
agreement, to perfect the Company’s title in any Intellectual Property Rights in works created by you or your staff but which belong to the
Company.
You hereby waive, on a worldwide basis, in favour of the Company all your rights pursuant to sections 77 - 89 of the Copyright Designs and
Patents Act 1988 and similar rights throughout the world in any works you (or they) create during the course of providing the Services. You also
agree to procure such a waiver from each member of staff supplied by you to provide the Services.
You accept that no future agreement between the Company and you, dealing with the ownership or licensing of any Intellectual Property Rights in
works created by you or your staff, shall be enforceable unless and until it is in writing signed by or on behalf of the Company by a director.
You agree that you will not use any of the Company’s Intellectual Property Rights after the termination of this agreement without the Company’s
prior written consent.
The Company owns all documents, files, data and prototypes or models that you or any of your staff create in connection with providing the
Services. You must keep these separate from your other documents, files, data and prototypes or models and shall, at your expense, deliver up to
us (or at our option destroy on oath) all such materials on the termination of this agreement.
You agree that the provisions of this clause 6 shall remain in full force and effect following the termination of this agreement for any reason.
You confirm that your staff shall be subject to the same obligations and provisions as you and shall enter into suitable undertakings with the
Company in a form approved by us.
DATA PROTECTION
We place the highest importance on compliance with all applicable data protection laws in force from time to time, including but not limited to the
General Data Protection Regulation as enacted into UK law and the Data Protection Act 2018 (“Data Protection Laws”).
We will hold and process personal data (as defined in the Data Protection Laws) about your staff in order to perform our obligations and exercise
our rights under this agreement and for the purposes of our business. Details about how and why we will process such personal data will be set out
in a privacy notice to be provided to you in due course. You agree to keep us informed of any changes to your staff’s personal data.
You must, and must procure that any staff supplied to the Company, at all times comply with the Data Protection Laws and all of our policies,
rules and procedures relating to the processing of personal data or otherwise relating to compliance with the Data Protection Laws whenever you
(or your staff) process any personal data as a result of or in connection with your appointment, including any personal data relating to any
individual employee, worker, client, customer, supplier or agent of the Company (“Company Personal Data”). You must treat all Company
Personal Data as if it were confidential information of the Company and not do or omit to do anything that would put the Company in breach of
the Data Protection Laws.
7.4
If, in the course of providing the Services, you (or your staff) process any Company Personal Data you (and your staff) agree to be bound by and
comply with the provisions set out in Schedule 3.
8
8.
8.1
8.2
8.3
8.4
8.5
8.6
8.7
STATUS AND LEGAL COMPLIANCE
There is nothing in this agreement that is intended to make you (or any staff supplied by you to provide the Services) an employee, worker, agent
or partner of the Company.
You must comply with all relevant laws and requirements relating to income tax, VAT, National Insurance and any other taxes and charges that
apply to the Services you are providing to us. Subject to clause 8.10, you must account for any taxes or charges due in respect of the fees we pay
to you for those services.
You shall be responsible for the payment of any fee or salary to any staff supplied by you to provide the Services, together with any National
Insurance and any other contributions and taxes required by law to be paid by you. You shall also be responsible for meeting all of the employer
obligations under the Pensions Act 2008 concerning the pension arrangements of your staff, including but not limited to the automatic enrolment
and re-enrolment of staff into a qualifying scheme and the payment of the appropriate level of pension contributions.
You must, and must procure that any staff supplied to the Company, comply with any policies of the Company relating to the prevention of tax
evasion and/or the prevention of the facilitation of tax evasion. You must report immediately to us if you (or any of your staff) have concerns or
suspicions of tax evasion or associated fraud.
You warrant that all staff supplied by you pursuant to this agreement are either employees (whose remuneration is subject to income tax and
National Insurance contributions deductions at source) or consultants engaged by you (who directly account to HM Revenue & Customs for any
income tax and National Insurance contributions that may be due as a result of any remuneration that they receive). You agree to indemnify us for
any loss. cost or liability we incur arising, directly or indirectly, from a breach of this warranty.
You acknowledge and agree (and shall procure that any staff supplied to the Company acknowledge and agree) that none of the staff supplied by
you to provide the Services constitute an agency worker for the purposes of Regulation 3(1) of the Agency Workers Regulations 2010.
You must (and must procure that any staff supplied to the Company) comply with all applicable laws. regulations. codes and sanctions relating to
anti-bribery and anticorruption, including but not limited to the Bribery Act 2010.
8.8
You agree to indemnify us in full in respect of:
(a)
(b)
any income tax, employee’s and employer’s National Insurance and social security contributions and apprenticeship levy (including any
related interest, surcharges or penalties) and any other liability, deduction, assessment or claim arising from or made in connection with
the performance of the Services under this agreement, where the recovery is not prohibited by law; and
any liability or obligation, costs, expenses (including legal expenses), damages or other losses which the Company or any Group
Company may directly or indirectly incur as a result of or arising from:
9
(i)
(ii)
any of your staff breaching the undertakings given by them under clauses Error! Reference source not found. and 6.8 above
and/or the Company or any Group Company taking steps to enforce such undertakings;
any of your staff claiming that they are an employee or worker of the Company or any Group Company, including in relation to
income tax, other taxes, National Insurance, social security or other contributions, awards of compensation or damages and any
interest or penalties relating to the same;
(iii)
any claim by any of your staff that they are an agency worker for the purposes of the Agency Workers Regulations 2010;
(iv)
any claim by you and/or your staff that the Company or any Group Company has obligations to you or any of your staff and/or
owes any sums in respect of pension contributions under the Pensions Act 2008; and
(v)
any breach by you or any of your staff of the Data Protection Laws.
8.9
8.10
The Company may at its discretion satisfy the indemnities referred to in clause 8.8 above (whether in whole or in part), and any other indemnity
given by you under the terms of this agreement, by way of deductions from any payments (if any) to be made by the Company to you under this
agreement.
You acknowledge and agree that the Company is entitled to deduct from payments to you any PAYE and employer’s and employee’s National
Insurance contributions and apprenticeship levy that it determines it is required to pay to HM Revenue & Customs in accordance with the Off-
Payroll Rules in respect of such payments to you and/or the Services, where the deduction is not prohibited by law. The Company shall remit any
such sums deducted under this clause 8.10 to HM Revenue & Customs and shall provide you with a statement setting out any such deductions.
8.11
You will, and will procure that any of your staff providing the Services will, provide promptly to the Company any information requested by the
Company that may be required to satisfy statutory legislation and/or reporting requirements (including, without limitation, the Off-Payroll Rules).
9.
9.1
9.2
TERMINATION
Either party may terminate this agreement at any time by giving not less than one months’ written notice to the other.
Notwithstanding the provisions of clause 9.1 above, the Company may terminate this agreement immediately without notice (and with no liability
to make any further payments to you, other than in respect of any fees accrued prior to termination) if at any time:
(a)
you or any member of your staff supplied to us commit any serious or repeated breach of this agreement or refuse or neglect to comply
with any reasonable directions by us;
10
(b)
(c)
(d)
(e)
(f)
(g)
(h)
you or any of your staff supplied to us misconduct themselves, whether during or outside the course of this agreement, in such a way that
in our reasonable opinion the business, operation, interests or reputation of the Company is, or is likely to be, prejudicially affected;
you or any member of your staff supplied to us commit any criminal offence (including in particular any offence involving dishonesty or
violence), other than an offence which does not in the reasonable opinion of the Company affect your position under this agreement (or
your staffs ability to provide the Services under this agreement);
you or any member of your staff supplied to us commit any serious or repeated breach of our policies and procedures;
you or any member of your staff supplied to us commit any breach of the Bribery Act 2010 or any breach of the obligations under clause
8.4;
you become insolvent;
we reasonably believe that HM Revenue & Customs (or any other competent tax authority) may determine that income tax and/or
national insurance is due from the Company as a result of this agreement;
you are unable to provide the Services to us for any reason for more than two weeks in total in any period of a month, unless agreed in
advance by the parties; or
(i)
there are other substantial grounds justifying the immediate termination of this agreement.
9.3
When this agreement terminates (or earlier upon request), you must immediately:
(a)
return to us all of our property and documents (including that which belongs or relates to any of our customers, clients and/or business
contacts); and
(b)
provide us with all notes, records and materials prepared or created by you (or any of your staff) in undertaking the Services.
11
9.4
You must not (and you must ensure that any staff supplied to us do not) keep any copies or summaries (in any format) of our property, documents,
notes, records or materials. If you have stored or copied any of our data or information on to a computer, personal organiser or other system or
device you must immediately delete that data or information. For the avoidance of doubt, the contact details of business contacts made during the
term of this agreement are regarded as Confidential Information and, as such, must be deleted from any personal, social or professional
networking accounts on termination of this agreement. If requested you must confirm in writing that you and your staff have fully complied with
the obligations under this clause.
9.5
Once you have ceased providing Services to us:
(a)
(b)
you and any of your staff supplied to us must not hold themselves out as still having any connection with us; and
you and any of your staff supplied to us still must not use, disclose or permit to be used or disclosed any Confidential Information.
10.
ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the parties. It cancels and is in substitution for all previous agreements and arrangements
(whether oral or in writing) between us concerning the terms of your consultancy, all of which are deemed to have been terminated by mutual
consent with effect from the Commencement Date.
11.
NOTICES
11.1
11.2
Any notice to be given under this agreement shall be deemed to have been properly served if given in writing and delivered personally to the
recipient or by pre-paid first class post to the relevant address of the recipient as set out above.
Any notice served personally shall take effect immediately and any notice served by pre-paid first class post shall be deemed to have been served
at 9am on the second business day after posting.
12.
RIGHTS OF THIRD PARTIES
No provisions of this agreement confer rights on, or shall be enforceable by, any third party (including any person supplied by you to provide the
Services), except that for the purposes of the Contracts (Rights of Third Parties) Act 1999 any Group Company can enforce the confidentiality and
Intellectual Property Rights clauses, and any other clauses of this agreement that purport to confer rights on any Group Company in relation to
you.
13.
GOVERNING LAW
13.1
This agreement is governed by and interpreted in accordance with the law of England and Wales.
13.2
The parties submit to the exclusive jurisdiction of the courts of England and Wales in connection with any claim, dispute or matter arising out of
or relating to this agreement.
13.3
Any delay by the Company in exercising any of its rights under this agreement will not constitute a waiver of such rights.
This agreement has been entered into on the date stated at the beginning of it.
12
SCHEDULE 1
The Consultancy Services
List of tasks to support the Company or its subsidiaries
● Regulatory Strategic Consulting
● Input/review/preparation of FDA/EMA/other Meeting Requests
● lnput/review/preparation o FDA/EMA/other Meeting Briefing Packages
● Review/advice of FDA/EMA/other Meeting comments
● Participation in and feedback on FDA/EMA/other meetings
● Support in oversight/management of regulatory and quality assurance activities as required
● Support in managing documentation, dossiers and applications to enable new products / therapies lo be launched or moved into clinical and/or
commercial phase, in compliance with all applicable regulatory requirements and organizational policies
● Analyze regulatory issues and communicate with key stakeholders. Work together to help develop plans to mitigate, so that we can deliver science
that is robust and aligned with business needs
● Support in Managing the preparation and submission of global regulatory applications
● Support in managing compliance in line with Gamida Cell expectations
● Write and prepare well-organized and scientifically sound regulatory documents, compliant for regulatory submissions
13
SCHEDULE 2
Staff of the Consultant to be engaged in the provision of the consultancy services
Jas Uppal
14
SCHEDULE 3
Data Protection
1.1
If you or your staff process Company Personal Data in the course of providing the Services or otherwise as a result of or in connection with your
appointment, it is anticipated that you will act as an independent controller and not as a processor (as defined in the Data Protection Laws).
1.2
When processing any Company Personal Data (whether as a controller or a processor) you must:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
take all appropriate technical and organisational measures to keep the personal data secure and to protect it against accidental or unlawful
destruction, loss or alteration and against unauthorised disclosure or access;
not disclose Company Personal Data to any person other than as necessary to perform the Services. You shall ensure that any persons
authorised by you to process Company Personal Data are bound by and comply with written terms equivalent to those set out in this
schedule and the confidentiality terms of this agreement;
not transfer it (or permit it to be accessed from) outside of the European Economic Area without our prior written consent;
notify us immediately on becoming aware of any requests by individuals to exercise their rights under the Data Protection Laws in
relation to Company Personal Data;
provide us with reasonable assistance in responding to any requests by individuals to exercise their rights in relation to Company
Personal Data and in complying with our other obligations under the Data Protection Laws (including with respect to security, breach
notifications, privacy impact assessments and consultations with supervisory authorities or regulators);
notify us immediately on becoming aware of any actual or suspected personal data breach or any communication which relates to our or
your compliance with the Data Protection Laws and comply with our reasonable requests in dealing with them;
in the event of a personal data breach, not inform any third party without first obtaining prior written consent from us, unless notification
is required by EU, Member State or UK law to which you are subject, in which case you shall, to the extent permitted by law, inform us
of that legal requirement, provide a copy of the proposed notification and consider in good faith any comments made by us before
notifying the personal data breach: and
maintain complete and accurate records and information to demonstrate compliance with this schedule and provide these records and
information to us at any time on request. You shall also permit us to audit your compliance with this schedule at any time on request.
1.3
You must process Company Personal Data solely for the purposes of providing the Services and must not process such data for longer than is
necessary to carry out the Services (other than as and to the extent necessary to comply with a requirement of EU Member State or UK applicable
laws to which you are subject).
15
1.4
1.5
1.6
You must permanently and securely delete or return to us (at our option) all Company Personal Data and any copies of it on termination of this
agreement (or whenever requested by us if earlier) unless you are required by the Data Protection Laws to retain a copy of that personal data.
You must enter into a written agreement with any staff supplied by you to provide the Services (including but not limited to any substitute
appointed under clause 3.11) which incorporates terms which are substantially the same as those set out in this schedule and which shall be
directly enforceable by us.
To the extent that you or your staff process any Company Personal Data as a processor (as defined in the Data Protection Laws) then. in addition
to the obligations set out above, you must:
(a)
(b)
only process such Company Personal Data in accordance with our written instructions, unless such processing is required by any law
(other than contract law) to which you are subject, in which case, you shall (to the extent permitted by law) inform us of that legal
requirement before carrying out the processing. You must tell us if you consider that our instructions breach Data Protection Laws; and
not engage or authorise (and shall ensure that no sub-processor of any tier engages or authorises) a sub-processor or any other third party
(other than your own staff) to process Company Personal Data unless:
(i)
(ii)
you have obtained our prior written consent; and
the proposed sub-processor has either entered into a direct contract with us or a contract with you incorporating provisions
equivalent to those in this agreement relating to confidentiality, data protection and security. For the avoidance of doubt, you
remain liable for the acts and omissions of your sub-contractors as if they were your own.
16
SIGNED by Julian Adams for and
on behalf of GAMIDA CELL
LIMITED
SIGNED by Jas Uppal for and on
behalf of UPPAL HEALTHCARE
LIMITED
)
)
)
)
17
/s/ Julian Adams
January 7, 2020
/s/ Jas Uppal
January 7, 2020
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-238115) pertaining to the 2017 Share Incentive Plan
of Gamida Cell Ltd. and its subsidiary (the “Company”), of our report dated March 24, 2022, with respect to the consolidated financial statements of the
Company, included in this Annual Report (Form 10-K) for the year ended December 31, 2021.
Exhibit 23.1
Tel-Aviv, Israel
March 24, 2022
/s/ KOST FORER GABBAY & KASIERER
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Julian Adams, certify that:
1. I have reviewed this Annual Report on Form 10-K of Gamida Cell Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurances regarding the reliability of financial reporting in the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: March 24, 2022
/s/ Julian Adams
By:
Title: Chief Executive Officer
Julian Adams, Ph.D.
CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Shai Lankry, certify that:
1. I have reviewed this Annual Report on Form 10-K of Gamida Cell Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurances regarding the reliability of financial reporting in the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: March 24, 2022
/s/ Shai Lankry
By:
Shai Lankry
Title: Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Gamida Cell Ltd. (the “Company”) on Form 10-K for the period ended December 31, 2021 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Julian Adams, Principal Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 24, 2022
/s/ Julian Adams
Julian Adams, Ph.D.
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Gamida Cell Ltd. (the “Company”) on Form 10-K for the period ended December 31, 2021 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Shai Lankry, Principal Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 24, 2022.
/s/ Shai Lankry
Shai Lankry
Chief Financial Officer