MediWound Ltd.
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 20‑F ☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001‑36349 MEDIWOUND LTD.(Exact name of Registrant as specified in its charter) ISRAEL(Jurisdiction of incorporation or organization) 42 Hayarkon StreetYavne, 8122745 Israel(Address of principal executive offices) Yaron Meyer, Adv.General Counsel and Corporate SecretaryTelephone: +972 (77) 971‑4100E‑mail: yaronm@mediwound.comMediWound Ltd.42 Hayarkon StreetYavne, 8122745 Israel(Name, telephone, e‑mail and/or facsimile number and address of company contact person)  Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredOrdinary shares, par value NIS 0.01 per share Nasdaq Global Market Securities registered or to be registered pursuant to Section 12(g) of the Act: None. Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None. Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:As of December 31, 2017, the registrant had outstanding 27,047,737 ordinary shares, par value NIS 0.01 per share. Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S‑T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ☐ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non‑accelerated filer, or an emerging growth company. See thedefinitions of “large accelerated filer,” and “accelerated filer,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. Large accelerated filer ☐Accelerated filer ☒Non‑accelerated filer ☐Emerging Growth Company ☒ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected notto use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of theExchange Act. ☐ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to itsAccounting Standards Codification after April 5, 2012. Indicate by check mark which basis for accounting the registrant has used to prepare the financing statements included in this filing: U.S. GAAP ☐International Financial Reporting Standards as issuedby the International Accounting Standards Board ☒Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒   MEDIWOUND LTD. FORM 20‑FANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 TABLE OF CONTENTS INTRODUCTIONiSPECIAL NOTE REGARDING FORWARD‑LOOKING STATEMENTSi PART I Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS1Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE1Item 3. KEY INFORMATION1Item 4. INFORMATION ON THE COMPANY31Item 4A. UNRESOLVED STAFF COMMENTS62Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS62Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES74Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS93Item 8. FINANCIAL INFORMATION97Item 9. THE OFFER AND LISTING98Item 10. ADDITIONAL INFORMATION99Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK115Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES116 PART II Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES117Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS117Item 15. CONTROLS AND PROCEDURES117Item 16. [Reserved]118Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT118Item 16B. CODE OF ETHICS118Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES118Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES119Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS119Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT119Item 16G. CORPORATE GOVERNANCE119Item 16H. MINE SAFETY DISCLOSURE119 PART III Item 17. FINANCIAL STATEMENTS120Item 18. FINANCIAL STATEMENTS120Item 19. EXHIBITS120SIGNATURES122  INTRODUCTION In this annual report, the terms “MediWound,” “we,” “us,” “our” and “the company” refer to MediWound Ltd. and its subsidiaries. This annual report includes other statistical, market and industry data and forecasts which we obtained from publicly available information andindependent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generallystate that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of theinformation. Although we believe that these sources are reliable, we have not independently verified the information contained in such publications. Certainestimates and forecasts involve uncertainties and risks and are subject to change based on various factors, including those discussed under the headings“Special Note Regarding Forward‑Looking Statements” and “ITEM 3.D. Risk Factors” in this annual report. Throughout this annual report, we refer to various trademarks, service marks and trade names that we use in our business. The “MediWound” designlogo, “MediWound,” “NexoBrid,” “EscharEx” and other trademarks or service marks of MediWound Ltd. appearing in this annual report are the property ofMediWound Ltd. We have several other trademarks, service marks and pending applications relating to our solutions. Other trademarks and service marksappearing in this annual report are the property of their respective holders. SPECIAL NOTE REGARDING FORWARD‑LOOKING STATEMENTS In addition to historical facts, this annual report on Form 20‑F contains forward‑looking statements within the meaning of Section 27A of the U.S.Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and thesafe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We make forward‑looking statements in this annual report that are subjectto risks and uncertainties. These forward‑looking statements include information about possible or assumed future results of our business, financial condition,results of operations, liquidity, plans and objectives. In some cases, you can identify forward‑looking statements by terminology such as “believe,” “may,”“estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions.The statements we make regarding the following matters are forward‑looking by their nature: ·the timing and conduct of our trials of NexoBrid, EscharEx and our pipeline product candidates, including statements regarding the timing,progress and results of current and future preclinical studies and clinical trials, and our research and development programs; ·the clinical utility, potential advantages and timing or likelihood of regulatory filings and approvals of NexoBrid, EscharEx and our pipelineproduct candidates; ·our expectations regarding future growth, including our ability to develop new products; ·our commercialization, marketing and manufacturing capabilities and strategy and the ability of our marketing team to cover regional burncenters and units; ·our ability to maintain adequate protection of our intellectual property; ·our plans to develop and commercialize NexoBrid, EscharEx and our pipeline product candidates; ·our estimates regarding expenses, future revenues, capital requirements and the need for additional financing; ·our estimates regarding the market opportunity for NexoBrid, EscharEx and our pipeline product candidates; ·our expectation regarding the duration of our inventory of intermediate drug substance and products; ·the impact of our research and development expenses as we continue developing product candidates; ·our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; and ·the impact of government laws and regulations. i The preceding list is not intended to be an exhaustive list of all of our forward‑looking statements. The forward‑looking statements are based on ourbeliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are onlypredictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level ofactivity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by theforward‑looking statements. These statements may be found in the sections of this annual report on Form 20‑F entitled “ITEM 3.D. Risk Factors,” “ITEM 4.Information on the Company,” “ITEM 5. Operating and Financial Review and Prospects,” “ITEM 10.E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Company Considerations” and elsewhere in this annual report, including the section entitled “ITEM 4.B. Business Overview”and “ITEM 4.B. Business Overview—Our Focus: Wounds,” which contain information obtained from independent industry sources. Actual results coulddiffer materially from those anticipated in these forward‑looking statements due to various important factors, including all the risks discussed in “ITEM 3.D.Risk Factors” and information contained in other documents filed with or furnished to the Securities and Exchange Commission. You should not rely upon forward‑looking statements as predictions of future events. Although we believe that the expectations reflected in theforward‑looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected inthe forward‑looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to publicly update any forward‑lookingstatements for any reason after the date of this annual report to conform these statements to actual results or to changes in our expectations. ii PART I Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. Item 3. KEY INFORMATION A. Selected Financial Data The following tables set forth our selected consolidated financial data. You should read the following selected consolidated financial data inconjunction with “ITEM 5. Operating and Financial Review and Prospects” and our consolidated financial statements and related notes included elsewherein this annual report. The selected consolidated statements of operations data for each of the years in the three‑year period ended December 31, 2017 and the consolidatedbalance sheet data as of December 31, 2017 and 2016 are derived from our audited consolidated financial statements appearing elsewhere in this annualreport. The consolidated statements of operations data for the years ended December 31, 2013 and 2014 and the consolidated balance sheet data as ofDecember 31, 2013, 2014 and 2015 are derived from our audited consolidated financial statements that are not included in this annual report. The historicalresults set forth below are not necessarily indicative of the results to be expected in future periods. Our financial statements have been prepared in accordancewith International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Year Ended December 31, 2013 2014 2015 2016 2017 (in thousands, except per share data) Consolidated statements of operations data: Revenues $— $259 $601 $1,558 $2,496 Cost of revenues(1) — 2,785 2,519 2,158 1,578 Gross (loss) profit — (2,526) (1,918) (600) 918 Operating expenses: Research and development, gross 4,513 6,054 8,139 14,779 14,625 Participation by BARDA and the Israeli InnovationAuthority (878) (705) (2,118) (7,711) (9,163)Research and development, net of participations(1)(2) 3,635 5,349 6,021 7,068 5,462 Selling and marketing(1) 2,259 8,829 9,284 8,403 5,362 General and administrative(1) 1,687 4,723 4,004 4,084 3,781 Operating loss (7,581) (21,427) (21,227) (20,155) (13,687)Financial income (expense), net (920) 2,552 (444) 1,270 (846)Loss from continuing operations (8,501) (18,875) (21,671) (18,885) (14,533)Loss from discontinued operation(1)(3) (6,850) — (417) — (7,616) Net loss $(15,351) $(18,875) $(22,088) $(18,885) $(22,149)Foreign currency translation adjustments (32) 14 2 7 (29)Total comprehensive loss $(15,383) $(18,861) $(22,086) $(18,878) $(22,178)Basic loss per share(4) $(0.98) $(0.95) $(1.02) $(0.86) $(0.95)Diluted loss per share(4) $(0.98) $(0.95) $(1.02) $(0.86) $(0.95)Weighted average number of ordinary shares used incomputing loss per ordinary share (in thousands): Basic: 15,671 19,940 21,718 21,862 23,341 Diluted: 15,671 19,940 21,718 21,862 23,341 1 As of December 31, 2013 2014 2015 2016 2017 (in thousands) Consolidated balance sheet data: Cash and cash equivalents and short‑term bank deposits $9,553 $64,853 $45,768 $30,029 $36,069 Working capital, net(5) 10,042 64,600 45,189 28,232 36,087 Total assets 14,826 71,121 52,523 35,764 44,135 Total non‑current liabilities 32,607 24,353 23,847 22,614 29,082 Total shareholders’ equity (deficit) (19,804) 42,871 23,470 7,770 9,620 (1)Includes share‑based compensation expense as follows: Year Ended December 31, 2013 2014 2015 2016 2017 (in thousands) Cost of revenues $— $763 $372 $504 $188 Research and development 315 657 511 752 488 Selling and marketing 24 1,430 669 765 204 General and administrative 192 1,977 1,107 1,150 483 Share‑based compensation expenses from continuingoperations 531 4,827 2,659 3,171 1,363 Discontinued operation(3) 76 — — — — Total share‑based compensation expenses $607 $4,827 $2,659 $3,171 $1,363 (2)Research and development expenses, net is presented net of participation by the U.S. Biomedical Advanced Research and Development Authority(“BARDA”) and others and net of the change in the fair value of the liability associated with government grants from the Israeli Innovation Authority(IIA) (formerly the Office of Chief Scientist). The effect of the participation by IIA totaled $0.9 million, $0.7 million, $1.3 million, $2.1 million, and $0.6for the years ended December 31, 2013, 2014, 2015, 2016, and 2017, respectively. The effect of the participation by BARDA totaled $0.8 million, $5.6million and $8.6 million for the years ended December 31, 2015, 2016 and 2017, respectively. See “ITEM 5.B. Liquidity and Capital Resources” formore information. (3)Discontinued operation consists of revenues and expenses related to our exclusive, worldwide license for the development, production andcommercialization of the PolyHeal Product, which expired following the termination of our collaboration with Teva. We account for our discontinuedoperation in accordance with IFRS accounting standard 5, “Non‑current Assets Held for Sale and Discontinued Operations.” See “ITEM 5.A. OperatingResults—Discontinued operation” for more information. (4)Basic and diluted net income (loss) per ordinary share is computed based on the basic and diluted weighted average number of ordinary sharesoutstanding during each period. For additional information, see Note [21] to our consolidated annual financial statements included elsewhere in thisreport. (5)Working capital, net is defined as total current assets minus total current liabilities. B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in our other filings withthe United States Securities and Exchange Commission (the “SEC”), including the following risk factors which we face and which are faced by our industry.Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. In that event, the trading price ofour ordinary shares would likely decline and you might lose all or part of your investment. This report also contains forward‑looking statements that involverisks and uncertainties. Our results could materially differ from those anticipated in these forward‑looking statements, as a result of certain important factorsincluding the risks described below and elsewhere in this report and our other SEC filings. See “Special Note Regarding Forward‑Looking Statements” onpage i. 2 Risks Related to Our Business and Our Industry Product development is a lengthy and expensive process, with an uncertain outcome. We intend to develop and commercialize pipeline product candidates based on our patented proteolytic enzyme technology marketingauthorization of NexoBrid in the U.S. and for new indications, such as for debridement of chronic and other hard‑to‑heal wounds and treatment of connectivetissue and other indications. However, before obtaining regulatory approval for the sale of our pipeline product candidates in any jurisdiction, we mustconduct, at our own expense, clinical studies to demonstrate that the products are safe and effective. Preclinical and clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. Afailure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of,preclinical testing and the clinical trial process. For example, on August 3, 2004, the U.S. Food and Drug Administration (the “FDA”) put one of our Phase 2studies of NexoBrid on a clinical hold due to safety concerns in the study group, including four deaths and a higher incidence of pain and pyrexia comparedto the standard of care (“SOC”) group. Although the Data Safety Monitoring Board unanimously concluded that no causal relationship between these deathsand the NexoBrid treatment was established and provided a reasoning for the higher incidence of such adverse events, the FDA delayed the continuation ofthe development plan until we proposed to initiate an additional smaller Phase 2 study to demonstrate the effectiveness of our proposed corrective measures.We successfully completed this smaller Phase 2 study, allowing us to continue the development plan, but experienced a significant delay and higher costs asa result. Even if preclinical or clinical trials are successful, we still may be unable to commercialize the product, as success in preclinical trials, early clinicaltrials, including Phase 2 trials, or previous clinical trials, does not ensure that later clinical trials will be successful. Similar or other events could delay or prevent our ability to complete necessary clinical trials for our pipeline product candidates, including: ·regulators may not authorize us to conduct a clinical trial within a country or at a prospective trial site or may change the design of a study; ·delays may occur in reaching agreement on acceptable clinical trial terms with regulatory authorities or prospective sites, or obtaininginstitutional review board approval; ·our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conductadditional trials or to abandon strategic projects; ·the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower or moredifficult than we expect, or patients may not participate in necessary follow‑up visits to obtain required data, any of which would result insignificant delays in our clinical testing process; ·our third‑party contractors, such as a research institute, may fail to comply with regulatory requirements or meet their contractual obligations tous; ·we may be forced to suspend or terminate our clinical trials if the participants are being exposed, or are thought to be exposed, to unacceptablehealth risks or if any participant experiences an unexpected serious adverse event; ·regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, includingnoncompliance with regulatory requirements; ·undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared bythat researcher, lead to the suspension or substantive scientific review of one or more of our marketing applications by regulatory agencies, andresult in the recall of any approved product distributed pursuant to data determined to be fraudulent; 3 ·the cost of our clinical trials may be greater than we anticipate; ·an audit of preclinical or clinical studies by regulatory authorities may reveal noncompliance with applicable protocols or regulations, whichcould lead to disqualification of the results and the need to perform additional studies; and ·delays may occur in obtaining our clinical materials. Moreover, we do not know whether preclinical tests or clinical trials will begin or be completed as planned or will need to be restructured.Significant delays could also shorten the patent protection period during which we may have the exclusive right to commercialize our pipeline productcandidates or could allow our competitors to bring products to the market before we do, impairing our ability to commercialize our pipeline productcandidates. We may be unable to successfully obtain approval of NexoBrid for treatment of severe burns in the United States and other markets. In the short term, we plan to rely on sales of NexoBrid in Europe for the treatment of severe burns for a significant portion of our total revenues.However, our continued growth depends, in large part, on our ability to develop and obtain marketing authorization for NexoBrid for treatment of severeburns in additional markets, especially in the United States from the FDA. Although we initiated a Phase 3 pivotal study in April 2015 to support a BiologicsLicense Application (“BLA”) submission to the FDA, we will not be able to submit a BLA until the study is complete or until such time that the FDA acceptsour BLA submission. We cannot predict whether the study will be successful and, even if it is successful, whether the FDA will accept a BLA submissionfollowing this study, how long the FDA will take to review and approve NexoBrid following our BLA submission or whether any such approval in the UnitedStates will ultimately be granted. Similarly, we cannot predict how long regulatory authorities outside of the United States and Europe will take to provideNexoBrid with marketing authorization in their jurisdictions or whether such authorizations will be granted at all. A number of companies in thepharmaceutical and biotechnology industry have suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlierclinical trials. See “—Product development is a lengthy and expensive process, with an uncertain outcome” and “—Development and commercialization ofNexoBrid in the United States and our pipeline product candidates worldwide requires successful completion of the regulatory approval process, and maysuffer delays or fail.” The failure to receive such marketing authorization, especially in the United States, would have a materially adverse impact on ourbusiness prospects. Development and commercialization of NexoBrid in the United States and our pipeline product candidates worldwide requires successful completion ofthe regulatory approval process, and may suffer delays or fail. In the United States and Europe, as well as other jurisdictions, we are required to apply for and receive marketing authorization before we can marketour products, as we have already completed for NexoBrid in the European Union, Israel and Argentina. This process can be time‑consuming and complicatedand may result in unanticipated delays. To secure marketing authorization, an applicant generally is required to submit an application that includes the datasupporting preclinical and clinical safety and efficacy as well as detailed information on the manufacturing and control of the product, proposed labeling andother information. Before marketing authorization is granted, regulatory authorities generally require the inspection of the manufacturing facility or facilitiesand quality systems (including those of third parties) at which the product candidate is manufactured and tested, to assess compliance with strictly enforcedcurrent good manufacturing practices (“cGMP”), as well as potential audits of the non‑clinical and clinical trial sites that generated the data cited in themarketing authorization application. We cannot predict how long the applicable regulatory authority or agency will take to grant marketing authorization or whether any suchauthorizations will ultimately be granted. Regulatory agencies, including the FDA and the European Medicines Agency (the “EMA”), have substantialdiscretion in the approval process, and the approval process and the requirements governing clinical trials vary from country to country. The policies of theFDA, the EMA or other regulatory authorities may change or may not be explicit, and additional government regulations may be enacted that could prevent,limit or delay regulatory approval of NexoBrid, EscharEx or our pipeline product candidates. For example, in December 2016, the 21st Century Cures Act, orCures Act, was signed into law in the United States. The Cures Act, among other things, is intended to modernize the regulation of drugs and biologics andspur innovation, but its ultimate implementation is unclear. If we are slow or unable to adapt to changes in existing requirements or the adoption of newrequirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and wemay not achieve or sustain profitability. We also cannot predict the likelihood, nature or extent of government regulation that may arise from futurelegislation or administrative or executive action, either in the United States or abroad. For example, certain policies of the current U.S. presidentialadministration may impact our business and industry. Namely, this administration has taken several executive actions, including the issuance of a number ofexecutive orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversightactivities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. It is difficult topredict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If theseexecutive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may benegatively impacted. 4 In addition, any regulatory approval that we receive may also contain requirements for potentially costly post‑marketing testing, including Phase 4clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. For example, as part of the EMA regulatory approval process, weagreed to provide further data from a post‑marketing Phase 3 clinical trial of NexoBrid. We believe that our U.S. Phase 3 study will also serve to address thispost‑marketing commitment to EMA. If the EMA does not accept such study or is not satisfied with the study results, we will need to perform another costlystudy to provide such data. Once a product is approved, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage,advertising, promotion, import, export and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. Theserequirements include submission of safety and other post‑marketing information and reports, registration and continued compliance with cGMP for anyclinical trials that we conduct post‑approval. Although our manufacturing facility is cGMP‑certified, we may face difficulties in obtaining regulatoryapproval for the manufacturing and quality control process of our pipeline product candidates. Any delays or failures in obtaining regulatory and marketing approval for NexoBrid in the United States, or for our pipeline product candidatesworldwide, would adversely affect our business, prospects, financial condition and results of operations. We are dependent on our contract with the U.S. Biomedical Advanced Research and Development Authority to fund our Phase 3 pivotal studies and otherdevelopment activities of NexoBrid in the United States, and if we do not continue to receive funding under this contract, we may need to obtain alternativesources of funding. We have a contract with BARDA valued at up to $132 million for the advancement of the development and manufacturing, as well as theprocurement, of NexoBrid in the United States. Under the contract, BARDA has agreed to fund up to $56 million of the development costs of NexoBridrequired to obtain marketing approval in the United States, including our ongoing pediatric phase 3 study and its expansion to include U.S. pediatric burncare sites, and has an option to further fund $10 million in development activities for other potential NexoBrid indications. BARDA has also made a $16.5million commitment for procurement of NexoBrid, which is contingent upon the U.S. FDA Emergency Use Authorization (EUA) and/or FDA marketingauthorization for NexoBrid, and has a $50 million option for additional procurement of NexoBrid. However, the contract provides that BARDA mayterminate the contract at any time, at its convenience, without any further funding obligations. There can be no assurances that BARDA will not terminate thecontract. Changes in government budgets and agendas may result in a decreased and de‑prioritized emphasis on supporting the development of products forthe treatment of severe burns such as NexoBrid. Although we have used a portion of our cash to fund our NexoBrid development program, any reduction ordelay in BARDA funding may force us to suspend the program or seek alternative funding, which may not be available on non‑dilutive terms, terms favorableto us or at all. Further, we cannot provide any assurances as to when or whether BARDA’s option to fund additional development activities for NexoBrid willbe exercised. Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our productcandidates and affect the prices we may obtain. The United States and several other jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals tochange the healthcare system in ways that may affect our ability to sell NexoBrid, EscharEx or any of our pipeline product candidates profitably, if approved.We cannot predict the initiatives that may be adopted in the future. The continuing efforts of hospitals, governments, insurance companies, managed careorganizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect: ·the market acceptance or demand for NexoBrid, EscharEx or any of our pipeline product candidates, if approved; 5 ·the ability to set a price that we believe is fair for NexoBrid, EscharEx or any of our pipeline product candidates, if approved; ·our ability to generate revenues and achieve or maintain profitability; ·the level of taxes that we are required to pay; and ·the availability of capital. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems withthe stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been aparticular focus of these efforts and has been significantly affected by major legislative initiatives. In March 2010, President Obama signed into law thePatient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, asweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud andabuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and imposeadditional health policy reforms. Among the provisions of the Affordable Care Act of importance to our potential product candidates are the following: ·an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportionedamong these entities according to their market share in certain government healthcare programs; ·an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of theaverage manufacturer price for branded and generic drugs, respectively; ·addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs thatare inhaled, infused, instilled, implanted or injected; ·a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point‑of‑sale discounts off negotiatedprices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatientdrugs to be covered under Medicare Part D; ·extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed careorganizations; ·expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additionalindividuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal PovertyLevel beginning in 2014, thereby potentially increasing manufacturers’ Medicaid rebate liability; ·expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ·a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and ·a new Patient‑Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research. 6 There have been judicial and congressional challenges to certain aspects of the Affordable Care Act, and we expect the current U.S. presidentialadministration to continue to seek amendments to or repeal of the Affordable Care Act. In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. These changes includedaggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislativeamendments, will stay in effect through 2025 unless additional Congressional action is taken. In January 2013, President Obama signed into law theAmerican Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers, and increased the statute oflimitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions inMedicare and other healthcare funding, which could negatively impact the market for NexoBrid and our other product candidates, if approved, and,accordingly, our financial operations. There has been heightened governmental scrutiny recently over the manner in which drug manufacturers set prices fortheir marketed products, which have resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparencyto product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursementmethodologies for drug products. We expect that other possible healthcare reform measures may result in additional reductions in Medicare and other healthcare funding, morerigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Anyreduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. Theimplementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, orcommercialize our drugs. Legislative and regulatory proposals have been made to expand post‑approval requirements and restrict sales and promotional activities for drugs.We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, orwhat the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress ofthe FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling andpost‑marketing testing and other requirements. The commercial success of NexoBrid, EscharEx and our pipeline product candidates will depend upon their degree of market acceptance. NexoBrid, EscharEx and our pipeline product candidates may not gain market acceptance by physicians and their teams, healthcare payors andothers in the medical community. Although many physicians in burn centers throughout Europe, the United States and other international markets have usedNexoBrid for severe burns as part of our clinical trials or since NexoBrid’s commercial launch in Europe and Israel, we cannot guarantee that use of NexoBridwill be accepted in the market. We need to successfully integrate NexoBrid into the overall treatment of burns in burn centers. If we are unable to successfullycommercialize NexoBrid in Europe, sales of NexoBrid will be severely affected, which will have a material adverse effect on our business, financial conditionand results of operations. If NexoBrid, EscharEx and our pipeline product candidates do not achieve an adequate level of acceptance, we may not generaterevenue and we may not achieve or sustain profitability. The degree of market acceptance of NexoBrid in Europe, Israel and Argentina and, if we receivemarketing approval, in other countries and of EscharEx and our pipeline product candidates, will depend on a number of factors, some of which are beyondour control, including: ·the willingness of physicians, burn care teams and hospital administrators to administer our products and their acceptance as part of the medicaldepartment routine; ·the consent of hospitals to fund/purchase NexoBrid or obtain third‑party coverage or reimbursement for our products; 7 ·the ability to offer NexoBrid, EscharEx and our pipeline product candidates for sale at an attractive value; ·the efficacy and potential advantages of NexoBrid, EscharEx and our pipeline product candidates relative to current standard of care; ·the prevalence and severity of any side effects; and ·the efficacy, potential advantages and timing of introduction to the market of alternative treatments. Failure to achieve market acceptance for NexoBrid, EscharEx or any of our pipeline product candidates, if and when they are approved forcommercial sale, will have a material adverse effect on our business, financial condition and results of operations. We may be unsuccessful in commercializing our products due to unfavorable pricing regulations or third‑party coverage and reimbursement policies. While we are executing a country‑specific market access strategy, which includes pricing and/or reimbursement targets for NexoBrid in most ofEurope, we cannot guarantee that we will receive favorable hospital, regional or national funding or pricing and reimbursement. Additionally, we cannotpredict the pricing and reimbursement of NexoBrid, EscharEx or our pipeline product candidates in any other jurisdiction. The regulations that governmarketing approvals, pricing and reimbursement for new products vary widely from country to country, among regions within some countries and amongsome hospitals. In some foreign jurisdictions, including the European Union, the pricing of prescription pharmaceuticals is subject to governmental control.In other countries, coverage negotiations must occur at the regional or hospital level in order to be included in the hospital formulary. Pricing negotiationswith governmental authorities at the regional or hospital level can take considerable time after the receipt of marketing approval for a product candidate. As a result, even after obtaining regulatory approval for a product in a particular country, we may be subject to price regulations or denied or limitedby reimbursement or formulary inclusion, which may delay or limit our commercial launch of the product and negatively impact the revenue we are able togenerate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in NexoBrid, EscharEx orour pipeline product candidates, even after obtaining regulatory approval. Additionally, we cannot be sure that coverage and reimbursement will be available for NexoBrid, EscharEx or any pipeline product candidate thatwe commercialize in the future and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may affect thedemand for, the price of, or the budget allocated for reimbursement for any product for which we obtain marketing approval. Obtaining reimbursement for ourproducts may be particularly difficult because of the higher prices often associated with products administered under the supervision of a physician. Ifcoverage and reimbursement are not available or are available only at limited levels, we may not be able to successfully commercialize NexoBrid, EscharExor any pipeline product candidate that we successfully develop. Eligibility for reimbursement does not guarantee that any product will be paid for in all casesor at a rate that covers our costs. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be madepermanent. Payment rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed forlower cost products that are already reimbursed and may be incorporated into existing payments for other services. Net prices for products may be reduced bymandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrictimports of products from countries where they may be sold at lower prices than in certain other countries, such as the United States. In the United States,third‑party payors often rely on the coverage policies and payment limitations imposed by Medicare and other government payors, in setting their owncoverage policies and reimbursement rates. Our inability to promptly obtain coverage and profitable payment rates from hospital budget, government‑fundedand private payors for NexoBrid, EscharEx or any pipeline product candidate could have a material adverse effect on our operating results, our ability to raisecapital needed to commercialize products and our overall financial condition. 8 Our success will depend initially on our ability to commercialize NexoBrid in Europe. We are currently marketing a single product, NexoBrid, based on our patented proteolytic enzyme technology, which has already been approved bythe EMA and the Israeli and Argentinean Ministries of Health for marketing in the European Union, Israel and Argentina, respectively, for the treatment ofadults with deep partial‑ and full‑thickness burns, which we refer to as severe burns. NexoBrid is not currently approved for marketing in any otherjurisdiction, including the United States, and has not been approved for any other indication or for use in children. We launched NexoBrid in Europe in2014, in Israel in 2015, and in Argentina, through our local distributor in 2016. In November 2017, the European Commission granted a five‑year renewal ofour NexoBrid marketing authorization. We anticipate that, for at least the next several years, our ability to generate revenues and become profitable willdepend on the commercial success of NexoBrid in these markets. We are marketing, selling and distributing NexoBrid in Europe and in Israel through our own sales force. We have established a commercialorganization for the marketing, sales and distribution of NexoBrid, including our European headquarters in Germany and sales and marketing teamsthroughout Europe. In order to successfully commercialize NexoBrid, we must successfully manage and operate our marketing, sales, distribution, managerialand other non‑technical capabilities, which includes many challenges, such retaining talented personnel; training employees; having the appropriate systemof incentives; managing headcount in Europe; and managing business units in Europe. The continued operation of our own sales infrastructure is expensiveand time‑consuming. Moreover, we do not have substantial experience as a company in operating a significant sales infrastructure and we cannot be certainthat we will be able to do so successfully. We will have to compete with other pharmaceutical, biotechnology and wound care companies to recruit, hire, trainand retain personnel for medical affairs, marketing and sales. We have a history of net losses. We expect to continue to incur substantial and increasing net losses for the foreseeable future, and we may never achieve ormaintain profitability. We are not profitable and have incurred significant net losses, including net losses of $18.9 million and 22.2 million for the years endedDecember 31, 2016 and 2017, respectively. As of December 31, 2017, we had an accumulated deficit of $129.4 million. We expect to incur substantial netlosses for the foreseeable future. These losses and negative cash flows have had, and will continue to have, an adverse effect on our shareholders equity andworking capital. We make business decisions based on forecasts of future sales of our products and pipeline product candidates that may be inaccurate. Our market estimates are based on many assumptions, including, but not limited to, reliance on external market research, our own internal research,population estimates, estimates of disease diagnostic rates, treatment trends, and market estimates by third parties. Any of these assumptions can materiallyimpact our forecasts and we cannot be assured that the assumptions are accurate. If the market for any of our products or product candidates is less than thisdata would suggest, the potential sales for the product or pipeline product candidates in question could be adversely affected, and our inventories and netlosses could increase. Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable toaccurately predict the timing or amount of future expenses or when, or if, we will be able to achieve or maintain profitability. We have financed ouroperations primarily through the sale of equity securities, licensing agreements and government grants. The size of our future net losses will depend, in part,on the rate of growth or contraction of our expenses and the level and rate of growth, if any, of our revenues. If we are unable to successfully commercializeNexoBrid, EscharEx or one or more of our pipeline product candidates or if revenue from NexoBrid, EscharEx or any pipeline product candidate that receivesmarketing approval is insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increaseprofitability. 9 We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses and future capital requirements may increase if and as we: ·accelerate our clinical development activities, particularly with respect to our clinical development of EscharEx for the debridement of chronicand other hard‑to‑heal wounds and our clinical trials for our product candidate for the treatment of connective tissue disorders or otherindications; ·continue to operate our sales, marketing and distribution infrastructure in Europe and thereafter in the United States to commercialize NexoBridand any pipeline product candidates for which we obtain marketing approval; ·further scale‑up the manufacturing process for NexoBrid; ·seek regulatory and marketing approvals for NexoBrid and any pipeline product candidate that successfully completes clinical trials; ·initiate additional preclinical, clinical or other studies for NexoBrid, EscharEx and our pipeline product candidates and seek to identify andvalidate new products; ·acquire rights to other product candidates and technologies; ·change or add suppliers; ·maintain, expand and protect our intellectual property portfolio; ·attract and retain skilled personnel; and ·experience any delays or encounter issues with any of the above. We may need substantial additional capital in the future, which may cause dilution to our existing shareholders, restrict our operations or require us torelinquish rights to our pipeline product candidates or intellectual property. If additional capital is not available, we may have to delay, reduce or ceaseoperations. We may seek additional funding in the future, which may consist of equity offerings, collaborations, licensing arrangements or any other means todevelop our pipeline product candidates, increase our commercial manufacturing capabilities, operate our sales and marketing capabilities or other generalcorporate purposes. For example, on March 7, 2016, the SEC declared our shelf registration statement on Form F‑3 effective. Under this shelf registrationstatement, we may offer from time to time up to $125 million in the aggregate of our ordinary shares, warrants and/or debt securities in one or more series orissuances. In September 2017, we used the shelf registration statement to complete an underwritten public offering of 5,037,664 of our ordinary shares, for netproceeds of $22.7 million, after deducting the underwriting discount and offering expenses payable by us. Our September 2017 offering diluted then‑existing shareholders and to the extent that we raise additional capital through, for example, the sale ofequity or convertible debt securities, our existing shareholders’ ownership interest will be further diluted, and the terms may include liquidation or otherpreferences that adversely affect our shareholders’ rights. The incurrence of indebtedness or the issuance of certain equity securities could result in increasedfixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or to issueadditional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact ourability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market priceof our ordinary shares to decline. Securing additional financing may also divert our management from our day‑to‑day activities, which may adversely affectour ability to develop and commercialize NexoBrid, EscharEx and our pipeline product candidates. Additional funding may not be available to us on acceptable terms, or at all. In the event that we enter into collaborations or licensing arrangementsin order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rightsto product candidates or intellectual property that we otherwise would seek to develop or commercialize ourselves or reserve for future potentialarrangements when we might be able to achieve more favorable terms. 10 If we are unable to raise additional capital when required or on acceptable terms, we may be required to: ·delay, scale back or discontinue the development, manufacturing scale‑up or commercialization of NexoBrid, EscharEx or our pipeline productcandidates; ·seek corporate partners for NexoBrid, EscharEx or one or more of our pipeline product candidates on terms that are less favorable than mightotherwise be available; or ·relinquish or license on unfavorable terms, our rights to NexoBrid, EscharEx or our pipeline product candidates that we otherwise would seek todevelop or commercialize ourselves. Any such consequence will have a material adverse effect on our business, operating results and prospects and on our ability to develop our pipeline productcandidates. We depend on a sole supplier to obtain our intermediate drug substance, bromelain SP, which is necessary for the production of our products. We currently procure bromelain SP, an intermediate drug substance in the manufacturing of NexoBrid, EscharEx and our pipeline productcandidates, from a single supplier, Challenge Bioproducts Corporation Ltd. (“CBC”). CBC’s manufacturing facilities are located in the Republic of Chinaand it uses proprietary methods to manufacture bromelain SP. Our supply agreement with CBC has no fixed expiration date and can be voluntarily terminatedby us, with at least six months’ advance written notice, or by CBC, with at least 24 months’ advance written notice. Although we have a contractual right toprocure this material from other suppliers, subject to payment of a one‑time, non‑material licensing fee to CBC, procuring this material from any other sourcewould require time and effort which may interrupt our supply of bromelain SP and may cause an interruption of the supply of NexoBrid, EscharEx and ourpipeline product candidates to the marketplace and for future clinical trials or other development purposes. Regulatory authorities could require that weconduct additional studies in support of a new supplier, which could result in significant additional costs or delays. Furthermore, there can be no assurancethat we would be able to procure alternative supplies of bromelain SP at all or at comparable quality or competitive prices or upon fair and reasonablecontractual terms and conditions. Although we believe that we currently store sufficient inventory of bromelain SP in our warehouse and CBC warehouse tocontinue full capacity operations for approximately two years, this inventory may prove insufficient, and any interruption or failure to source additionalbromelain SP from CBC or other third parties in a timely manner, or at all, would adversely affect our business, prospects, financial condition and results ofoperations. If our manufacturing facility in Yavne, Israel were to suffer a serious accident, or if a force majeure event materially affected our ability to operate andproduce NexoBrid, EscharEx and our pipeline product candidates, all of our manufacturing capacity could be shut down for an extended period. We currently rely on a single manufacturing facility in Yavne, Israel, and we expect that all of our revenues in the near future will be derived fromproducts manufactured at this facility. If this facility were to suffer an accident or a force majeure event such as war, missile or terrorist attack, earthquake,major fire or explosion, major equipment failure or power failure lasting beyond the capabilities of our backup generators or similar event, our revenueswould be materially adversely affected and any of our clinical trials could be materially delayed. In this situation, our manufacturing capacity could be shutdown for an extended period, we could experience a loss of raw materials, work in process or finished goods inventory and our ability to operate our businesswould be harmed. In addition, in any such event, the reconstruction of our manufacturing facility and storage facilities, and obtaining regulatory approval forthe new facilities could be time‑consuming. During this period, we would be unable to manufacture NexoBrid or our pipeline product candidates. In addition,we currently have limited inventory of NexoBrid that we can supply to our customers in the event that we are unable to further manufacture NexoBrid. Moreover, our business insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East.Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assureyou that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damagesincurred by us could have a material adverse effect on our business. 11 We may not be able to expand our production or processing capabilities or satisfy future demand. We are currently seeking to expand our manufacturing capabilities in order to increase our capacity to manufacture NexoBrid and future products.We cannot guarantee that we will be able to obtain the requisite approvals, including meeting regulatory and quality requirements, or the necessary capitalresources for procuring this facility, or if we do, that the facility will satisfy additional growing demand. Conversely, there can be no assurance, even if weobtain a new facility, that demand for our products will increase proportionately to the increased production capability. Furthermore, we cannot assure thatthis or similar projects will be implemented in a timely and cost efficient manner, and that our current production will not be adversely affected by theoperational challenges of implementing the expansion project. We are subject to a number of other manufacturing risks, any of which could substantially increase our costs and limit supply of NexoBrid, EscharEx andour pipeline product candidates. The process of manufacturing NexoBrid, EscharEx and our pipeline product candidates is complex, highly regulated and subject to the risk ofproduct loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviationsfrom normal manufacturing processes or quality requirements for our products could result in reduced production yields, product defects and other supplydisruptions. If microbial, viral or other contaminations are discovered in NexoBrid or our pipeline product candidates or in the manufacturing facilities inwhich NexoBrid or our pipeline product candidates are or will be made, such manufacturing facilities may need to be closed to investigate and remedy thecontamination. Although we have not experienced any contaminations, major equipment failures, or other similar manufacturing problems of such magnitude, anyadverse developments affecting manufacturing operations for NexoBrid or our pipeline product candidates may result in shipment delays, inventoryshortages, lot failures, withdrawals or recalls, or other interruptions in the supply of NexoBrid or our pipeline product candidates. We may also have to takeinventory write‑offs and incur other charges and expenses for our products that fail to meet specifications, undertake costly remediation efforts, or seek morecostly manufacturing alternatives. Our ability to continue manufacturing and distributing our products depends on our continued adherence to current good manufacturing practicesregulations. The manufacturing processes for our products are governed by detailed regulations that are set forth in the current cGMP. Failure by ourmanufacturing and quality operations unit to adhere to established regulations or to meet a specification or procedure set forth in cGMP requirements couldrequire that a product or material be rejected and destroyed. Our adherence to cGMP regulations and the effectiveness of our quality control systems areperiodically assessed through inspections of our manufacturing facility by regulatory authorities. Such inspections could result in deficiency citations, whichwould require us to take action to correct those deficiencies to the satisfaction of the applicable regulatory authorities. If critical deficiencies are noted or ifwe are unable to prevent recurrences, we may have to recall products or suspend operations until appropriate measures can be implemented. Since cGMPreflects ever‑evolving standards, we need to regularly update our manufacturing processes and procedures to comply with cGMP. These changes may causeus to incur additional costs and may adversely impact our profitability. For example, more sensitive testing assays (if and when they become available ordiscontinuation of the availability of the disposables used in production) may be required or existing procedures or processes may require revalidation, all ofwhich may be costly and time‑consuming and could delay or prevent the manufacturing of NexoBrid or launch of a new product. We may have liabilities under our former agreements with Teva Pharmaceutical Industries Ltd. and PolyHeal Ltd. In 2010 we entered into a series of agreements with Teva Pharmaceutical Industries Ltd. (“Teva”), and PolyHeal Ltd. (“PolyHeal”), to collaborate inthe development, manufacturing and commercialization of PolyHeal’s wound product (the “PolyHeal Product”). Under the 2010 series of agreementsbetween PolyHeal and the company (collectively, the “2010 PolyHeal Agreements”), PolyHeal granted us an exclusive global license to develop,manufacture and commercialize the PolyHeal Product, and we granted an exclusive sub‑license to Teva to commercialize the PolyHeal Product worldwide. Inaddition, in accordance with the 2010 PolyHeal Agreements, Teva made investments in our ordinary shares and agreed to fund our research and developmentexpenses and certain manufacturing costs and perform all marketing activities for the PolyHeal Product, under the 2010 PolyHeal Agreement. On November15, 2012, we informed Teva of the first administration of the next generation of the PolyHeal Product in humans, which constituted a milestone under the2010 PolyHeal Agreements. Upon achievement of this milestone, Teva was required to invest an additional $6.75 million in exchange for our ordinaryshares, and following and pending such investment, we were required to purchase, for an identical amount, ordinary shares of PolyHeal from its existingshareholders. We have commenced discussions regarding this matter with Teva, however, as of the date of this annual report, we have not received themilestone investment from Teva and we cannot assure you that Teva will invest this amount in the future. 12 On September 15, 2014, a statement of claim was filed against the company by certain shareholders of PolyHeal. The plaintiffs allege that thecompany is obligated to pay them a total amount of approximately $1.3 million plus applicable interest (totaled $1.5 million as of the date of the ruling) inexchange for their respective portion of PolyHeal’s shares, following the milestone occurrence. On November 13, 2017, the Tel Aviv District Court issued aruling in favor of the plaintiffs. The Court ruled that we are obligated to purchase PolyHeal’s shares for approximately $6.75 million plus applicable interest(totaled $7.5 million as of the date of the ruling), which represents the purchase price for the total number of shares that we were obligated to purchase fromPolyHeal subject to the receipt of equivalent funds from Teva. The plaintiffs hold shares worth approximately $1.5 million of the total $7.5 million amount,however other shareholders may sue to enforce their alleged rights. Any such purchase of PolyHeal’s shares absent an investment from Teva as contemplatedby the 2010 PolyHeal agreements could have a material adverse effect on our liquidity and financial condition. On December 27, 2017, we filed an appeal tothe Supreme Court over the said ruling (the “Appeal”), alleging, among other things, that the agreement according to which the ruling was granted wasmisinterpreted by the District Court. We further alleged that both the wording of the agreement and the conduct of the parties thereunder prove that our’obligation to purchase PolyHeal’s shares was subject to the prior receipt of funds, which were never received, from Teva. On January 30, 2018, certainPolyHeal shareholders filed a cross appeal, alleging that they are entitled to receive from us a full repayment of their counsel’s fees in a sum equal to 12.5% ofthe consideration to be paid for their shares (the “Cross Appeal”). The Appeal and Cross Appeal are currently scheduled to be heard on January 7, 2019. Inaccordance with the Tel Aviv District Court ruling, on February 7, 2018, we purchased PolyHeal’s Shares in consideration for a total sum of approximately$1.5 million. If we are not successful in the appeal or if we are unable to reach a settlement with Teva, we could be required to purchase an equivalent of $6million of additional ordinary shares of PolyHeal from other existing shareholders even if we do not receive such investment from Teva, which could have amaterial adverse effect on our liquidity and financial condition. Accordingly, a full provision for the purchase price of the shares, plus the accrued interest,totaling $7.5 million, was recorded within the loss from discontinued operations in respect of this claim, of which approximately $1.5 million was paid toplaintiffs in consideration for PolyHeal’s shares. In addition, we believe that Teva is obligated to us for payments totaling an aggregate of $4.7 million pursuant to a 2007 collaboration agreementbetween Teva and the company (the “2007 Teva Agreement”) and the 2010 PolyHeal Agreements. We have commenced discussions with Teva regardingthese payments, which are primarily reimbursement for development and manufacturing costs that we believe were to be borne by Teva through the effectivedate of termination of such agreements in December 2012. Furthermore, if we are unable to reach a negotiated settlement with Teva and the Teva Subsidiary relating to our disputes under the 2007 TevaAgreement or the 2010 PolyHeal Agreements, these matters may result in the continuation of the existing litigation or new litigation or arbitrationproceedings, any of which would materially increase our expenses and may disrupt our management’s focus on our business. NexoBrid, EscharEx, our current pipeline product candidates or future product candidates may cause unanticipated and undesirable side effects or haveother properties, which are currently unknown to us. NexoBrid, EscharEx and all of our current pipeline product candidates rely on our patented proteolytic enzyme technology, although their specificformulations or mode of applications may vary. Like most pharmaceutical products, our approval labels in Europe, Israel and Argentina for NexoBrid listscertain side effects. If we or others identify previously unknown problems with NexoBrid, EscharEx or their underlying proteolytic enzymes, includingadverse events of unanticipated severity or frequency, problems with our manufacturers or manufacturing processes, or failure to comply with regulatoryrequirements, the following consequences, among others, may occur: ·restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory productrecalls; 13 ·fines, warning letters or holds on clinical trials; ·harm to our reputation, reduced demand for our products and loss of market acceptance; ·refusal by the applicable regulatory authority to approve pending applications or supplements to approved applications filed by us, orsuspension or revocation of product license approvals; ·product seizure or detention, or refusal to permit the import or export of products; and ·injunctions or the imposition of civil or criminal penalties. Any of these events could prevent us from achieving or maintaining market acceptance of NexoBrid, our pipeline product candidates or futureproduct candidates, which would adversely affect our business, prospects, financial condition and results of operations. We face competition from the existing standard of care and potential changes in medical practice and technology and the possibility that our competitorsmay develop products, treatments or procedures that are similar, more advanced, safer or more effective than ours. The medical, biotechnology and pharmaceutical industries are intensely competitive and subject to significant technological and practice changes.We may face competition from many different sources with respect to NexoBrid, our pipeline product candidates or any product candidates that we may seekto develop or commercialize in the future. Possible competitors may be medical practitioners, pharmaceutical and wound care companies, academic andmedical institutions, governmental agencies and public and private research institutions, among others. Should any competitor’s product candidates receiveregulatory or marketing approval prior to ours, they may establish a strong market position and be difficult to displace, or may diminish the need for ourproducts. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures thatare safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product that we may develop. In addition,we face competition from the current standard of care for eschar removal in severe burns, which is surgery, where debridement can occur by tangentialexcision, dermabrasion or hydro jet, or non‑surgical alternatives, such as topical medications applied to the eschar to facilitate the natural healing process.We face competition in the removal of eschar in severe burns from surgery and topical medications such as gels. In chronic and other hard‑to‑heal wounds, weexpect to face competition from Smith & Nephew Plc’s Santyl, a collagenase‑based product indicated for debriding chronic dermal ulcers and severelyburned areas. Many of our current or future competitors may have significantly greater financial resources and expertise in research and development,manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we may have. Mergersand acquisitions in the pharmaceutical and biotechnology industries or wound care markets may result in even more resources being concentrated among asmaller number of our competitors. For example, Healthpoint Biotherapeutics, which marketed Santyl, was acquired by Smith & Nephew Plc in 2012. Smallerand other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and establishedcompanies. These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites andpatient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. 14 We may lose orphan drug designation for NexoBrid in the United States and the European Union. NexoBrid has been designated an orphan drug in the United States and European Union. One of the incentives provided by an orphan drugdesignation is market exclusivity for seven and ten years in the United States and the European Union, respectively. While the marketing exclusivity of anorphan drug prevents other sponsors from obtaining approval of a similar medicinal product for the same indication (unless the sponsor demonstrates clinicalsuperiority or a market shortage occurs), it would not prevent other sponsors from obtaining approval of the same compound for other indications. Inaddition, the FDA or the EMA may revisit any orphan drug designation and retains the ability to withdraw the designation at any time. The U.S. Congress hasconsidered, and may consider in the future, legislation that would restrict the duration or scope of the market exclusivity of an orphan drug and, thus, wecannot be sure that the benefits to us of the existing statute will remain in effect. Regulatory approval for NexoBrid, EscharEx and our pipeline product candidates is and may be limited to specific indications and conditions for whichclinical safety and efficacy have been demonstrated, and the prescription or promotion of off‑label uses could adversely affect our business. The marketing approval for NexoBrid in the European Union, Israel and Argentina is limited to the treatment of deep partial‑ and full‑thicknessburns in adults. In addition, any additional regulatory approval of NexoBrid for severe burns and any regulatory approval we may receive for any of ourpipeline product candidates in the future, would be limited to those specific indications for which such pipeline product candidate had been deemed safe andeffective by the EMA, the FDA or other regulatory authority and, like the EMA marketing approval for NexoBrid, would be subject to a renewal examinationfive years after the marketing approval was extended for an additional five years during 2017. Additionally, labeling restrictions may also limit the manner inwhich a product may be used. For example, NexoBrid’s label provides that it should only be used in specialized burns centers or by burn specialists andshould not be applied to more than 15% of the patient’s total body surface area. It is not, however, unusual for physicians to prescribe medication forunapproved, or “off‑label,” uses or in a manner that is inconsistent with the manufacturer’s labeling. To the extent such off‑label uses are pervasive andproduce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer. In addition, should any of ourfuture products have a significant price difference and if they are used interchangeably, off‑label uses may cause a decline in our revenues or potentialrevenues. Furthermore, while physicians may choose to prescribe treatments for uses that are not described in the product’s labeling and for uses that differfrom those approved by regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the EMA,the FDA or other regulatory authorities. Although regulatory authorities generally do not regulate the behavior of physicians, they do restrictcommunications by companies on the subject of off‑label use. If our promotional activities fail to comply with these regulations or guidelines, we may besubject to warnings from, or enforcement action by, these authorities. In the United States, “off‑label promotion” by pharmaceutical companies has resulted insignificant litigation under the Federal False Claims Act, violations of which may result in substantial civil penalties and fines as well as exclusion fromgovernment health care programs. More generally, failure to follow the rules and guidelines of regulatory agencies relating to promotion and advertising,such as that promotional materials not be false or misleading, can result in refusal to approve a product, the suspension or withdrawal of an approved productfrom the market, product recalls, fines, disgorgement of money, operating restrictions, injunctions or criminal prosecution. If we fail to manage our growth effectively, our business could be disrupted. Our future financial performance and ability to successfully commercialize our products and to compete effectively will depend, in part, on ourability to manage any future growth effectively. We have made and expect to continue to make significant investments to enable our future growth through,among other things, new product development, clinical trials for new indications and expansion of our marketing and sales infrastructure. While we believethat our current manufacturing capacity is sufficient to meet the expected near‑term commercial demand for NexoBrid, we are planning to increase thecapacity by constructing a new manufacturing facility, which we estimate will be valid and qualified, subject to successful authorities’ cGMP audit, during2022 and which we believe will cost approximately $12‑15 million. We must also be prepared to expand our work force and train, motivate and manageadditional employees as the need for additional personnel arises. Even following expansion, our facilities, personnel, systems, procedures and controls maynot be adequate to support our future operations, or we may expand, but then fail to grow our sales of NexoBrid or our pipeline product candidatessufficiently to support such operational growth. Any failure to manage future growth effectively could have a material adverse effect on our business andresults of operations. 15 Exchange rate fluctuations between the U.S. dollar and the Israeli shekel, the Euro and other non‑U.S. currencies may negatively affect our earnings. The dollar is our functional and reporting currency. However, a significant portion of our operating expenses are incurred in Israeli shekels andEuros. As a result, we are exposed to the risks that the shekel may appreciate relative to the dollar, or, if the shekel instead devalues relative to the dollar, thatthe inflation rate in Israel may exceed such rate of devaluation of the shekel, or that the timing of such devaluation may lag behind inflation in Israel. In anysuch event, the dollar cost of our operations in Israel would increase and our dollar‑denominated results of operations would be adversely affected. We cannotpredict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the shekel against the dollar. For example, the dollar depreciatedrelative to the shekel by 9.8% and 1.5% in 2017 and 2016, respectively, while the dollar appreciated relative to the shekel by 0.3% in 2015. If the dollar orEuro cost of our operations in Israel increases, our dollar‑ and Euro‑measured results of operations will be adversely affected. Our operations also could beadversely affected if we are unable to effectively hedge against currency fluctuations in the future. In addition, we expect that our revenues will continue to be denominated in currencies other than the dollar and the shekel, such as the Euro.Therefore, our operating results and cash flows are also subject to fluctuations due to changes in the relative values of the dollar and these foreign currencies.These fluctuations could negatively affect our operating results and could cause them to vary from quarter to quarter. Furthermore, to the extent that we mayreceive revenues from sales in certain countries, such as certain countries in the Asia Pacific region, where our sales are expected to be denominated indollars, a strengthening of the dollar in relation to other currencies could make our products less competitive in those foreign markets and collection ofreceivables more difficult. For further information, see “ITEM 11. Quantitative and Qualitative Disclosures About Market Risk” elsewhere in this annualreport. Certain of our business practices could become subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens. Failure tocomply with applicable law or an adverse decision in lawsuits may result in adverse consequences to us. The laws governing our conduct in the United States are enforceable by criminal, civil and administrative penalties. Violations of laws such as theFederal Food, Drug and Cosmetic Act (the “FDCA”), the Public Health Service Act, the Federal False Claims Act, provisions of the U.S. Social Security Act,including the “Anti‑Kickback Statute,” or any regulations promulgated under their authority, may result in various administrative, civil and criminalsanctions, jail sentences, fines or exclusion from federal and state programs, as may be determined by the U.S. Department of Justice, the Office of InspectorGeneral of the U.S. Department of Health and Human Services (the “OIG”), the Centers for Medicare & Medicaid Services, other regulatory authorities and thecourts. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices willnot be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen “relators” under federal or state false claims laws. The federal Anti‑Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration(including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for orrecommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federalhealthcare programs. The term “remuneration” has been broadly interpreted to include anything of value. Although there are a number of statutoryexceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practicesthat involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do notqualify for an exception or safe harbor. For example, even common business arrangements, such as discounted terms and volume incentives for customers in a position to recommend orchoose drugs and devices for patients, such as physicians and hospitals, can result in substantial legal penalties, including, among other things, exclusionfrom Medicare and Medicaid programs if not carefully structured to comply with applicable requirements. Also, certain business practices, such as paymentof consulting fees to healthcare providers, sponsorship of educational or research grants, charitable donations, interactions with healthcare providers andfinancial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid any possibility ofunlawfully inducing healthcare providers to prescribe or purchase particular products or rewarding past prescribing. Failure to meet all of the requirements ofa particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti‑Kickback Statute. Instead, thelegality of the arrangement will be evaluated on a case‑by‑case basis based on a cumulative review of all its facts and circumstances. Several courts haveinterpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federalhealthcare covered business, the Anti‑Kickback Statute has been violated. In addition, a person or entity does not need to have actual knowledge of thestatute or specific intent to violate it in order to have committed a violation. Moreover, a claim including items or services resulting from a violation of thefederal Anti‑Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. 16 Significant enforcement activity has also taken place under federal and state false claims act statutes. Violations of the federal False Claims Act canresult in treble damages, and a penalty of up to $21,563 for each false claim submitted for payment. Several pharmaceutical, device and other healthcarecompanies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation that thecustomers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of thecompanies’ marketing of products for unapproved, and thus non‑covered, uses. The government may further prosecute conduct constituting a false claimunder the criminal False Claims Act. The criminal False Claims Act prohibits the making or presenting of a claim to the government knowing such claim tobe false, fictitious, or fraudulent and, unlike the civil False Claims Act, requires proof of intent to submit a false claim. The federal False Claims Act, as well as certain state false claims acts, also permits relators to file complaints in the name of the United States (and ifapplicable, particular states). These relators may be entitled to receive up to 30% of total recoveries and have been active in pursuing cases againstpharmaceutical companies. Where practices have been found to involve improper incentives to use products, the submission of false claims, or otherimproper conduct, government investigations and assessments of penalties against manufacturers have resulted in substantial damages and fines. In addition,to avoid exclusion from participation in federal healthcare programs, many manufacturers have been required to enter into Corporate Integrity Agreementsthat prescribe allowable corporate conduct and impose reporting and disclosure obligations by the manufacturer to the government. Failure to satisfyrequirements under the FDCA can also result in a variety of administrative, civil and criminal penalties, including injunctions or consent decrees thatprescribe allowable corporate conduct. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, amongother things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third‑partypayors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcareoffense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement inconnection with the delivery of or payment for healthcare benefits, items or services. Like the Anti‑Kickback Statute, the Affordable Care Act amended theintent standard for certain healthcare fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute orspecific intent to violate it in order to have committed a violation. Additionally, there has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcareprofessionals and/or entities. The Affordable Care Act, among other things, imposed annual reporting requirements on certain manufacturers of drugs,devices, biologicals and medical supplies for payments and other transfers of value provided by them, directly or indirectly, to physicians and teachinghospitals, as well as ownership and investment interests held by physicians and their family members. A manufacturer’s failure to submit timely, accuratelyand completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary penalties of upto an aggregate of $150,000 per year, and up to an aggregate of $1 million per year for “knowing failures.” Any failure to comply could result in significantfines and penalties. To enhance compliance with applicable healthcare laws, and mitigate potential liability in the event of noncompliance, regulatory authorities, suchas the OIG, have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements ofan effective compliance and ethics program described in Section 8B2.1 of the U.S. Sentencing Commission Guidelines Manual. Increasing numbers ofU.S.‑based pharmaceutical companies have such programs. As NexoBrid is not yet approved for marketing in the United States, we have not adopted U.S.healthcare compliance and ethics programs that generally incorporate the OIG’s recommendations. Even if we do adopt such compliance and ethics programsin the future, there can be no assurance that we will avoid any compliance issues. 17 In addition, we are subject to analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, which may apply tosales or marketing arrangements and claims involving healthcare items or services reimbursed by non‑governmental third‑party payors, including privateinsurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines andthe relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state andforeign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcareproviders or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances. Many ofthese laws differ from each other in significant ways and often are not preempted by the U.S. Health Insurance Portability and Accountability Act of 1996thus complicating compliance efforts. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involvesubstantial costs. 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 are found to be in violation of any ofthese laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties,including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as Medicare andMedicaid, and the curtailment or restructuring of our operations, which could have a material adverse effect on our business. If any of the physicians or otherhealthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, it may be subject to criminal, civilor administrative sanctions, including exclusions from participation in government healthcare programs, which could also materially affect our business. As a public company with securities registered under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are subject tothe U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA and similar worldwide anti‑bribery laws generally prohibit companies and theirintermediaries from making improper payments to officials for the purpose of obtaining or retaining business. While we continue to maintain and enhanceinternal policies mandating compliance with these anti‑bribery laws, we may operate in parts of the world that have experienced governmental corruption tosome degree and in certain circumstances, strict compliance with anti‑bribery laws may conflict with local customs and practices or may require us to interactwith doctors and hospitals, some of which may be state controlled, in a manner that is different than in the United States. Our internal control policies andprocedures may not be sufficient to effectively protect us against reckless or criminal acts committed by our employees or agents. Violations of these laws, orallegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cashflows. Laws and regulations affecting government contracts make it more costly and difficult for us to successfully conduct our business. We must comply with numerous laws and regulations relating to the formation, administration and performance of government contracts, which canmake it more difficult for us to retain our rights under our BARDA contract. These laws and regulations affect how we conduct business with governmentagencies. Among the most significant government contracting regulations that affect our business are: ·the Federal Acquisition Regulations (“FAR”) and agency‑specific regulations supplemental to the FAR, which comprehensively regulate theprocurement, formation, administration and performance of government contracts; ·business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict thegranting of gratuities and funding of lobbying activities and include other requirements such as the Anti‑Kickback Statute and Foreign CorruptPractices Act; 18 ·export and import control laws and regulations; and ·laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and theexportation of certain products and technical data. Any material changes in applicable laws and regulations could restrict our ability to maintain our existing BARDA contract or obtain new contractswith the U.S. federal government. We could be subject to product liability lawsuits, which could result in costly and time‑consuming litigation and significant liabilities. The development of biopharmaceutical products involves an inherent risk of product liability claims and associated adverse publicity. Our productsmay be found to be harmful or to contain harmful substances. This exposes us to substantial risk of litigation and liability or may force us to discontinueproduction of certain products. Although we have product liability insurance covering up to $10.0 million for claims in the European Union, Israel andArgentina, the coverage may not insure us against all claims that may be asserted against us. Product liability insurance is costly and often limited in scope.There can be no assurance that we will be able to obtain or maintain insurance on reasonable terms or to otherwise protect ourselves against potential productliability claims that could impede or prevent commercialization of NexoBrid, EscharEx or our pipeline product candidates. Furthermore, a product liabilityclaim could damage our reputation, whether or not such claims are covered by insurance or are with or without merit. A product liability claim against us orthe withdrawal of a product from the market could have a material adverse effect on our business or financial condition. Furthermore, product liabilitylawsuits, regardless of their success, would likely be time‑consuming and expensive to resolve and would divert management’s time and attention, whichcould seriously harm our business. Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to, or incorporated into, our technologyand products. Our commercial success depends in part on our ability to obtain and maintain patent protection and trade secret protection for our intellectualproperty and proprietary technologies, our products and their uses, as well as our ability to operate without infringing upon the proprietary rights of others.We rely on a combination of patent, trademark and trade secret laws, non‑disclosure and confidentiality agreements, licenses, assignments of inventionagreements and other restrictions on disclosure and use to protect our intellectual property rights. As of December 31, 2017, we had been granted a total of 65 patents and have 15 pending patent applications. The family of patents that coversNexoBrid specifically includes 35 granted patents worldwide and 1 pending national phase application. EscharEx is covered in 2 provisional patentapplications (“PCT”) and 4 national phase applications. However, there can be no assurance that patent applications relating to our products, processes ortechnologies will result in patents being issued, that any patents that have been issued will be adequate to protect our intellectual property or that we willenjoy patent protection for any significant period of time. Additionally, any issued patents may be challenged by third parties, and patents that we hold maybe found by a judicial authority to be invalid or unenforceable. Other parties may independently develop similar or competing technology or design aroundany patents that may be issued to or held by us. Our current patents will expire or they may otherwise cease to provide meaningful competitive advantage,and we may be unable to adequately develop new technologies and obtain future patent protection to preserve our competitive advantage or avoid adverseeffects on our business. Our patent protection may be limited, subjecting us to challenges by competitors. At present, we consider our patents relating to our proteolytic enzyme technology, which underlies NexoBrid, EscharEx and our current pipelineproduct candidates, to be material to the operation of our business as a whole. Our patents which cover NexoBrid claim specific mixtures of proteolyticenzymes, methods of producing such mixtures and methods of treatment using such mixtures. Although the protection achieved is significant for NexoBrid,EscharEx and our pipeline product candidates, when looking at our patents’ ability to block competition, the protection offered by our patents may be, tosome extent, more limited than the protection provided by patents which claim chemical structures that were previously unknown. If our patents coveringNexoBrid in various jurisdictions were subject to a successful challenge or if a competitor were able to successfully design around them, our business andcompetitive advantage could be significantly affected. 19 In addition, the patent landscape in the biotechnology field is highly uncertain and involves complex legal, factual and scientific questions, andchanges in either patent laws or in the interpretation of patent laws in the United States and other countries may diminish the value and strength of ourintellectual property or narrow the scope of our patent protection. In addition, we may fail to apply for or be unable to obtain patents necessary to protect ourtechnology or products or enforce our patents due to lack of information about the exact use of our process by third parties. Even if patents are issued to us,they may be challenged, narrowed, invalidated, held to be unenforceable or circumvented, which could limit our ability to prevent competitors from usingsimilar technology or marketing similar products, or limit the length of time our technologies and products have patent protection. In addition, we are a partyto license agreements with each of Mark Klein and L.R. R&D Ltd., an entity which is wholly‑owned by Prof. Lior Rosenberg, that impose various obligationsupon us as a licensee, including, with respect to the agreement with Mark Klein, the obligation to make milestone and royalty payments contingent on thesales of NexoBrid. If we fail to comply with these obligations, the licensor may terminate the license, in which event we might not be able to market anyproduct that is covered by the licensed intellectual property, including NexoBrid. In order to preserve and enforce our patent and other intellectual property rights, we may need to assert claims or file lawsuits against third parties.Such lawsuits could entail significant costs to us and divert our management’s attention from developing and commercializing our products. Lawsuits mayultimately be unsuccessful and may also subject us to counterclaims and cause our intellectual property rights to be challenged, narrowed, invalidated orheld to be unenforceable. The timing of a patent application, grant, and expiration may put us at a disadvantage compared to our competitors. Our material patents also may not afford us protection against competitors with similar technology. Because patent applications in the United Statesand many other jurisdictions are typically not published until 18 months after their filing, if at all, and because publications of discoveries in scientificliterature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in ouror their issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in such patentapplications. As a result, the patents we own and license may be invalidated in the future, and the patent applications we own and license may not be granted.For example, if a third party has also filed a patent application covering an invention similar to one covered in one of our patent applications, we may berequired to participate in an adversarial proceeding known as an “interference proceeding,” declared by the U.S. Patent and Trademark Office or its foreigncounterparts, to determine priority of invention. The costs of these proceedings could be substantial and our efforts in them could be unsuccessful, resultingin a loss of our anticipated patent position. In addition, if a third party prevails in such a proceeding and obtains an issued patent, we may be prevented frompracticing technology or marketing products covered by that patent. Additionally, patents and patent applications owned by third parties may prevent usfrom pursuing certain opportunities such as entering into specific markets or developing certain products. Finally, we may choose to enter into markets wherecertain competitors have patents or patent protection over technology that may impede our ability to compete effectively. We may not be able to protect our intellectual property rights in all jurisdictions. Effective protection of our intellectual property rights may be unavailable or limited in some countries, and even if available, we may fail to pursueor obtain necessary intellectual property protection in such countries, including because filing, prosecuting, maintaining and defending patents on productcandidates in all countries throughout the world would be prohibitively expensive. In addition, the legal systems of certain countries do not favor theaggressive enforcement of patents and other intellectual property rights, and the laws of certain foreign countries do not protect our rights to the same extentas the laws of the United States. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializingproducts similar or identical to ours. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop theirown products, and we may be unable to prevent such competitors from importing such infringing products into territories where we have patent protectionbut where enforcement is not as strong as in the United States or into jurisdictions in which we do not have patent protection. These products may competewith our product candidates and our patents and other intellectual property rights may not be effective or sufficient to prevent them from competing in thosejurisdictions. 20 Our currently issued NexoBrid Family patents are nominally due to expire at various dates between 2025 and 2029. However, because of theextensive time required for development, testing and regulatory review of a potential product, and although such delays may entitle us to patent termextensions, it is possible that, before NexoBrid can be commercialized in additional jurisdictions and/or before any of our future products can becommercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantages ofthe patent. The international PCT patent applications relating to EscharEx were filed on January 30, 2017. If national phase applications of these PCTapplications are filed in due course and if granted, the expiration date of these patents would be January 30, 2037, absent patent‑term extensions. Ourpending and future patent applications may not lead to the issuance of patents or, if issued, the patents may not be issued in a form that will provide us withany competitive advantage. We also cannot guarantee that: ·any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented,challenged or abandoned; ·our intellectual property rights will provide competitive advantages or prevent competitors from making or selling competing products; ·our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by ouragreements with third parties; ·any of our pending or future patent applications will be issued or have the coverage originally sought; ·our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or ·we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or otherpayments. We may be unable to identify all past or future unauthorized uses of our intellectual property. Additionally, unauthorized use of our intellectual property may have occurred or may occur in the future. Any failure to identify unauthorized useof, and otherwise adequately protect, our intellectual property could adversely affect our business, including by reducing the demand for our products. Anyreported adverse events involving counterfeit products that purport to be our products could harm our reputation and the sale of our products. Moreover, ifwe are required to commence litigation related to unauthorized use, whether as a plaintiff or defendant, such litigation would be time‑consuming, force us toincur significant costs and divert our attention and the efforts of our management and other employees, which could, in turn, result in lower revenue andhigher expenses. In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know‑how. We rely on proprietary information, such as trade secrets, know‑how and confidential information, to protect intellectual property that may not bepatentable or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this proprietary information byentering into confidentiality agreements, or consulting, services or employment agreements that contain non‑disclosure and non‑use provisions with ouremployees, consultants, contractors, scientific advisors and third parties. However, we may fail to enter into the necessary agreements, and even if enteredinto, these agreements may be breached or otherwise fail to prevent disclosure, third‑party infringement or misappropriation of our proprietary information,may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. We havelimited control over the protection of trade secrets used by our suppliers and service providers and could lose future trade secret protection if anyunauthorized disclosure of such information occurs. In addition, our proprietary information may otherwise become known or be independently developedby our competitors or other third parties. To the extent that our employees, consultants, contractors, scientific advisors and other third parties use intellectualproperty owned by others in their work for us, disputes may arise as to the rights in related or resulting know‑how and inventions. Costly and time‑consuminglitigation could be necessary to enforce and determine the scope of our and relevant third parties’ proprietary rights and failure to obtain or maintainprotection for our proprietary information could adversely affect our competitive business position. In addition, if a third party is able to establish that we areusing their proprietary information without their permission, we may be required to obtain a license to such information or, if such a license is not available,re‑design our products to avoid any such unauthorized use or temporarily delay or permanently stop manufacturing or sales of the affected products.Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection to our trade secrets. 21 We also rely on physical and electronic security measures to protect our proprietary information, but we cannot provide assurance that these securitymeasures will not be breached or will provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize ourproprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such information or takeappropriate and timely steps to enforce our intellectual property rights. Some of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including potentialcompetitors. While we take steps to prevent our employees from using the proprietary information or know‑how of others in their work for us, we may besubject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietaryinformation of any such employee’s former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defendingourselves, could result in substantial costs to us or be distracting to our management. If we fail to defend any such claims successfully, in addition to payingmonetary damages, we may lose valuable intellectual property rights or personnel. If we are unable to protect our trademarks from infringement, our business prospects may be harmed. We own trademarks that identify “MediWound,” “NexoBrid” and “EscharEx,” among others, and have registered these trademarks in certain keymarkets. Although we take steps to monitor the possible infringement or misuse of our trademarks, it is possible that third parties may infringe, dilute orotherwise violate our trademark rights. Any unauthorized use of our trademarks could harm our reputation or commercial interests. In addition, ourenforcement against third‑party infringers or violators may be unduly expensive and time‑consuming, and the outcome may be an inadequate remedy. We may be subject to claims that we infringe, misappropriate or otherwise violate the intellectual property rights of third parties. Our development, marketing or sale of NexoBrid, EscharEx or our pipeline product candidates may infringe or be accused of infringing one or moreclaims of an issued patent or may fall within the scope of one or more claims in a published patent application that may be subsequently issued and to whichwe do not hold a license or other rights. We may also be subject to claims that we are infringing, misappropriating or otherwise violating other intellectualproperty rights, such as trademarks, copyrights or trade secrets. Third parties could therefore bring claims against us or our strategic partners that would causeus to incur substantial expenses, including litigation costs or costs associated with settlement, and, if successful against us, could cause us to pay substantialdamages. Further, if such a claim were brought against us, we could be forced to temporarily delay or permanently stop manufacturing or sales of NexoBrid,EscharEx or our pipeline product candidates that are the subject of the suit. If we are found to be infringing, misappropriating or otherwise violating the patent or other intellectual property rights of a third party, or in order toavoid or settle claims, we may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both, which couldbe substantial. These licenses may not be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive,which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, orbe forced to cease some aspect of our business operations, if, as a result of actual or threatened claims, we or our strategic partners are unable to enter intolicenses on acceptable terms. There have been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical andbiotechnology industries. In addition, to the extent that we gain greater visibility and market exposure as a public company in the United States, we face agreater risk of being involved in such litigation. In addition to infringement claims against us, we may become a party to other patent litigation and otherproceedings, including interference, opposition, re‑examination and similar proceedings before the U.S. Patent and Trademark Office and its foreigncounterparts, regarding intellectual property rights with respect to NexoBrid, EscharEx or our pipeline product candidates. The cost to us of any patentlitigation or other proceeding, even if resolved in our favor, could be substantial. A negative outcome could result in liability for monetary damages,including treble damages and attorneys’ fees if, for example, we are found to have willfully infringed a patent. A finding of infringement could prevent usfrom developing, marketing or selling a product or force us to cease some or all of our business operations. Some of our competitors may be able to sustainthe costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting fromthe initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace,and patent litigation and other proceedings may also absorb significant management time. 22 We are subject to extensive environmental, health and safety, and other laws and regulations. Our business involves the controlled use of chemicals. The risk of accidental contamination or injury from these materials cannot be eliminated. Ifan accident, spill or release of any such 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 tonumerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures. Although we maintainworkers’ compensation insurance to cover the costs and expenses that may be incurred because of injuries to our employees resulting from the use of thesematerials, this insurance may not provide adequate coverage against potential liabilities. Additional or more stringent laws and regulations affecting ouroperations may be adopted in the future. We may incur substantial capital costs and operating expenses and may be required to obtain consents to complywith any of these or certain other laws or regulations and the terms and conditions of any permits required pursuant to such laws and regulations, includingcosts to install new or updated pollution control equipment, modify our operations or perform other corrective actions at our respective facilities. 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, orcomply with the terms and conditions of, required environmental or other permits or consents. Under applicable employment laws, we may not be able to enforce covenants not to compete. We generally enter into non‑competition agreements with our employees. These agreements prohibit our employees, if they cease working for us,from competing directly with us or working for our competitors or clients for a limited period. We may be unable to enforce these agreements under the lawsof the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefitting from the expertise our formeremployees or consultants developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non‑competeundertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of materialinterests of the employer which have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property. We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation andadversely affect our business. A significant portion of our intellectual property has been developed for us by our employees in the course of their employment. Under the IsraeliPatent 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 acompany are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving theemployee proprietary rights. The Patent Law also provides under Section 134 that if there is no agreement between an employer and an employee as towhether the employee is entitled to consideration for service inventions, and to what extent and under which conditions, the Israeli Compensation andRoyalties Committee, or the Committee, a body constituted under the Patent Law, shall determine these issues. Section 135 of the Patent law provides criteriafor assisting the Committee in making its decisions. According to case law handed down by the Committee, an employee’s right to receive consideration forservice inventions is a personal right and is entirely separate from the proprietary rights in such invention. Therefore, this right must be explicitly waived bythe employee. A decision handed down in May 2014 by the Committee clarifies that the right to receive consideration under Section 134 can be waived andthat such waiver can be made orally, in writing or by behavior like any other contract. The Committee will examine, on a case by case basis, the generalcontractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined onespecific formula for calculating this remuneration, nor the criteria or circumstances under which an employee’s waiver of his right to remuneration will bedisregarded. Similarly, it remains unclear whether waivers by employees in their employment agreements of the alleged right to receive consideration forservice inventions should be declared as void being a depriving provision in a standard contract. We generally enter into assignment‑of‑inventionagreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment orengagement with us. Although our employees have agreed to assign to us service invention rights and have specifically waived their right to receive anyspecial remuneration for such service inventions beyond their regular salary and benefits, we may face claims demanding remuneration in consideration forassigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current or former employees orbe forced to litigate such claims, which could negatively affect our business. 23 Risks Related to an Investment in Our Ordinary Shares The market price of our ordinary shares may be subject to fluctuation and you could lose all or part of your investment. Our ordinary shares were first offered publicly in our IPO in March 2014 at a price of $14.00 per share, and our ordinary shares have subsequentlytraded as high as 18.16 per share and as low as $3.56 per share through March 15, 2018. The market price of our ordinary shares on the Nasdaq Global Marketmay fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: ·actual or anticipated variations in our and our competitors’ results of operations and financial condition; ·market acceptance of our products; ·general economic and market conditions and other factors, including factors unrelated to our operating performance; ·the mix of products that we sell and related services that we provide; ·changes in earnings estimates or recommendations by securities analysts, if our ordinary shares continue to be covered by analysts; ·publication of the results of preclinical or clinical trials for NexoBrid, EscharEx or any of our pipeline product candidates; ·failure by us to achieve a publicly announced milestone; ·delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; ·development of technological innovations or new competitive products by others; ·announcements of technological innovations or new products by us; ·regulatory developments and the decisions of regulatory authorities as to the marketing of our current products or the approval or rejection ofnew or modified products; ·developments concerning intellectual property rights, including our involvement in litigation; ·changes in our expenditures to develop, acquire or license new products, technologies or businesses; ·changes in our expenditures to promote our products; ·our sale or proposed sale, or the sale by our significant shareholders, of our ordinary shares or other securities in the future; ·changes in key personnel; ·success or failure of our research and development projects or those of our competitors; and 24 ·the trading volume of our ordinary shares. These factors and any corresponding price fluctuations may materially and adversely affect the market price of our ordinary shares and result insubstantial losses being incurred by our investors. In the past, following periods of market volatility, public company shareholders have often institutedsecurities class action litigation. If we were involved in securities litigation, it could impose a substantial cost upon us and divert the resources and attentionof our management from our business. If equity research analysts do not continue to publish research or reports about our business or if they issue unfavorable commentary or downgrade ourordinary shares, the price of our ordinary shares could decline. The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and ourbusiness, if at all. We do not have control over these analysts and we do not have commitments from them to write research reports about us. The price of ourordinary shares could decline if no research reports are published about us or our business, or if one or more equity research analysts downgrades our ordinaryshares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. Future sales of our ordinary shares could reduce the market price of our ordinary shares. If our existing shareholders, particularly certain of our directors or their affiliates or certain of our executive officers, sell a substantial number of ourordinary shares in the public market, the market price of our ordinary shares could decrease significantly. The perception in the public market that ourshareholders might sell our ordinary shares could also depress the market price of our ordinary shares and could impair our future ability to obtain capital,especially through an offering of equity securities. On March 7, 2016, the SEC declared effective our shelf registration statement on Form F‑3, whichregistered the resale of 11,640,827 shares subject to registration rights. All shares sold pursuant to an offering covered by such registration statement will befreely transferable. See “ITEM 7.B. Related Party Transactions—Registration Rights Agreement.” In September 2017, we completed an underwritten publicoffering of 5,037,664 of our ordinary shares. Sales by us or our shareholders of a substantial number of ordinary shares in the public market, or the perceptionthat these sales might occur, could cause the market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of,or pay for acquisitions using, our equity securities. In addition to these registration rights, as of March 15, 2018, 1,928,068 ordinary shares are subject to outstanding option awards granted toemployees and office holders under our share incentive plans, including 1,569,818 ordinary shares issuable under currently exercisable share options. OnApril 28, 2014, we filed a registration statement on Form S‑8 registering the issuance of up to 3,032,742 ordinary shares issuable under our share incentiveplans, which amount included 2,178,806 ordinary shares issuable upon the exercise of option awards previously granted under our 2003 Israeli Share OptionPlan and 853,936 ordinary shares issuable under our 2014 Equity Incentive Plan. On January 1, 2015 and 2018, the shares available for issuance under our2014 Equity Incentive Plan automatically increased by 431,006 and 540,955 shares, respectively. As of March 15, 2018, 3,229,386 shares remainedavailable for issuance under our share incentive plans, which amount includes 1,301,318 ordinary shares subject to outstanding awards. Shares included insuch registration statement may be freely sold in the public market upon issuance, except for shares held by affiliates who have certain restrictions on theirability to sell. The significant share ownership position of Clal Biotechnology Industries Ltd. may limit your ability to influence corporate matters. As of March 15, 2018, Clal Biotechnology Industries Ltd. (“CBI”), beneficially owns or controls, directly and indirectly, 34.9% of our issued andoutstanding ordinary shares. Accordingly, CBI is able to significantly influence the outcome of matters required to be submitted to our shareholders forapproval, including decisions relating to the election of our board of directors and the outcome of any proposed merger or consolidation of the company.CBI’s interests may not be consistent with those of our other shareholders. In addition, CBI’s significant interest in us may discourage third parties fromseeking to acquire control of us, which may adversely affect the market price of our ordinary shares. 25 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 share capital, nor do we anticipate paying any cash dividends on our share capital in theforeseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result,capital appreciation, if any, of our ordinary shares will be an investor’s sole source of gain for the foreseeable future. In addition, Israeli law limits our abilityto declare and pay dividends, and may subject our dividends to Israeli withholding taxes. See “ITEM 8.A. Consolidated Statements and Other FinancialInformation—Dividend Policy,” “ITEM 10.B. Articles of Association—Dividend and liquidation rights” and “ITEM 10.E. Taxation—Israeli TaxConsiderations and Government Programs.” As a foreign private issuer, we are permitted, and intend, to follow certain home country corporate governance practices instead of otherwise applicableSEC and Nasdaq requirements. As a foreign private issuer, we are permitted to, and do, follow certain home country corporate governance practices instead of those otherwiserequired under the Nasdaq Stock Market for domestic U.S. issuers. For instance, we follow home country practice in Israel with regard to the (i) quorumrequirement for shareholder meetings, (ii) independent director oversight of director nominations requirement and (iii) independence requirement for theboard of directors. See “ITEM 16G. Corporate Governance.” We may in the future elect to follow home country practices in Israel with regard to other mattersas well, such as the formation and composition of the nominating and corporate governance committee, separate executive sessions of independent directorsand the requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity‑basedcompensation plans, issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a20% or more interest in the company and certain acquisitions of the stock or assets of another company). Following our home country governance practicesas opposed to the requirements that would otherwise apply to a U.S. company listed on the Nasdaq Global Market may provide less protection to you thanwhat is accorded to investors under the Nasdaq Stock Market rules applicable to domestic U.S. issuers. See “ITEM 16G. Corporate Governance.” As a foreign private issuer, we are not subject to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing certain Exchange Actreports. As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxystatements, and our officers, directors and principal shareholders are exempt from the reporting and short‑swing profit recovery provisions contained inSection 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual and current reports and financial statements with theSEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and we are generally exempt from filingquarterly reports with the SEC under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which prohibits the selectivedisclosure of material nonpublic information to, among others, broker‑dealers and holders of a company’s securities under circumstances in which it isreasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. Even though we intend to comply voluntarilywith Regulation FD, these exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as aninvestor. For so long as we qualify as a foreign private issuer, we are not required to comply with the proxy rules applicable to U.S. domestic companies,including the requirement applicable to emerging growth companies to disclose the compensation of our Chief Executive Officer and other two most highlycompensated executive officers on an individual, rather than an aggregate, basis. Nevertheless, the regulations promulgated under the Israeli Companies Lawrequire us to disclose the annual compensation of our five most highly compensated officers on an individual, rather than on an aggregate, basis. See “ITEM6.B. Compensation.” Under the Companies Law regulations, this disclosure is required to be included in the proxy statement for our annual meeting ofshareholders each year, which we furnish to the SEC under cover of a Report of Foreign Private Issuer on Form 6‑K. Because of that disclosure requirementunder Israeli law, we are also including such information in this annual report, pursuant to the disclosure requirements of Form 20‑F. 26 We would lose our foreign private issuer status if a majority of our outstanding ordinary shares are held of record by U.S. shareholders and we fail tomeet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatoryprovisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securitieslaws as a U.S. domestic issuer may be significantly higher. If we lose our foreign private issuer status, we will be required to file periodic reports andregistration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer.We would also be required to follow U.S. proxy disclosure requirements, including the requirement to disclose more detailed information about thecompensation of our senior executive officers on an individual basis. We may also be required to modify certain of our policies to comply with acceptedgovernance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we would lose ourability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers. We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary sharesless attractive to investors. We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and we may take advantage ofcertain exemptions from various requirements that are applicable to other public companies that are not emerging growth companies. Most of suchrequirements relate to disclosures that we would only be required to make if we cease to be a foreign private issuer in the future. Nevertheless, as a foreignprivate issuer that is an emerging growth company, we will not be required to comply with the auditor attestation requirements of Section 404 of theSarbanes‑Oxley Act for up to five fiscal years after the date of our initial public offering. We will remain an emerging growth company until the earliest of:(a) the last day of our fiscal year during which we have total annual gross revenues of at least $1.07 billion; (b) December 31, 2019, the last day of our fiscalyear following the fifth anniversary of the closing of our initial public offering; (c) the date on which we have, during the previous three‑year period, issuedmore than $1.0 billion in non‑convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. When we areno longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannotpredict 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 ourordinary 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. If we are unable to satisfy the requirements of Section 404 of the Sarbanes‑Oxley Act, or if our internal control over financial reporting or our disclosurecontrols and procedures are not effective, investors may lose confidence in the accuracy and the completeness of the reports we furnish or file with the SEC,the reliability of our financial statements may be questioned and our share price may suffer. We are required to comply with the internal control, evaluation and certification requirements of Section 404 of the Sarbanes‑Oxley Act of 2002 (the“Sarbanes‑Oxley Act”). Pursuant to Section 404(a) of the Sarbanes‑Oxley Act, we are required to furnish a report by management on the effectiveness of ourinternal control over financial reporting. Additionally, pursuant to Section 404(b) of the Sarbanes‑Oxley Act, unless we lose our status as an “emerginggrowth company” under the JOBS Act prior to the end of the fiscal year in which the fifth anniversary of our IPO occurred, we will not be required to obtainan auditor attestation under Section 404 of the Sarbanes‑Oxley Act until the year ended December 31, 2019. To maintain the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, we expect that we will needto continue to enhance existing, and implement new, financial reporting and management systems, procedures and controls to manage our businesseffectively and support our growth in the future. The process of evaluating our internal control over financial reporting requires an investment of substantialtime and resources, including by our Chief Financial Officer and other members of our senior management. The determination and any remedial actionsrequired could divert internal resources and take a significant amount of time and effort to complete and could result in us incurring additional costs that wedid not anticipate, including the hiring of outside consultants. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results ofoperations and harm our reputation. As a result, we may experience higher than anticipated operating expenses, as well as higher independent auditor feesduring and after the implementation of these changes. If we are unable to implement any of the required changes to our internal control over financialreporting effectively or efficiently, it could adversely affect our operations, financial reporting or results of operations. Further, if our internal controls overfinancial reporting are not effective, the reliability of our financial statements may be questioned and our share price may suffer. 27 Our U.S. shareholders may suffer adverse tax consequences if we are characterized as a passive foreign investment company. Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets(which may be determined in part by the market value of our ordinary shares, which is subject to change) are held for the production of, or produce, passiveincome, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Based on certain estimates of ourgross income and gross assets and the nature of our business, we do not believe we were classified as a PFIC for the taxable year ended December 31, 2017.There can be no assurance that we will not be considered a PFIC for the current or any future taxable year. PFIC status is determined as of the end of thetaxable year and depends on a number of factors, including the value of a corporation’s assets and the amount and type of its gross income. Furthermore,because the value of our gross assets is likely to be determined in large part by reference to our market capitalization, a decline in the value of our ordinaryshares may result in our becoming a PFIC. If we are characterized as a PFIC, our U.S. shareholders may suffer adverse tax consequences, including havinggains realized on the sale of our ordinary shares treated as ordinary income, rather than as capital gain, the loss of the preferential rate that may be applicableto dividends received on our ordinary shares by individuals who are U.S. Holders (as defined in “ITEM 10.E. Taxation—United States Federal IncomeTaxation”), and having interest charges apply to distributions by us and the proceeds of share sales. Certain elections exist that may alleviate some of theadverse consequences of PFIC status and would result in an alternative treatment (such as mark‑to‑market treatment) of our ordinary shares. However, we donot intend to provide the information necessary for U.S. holders to make qualified electing fund elections if we are classified as a PFIC. See “ITEM 10.E.Taxation—United States Federal Income Taxation—Passive Foreign Investment Company Considerations.” Risks Primarily Related to our Operations in Israel Our headquarters, manufacturing and other significant operations are located in Israel and, therefore, our results may be adversely affected by political,economic and military instability in Israel and by conflicts between Israel and other countries. Our headquarters, manufacturing and research and development facilities are located in Yavne, Israel. In addition, the majority of our keyemployees, officers and directors are residents of Israel. In recent years, there has been political, economic, and military instability in Israel, includinghostilities between Israel and its Arab neighbors, Hezbollah (an Islamist militia and political group in Lebanon) and Hamas (an Islamist militia and politicalgroup in the Gaza strip). Recent political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel’s neighbors Egyptand Syria, are affecting the political stability in those regions. This instability may lead to deterioration of the political relationships that exist between Israeland these countries and have raised concerns regarding security in the region. In addition, Iran has threatened to attack Israel and is widely believed to bedeveloping nuclear weapons, and has been expanding its influence in Syria and in Lebanon through Hezbollah and other proxy terrorist groups. AlthoughIran’s activities have not directly affected the political and economic conditions in Israel, Iran’s purpose is widely believed to take control of the MiddleEast, including Israel. These events and any future political, economic and military instability have the potential to interrupt our operations by damaging ourfacilities or preventing our employees, officers and directors from working. Such interruptions or stoppages may result in a material adverse effect on ourbusiness, operations and results of operations. Our commercial insurance may leave us subject to a risk of a loss if a terrorist attack or act of war occurs. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Thereinstatement value of direct damages that are caused by terrorist attacks or acts of war that the Israeli government is currently committed to covering mightnot be maintained or, if maintained, might not be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have amaterial adverse effect on our business. Any armed conflict involving Israel could adversely affect our operations and results of operations. 28 Our operations may be disrupted by the obligation of our employees to perform military service. As of December 31, 2017, we had 60 employees based in Israel, certain of which may be called upon to perform up to 54 days of military service ineach three‑year period (and in the case of non‑officer commanders or officers, up to 70 or 84 days, respectively, in each three‑year period) of military reserveduty until they reach the age of 40 (and in some cases, depending on their specific military profession, up to 45 or even 49 years of age). In certain emergencycircumstances, these employees may be called to immediate and unlimited active duty. Our operations could be disrupted by the absence of a significantnumber of employees related to military service, which could materially adversely affect our business and results of operations. Boycotts and various Middle Eastern business restrictions in the region may adversely impact our ability to operate sell our products. Several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may imposerestrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. In addition, there have beenincreased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly ifthey become more widespread, may adversely impact our ability to sell our products. Provisions of Israeli law and our articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, even when theterms of such a transaction are favorable to us and our shareholders. Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals fortransactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. Forexample, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from theholders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have apersonal interest in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of the company’s outstandingshares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following thecompletion of the tender offer, petition an Israeli court to alter the consideration for the acquisition, unless the acquirer stipulated in its tender offer that ashareholder that accepts the offer may not seek such appraisal rights. See “ITEM 10.B. Articles of Association—Acquisitions Under Israeli law” for additionalinformation. Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence doesnot have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax‑free share exchanges to thesame extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on thefulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales anddispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the taxdeferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. We received Israeli government grants for certain research and development activities. The terms of those grants require us to satisfy specified conditionsand to pay penalties in addition to repayment of the grants upon certain events. Our research and development efforts were and are financed in part through grants from the Israeli Innovation Authority (“IIA“), formerly operatingas the Israeli Office of the Chief Scientist (the “OCS”). The total gross amount of grants actually received by us from the IIA, including accrued LIBORinterest and net of royalties actually paid as of December 31, 2017, totaled approximately $13.4 million and the amortized cost (using the interest method) ofthe liability as of that date totaled approximately $7.4 million. As of December 31, 2017, we had accrued and paid royalties to the IIA $152 thousands. Weexpect to receive additional grants from the IIA through March 2018, and we applied for further grants for 2018. However, as the funds available for IIAgrants out of the annual budget of the State of Israel have been reduced in the past and may be further reduced in the future, we cannot predict whether wewill be entitled to any future grants, or the amounts of any such grants. 29 The grants are repayable by payment of royalties from the sale of products developed as part of the programs for which grants were received. Ourobligation to pay these royalties is contingent on our actual sale of such products and services. In the absence of such sales, no payment of such royalties isrequired. Even following full repayment of any IIA grants, we must nevertheless continue to comply with the requirements of the Encouragement of Research,Development and Technological Innovation in the Industry Law, 5744‑1984 (formerly known as the Law for the Encouragement of Industrial Research andDevelopment, 5744‑1984), and related regulations (collectively, the “Innovation Law”). When a company develops know‑how, technology or products usingIIA grants, the terms of these grants and the Innovation Law restrict the transfer outside of Israel of such know‑how, and the manufacturing or manufacturingrights of such products, technologies or know‑how, without the prior approval of the IIA. Therefore, if aspects of our technologies are deemed to have beendeveloped with IIA funding, the discretionary approval of an IIA committee would be required for any transfer to third parties outside of Israel of know‑howor manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may imposecertain conditions on any arrangement under which it permits us to transfer technology or development out of Israel. The transfer of IIA‑supported technology or know‑how or manufacturing or manufacturing rights related to aspects of such technologies outside ofIsrael may involve the payment of significant penalties and other amounts, depending upon the value of the transferred technology or know‑how, the amountof IIA support, the time of completion of the IIA‑supported research project and other factors. If our products are manufactured outside of Israel, assuming wereceive prior approval from the IIA for the foreign manufacturing, we may be required to pay increased royalties. The increase in royalties depends on themanufacturing volume that is performed outside of Israel. These restrictions and requirements for payment may impair our ability to sell our technologyassets outside of Israel or to outsource or transfer development or manufacturing activities with respect to any product or technology outside of Israel.Furthermore, the consideration available to our shareholders in a transaction involving the transfer outside of Israel of technology or know‑how developedwith IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA. It may be difficult to enforce a judgment of a U.S. court against us, our officers and directors or the Israeli experts named in this annual report in Israel orthe United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors and these experts. We are incorporated in Israel. All of our executive officers and three of our directors listed in this annual report reside outside of the United States,and most of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any ofthese persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States andmay not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United States or to assert U.S.securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities lawsreasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it maydetermine 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 provenas a fact by expert witnesses, which can be a time‑consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There islittle binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us inIsrael, you may not be able to collect any damages awarded by either a U.S. or foreign court. Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the rights andresponsibilities of shareholders of U.S. companies. Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israelilaw. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in U.S.‑based corporations. In particular, ashareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards thecompany and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting ofshareholders on certain matters, such as an amendment to the company’s articles of association, an increase of the company’s authorized share capital, amerger of the company and approval of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain fromdiscriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine theoutcome of a shareholders’ vote or to appoint or prevent the appointment of an office holder in the company or has another power with respect to thecompany, has a duty to act in fairness towards the company. However, Israeli law does not define the substance of this duty of fairness. See “ITEM 6.C. BoardPractices.” Some of the parameters and implications of the provisions that govern shareholder behavior have not been clearly determined. These provisionsmay be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations. 30 Additionally, the quorum requirements for meetings of our shareholders are lower than is customary for domestic issuers. As permitted under theCompanies Law, pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders will consist of at least two shareholderspresent in person, by proxy or by other voting instrument in accordance with the Companies Law, who hold at least 25% of our outstanding ordinary shares(and in an adjourned meeting, with some exceptions, any number of shareholders). For an adjourned meeting at which a quorum is not present, the meetingmay generally proceed irrespective of the number of shareholders present at the end of half an hour following the time fixed for the meeting. Item 4. INFORMATION ON THE COMPANY A. History and Development of the Company Our History MediWound Ltd. (“MediWound”) was founded in January 2000 with the goal of developing, manufacturing and commercializing novel products toaddress unmet needs in the fields of severe burns as well as chronic and other hard‑to‑heal wounds and connective tissue disorders. In December 2012, ourinnovative biopharmaceutical product, NexoBrid, received marketing authorization from the EMA for removal of dead or damaged tissue in adults withsevere burns, and in December 2013, we launched NexoBrid in the European Union. In March 2014, we listed our shares on the Nasdaq Global Market. We are a company limited by shares organized under the laws of the State ofIsrael. We are registered with the Israeli Registrar of Companies. Our registration number is 51‑289494‑0. Our principal executive offices are located at 42Hayarkon Street, Yavne 8122745, Israel, and our telephone number is +972 (77)‑971‑4100. Our website address is www.MediWound.com. Informationcontained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein. Wehave included our website address in this annual report solely for informational purposes. Our agent for service of process in the United States is Puglisi &Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, and its telephone number is +1 (302) 738‑6680. Principal Capital Expenditures See “ITEM 5.B. Liquidity and Capital Resources.” B. Business Overview We are a fully integrated biopharmaceutical company focused on developing, manufacturing and commercializing novel therapeutics products toaddress unmet needs in the fields of severe burns, chronic and other hard‑to‑heal wounds, connective tissue disorders and other indications. Our firstinnovative biopharmaceutical product, NexoBrid, received marketing authorization from the EMA and the Israeli and Argentinean Ministries of Health forremoval of dead or damaged tissue, known as eschar, in adults with deep partial‑ and full‑thickness thermal burns, also referred to as severe burns. NexoBrid,which is based on our patented proteolytic enzyme technology, represents a new paradigm in burn care management and our clinical trials havedemonstrated, with statistical significance, its ability to non‑surgically and rapidly remove the eschar earlier relative to existing standard of care upon patientadmission, without harming viable tissues. We have established a commercial organization for the marketing, sales and distribution of NexoBrid, includingEuropean headquarters in Germany and sales and marketing teams throughout Europe. We sell NexoBrid in Europe, Israel through our commercialorganization, and we have launched NexoBrid in Argentina, through our local distributor, during 2016. We are conducting U.S. Phase 3 pivotal study tosupport a BLA submission to the FDA and a pediatric Phase 3 study to broaden the approved indication of NexoBrid. We manufacture NexoBrid in ourstate‑of‑the‑art, EMA‑certified, cGMP‑compliant, sterile pharmaceutical products manufacturing facility at our headquarters in Yavne, Israel. 31 NexoBrid is an easy to use, topically‑applied product that removes eschar in four hours without harming the surrounding healthy tissues. Theremoval of eschar is a procedure also known as debridement. Debridement is a critical first step in the successful healing of severe burns and chronic andother hard‑to‑heal wounds. Under existing SOC, burn eschar may be removed either by employing certain existing topical agents that have been found to beminimally effective or that take a significantly longer period of time to work, or by resorting to non‑selective surgery, which is traumatic and may result inloss of blood and viable tissue. NexoBrid’s rapid and selective debridement alleviates the known risks associated with eschar, such as infection, eventualsepsis, wound deterioration and consequential scarring, and it allows physicians to reach an informed decision on further treatment at an earlier stage bydirect visual assessment of the actual burn depth. Furthermore, NexoBrid minimizes the burden associated with invasive surgical procedures, reduces theneed for skin grafting and sacrifice of healthy tissue from donor sites on a patient’s body and generally results in a more favorable overall long‑term patientoutcome. NexoBrid has been investigated in hundreds of patients across more than 15 countries and four continents in seven completed Phase 2 and Phase 3clinical studies. There have been hundreds of presentations and award winning abstracts of NexoBrid in international and national scientific conferences, andNexoBrid has been presented in over 30 peer‑reviewed papers as well as in a chapter in Total Burn Care, a leading medical textbook, resulting in supportfrom hundreds of burn specialists and key opinion leaders. Awareness of NexoBrid continues to grow through our marketing efforts and continuedmultinational clinical development. Our second innovative product candidate, EscharEx, is a topical biological drug being developed for debridement of chronic and other hard‑to‑healwounds and is complementary to the large number of existing wound healing products, which require a clean wound bed in order to heal the wound.EscharEx contains the same proteolytic enzyme technology as NexoBrid, and benefits from the wealth of existing development data on NexoBrid. We havereported final results from our second Phase 2 study evaluating EscharEx for the debridement of chronic and other hard‑to‑heal wounds. In two Phase 2studies that we conducted, this technology demonstrated safety and efficacy in the debridement of chronic and other hard‑to‑heal wounds, in a fewapplications. The market opportunities for our patented proteolytic enzyme technology include both eschar removal of severe burns using NexoBrid anddebridement of chronic and other hard‑to‑heal wounds using EscharEx. Approximately 100,000 patients with severe burns are hospitalized every year in theUnited States and Europe. The severe burn patients are predominantly treated by specialists in approximately 250 burn centers in Europe and the UnitedStates, as well as at burn units of large hospitals in Europe. In addition to marketing NexoBrid in Europe, we have signed local distribution agreements for distribution in Argentina, Russia, South Korea,Mexico, Colombia, Peru, Chile, Ecuador, Panama, India, Bangladesh, Sri Lanka, Japan, and Taiwan. We plan to target other international markets, such asLatin America, certain Asia‑Pacific countries and members of the Commonwealth of Independent States (“CIS”), by leveraging our approved registration filefor additional regional marketing authorizations. In additional to the market opportunities for NexoBrid discussed above, we believe that NexoBrid has the potential to play a critical role in theevent of a mass casualty incident (“MCI”), which is generally defined as any incident in which emergency medical services resources, such as personnel andequipment, are overwhelmed by the number and severity of casualties. A variety of public emergencies may give rise to an MCI, such as terrorist attacks,natural disasters, fires and explosions. One example of a MCI is a mass burn casualty disaster, which is defined by the American Burn Association as acatastrophic event in which the number of burn victims exceeds the capacity of the local burn center to provide optimal care. If a significant number of burnvictims arrive at a burn center following an event, some victims may go untreated until the bottleneck is resolved. The use of non‑surgical means that arecapable of providing fast debridement without harming healthy tissues, particularly during public health emergencies, could potentially reduce the time,labor and resource burdens associated with the current standard‑of‑care, thereby enabling the treatment of more patients. In the event of a mass burn casualtydisaster, healthcare professionals can use NexoBrid to begin treatment at the patient’s bedside without the need for a surgical team and facilities. NexoBridhas demonstrated in clinical studies, with statistical significance, its ability to non‑surgically and rapidly remove eschar in a single four‑hour application.Once the acute treatment has been completed, the wound can be covered with available means and further managed once the MCI is under control and thebottlenecks resolved. NexoBrid has been recognized by BARDA as a potential solution for treatment of burns in the event of a MCI. In September 2015, wewere awarded a contract by BARDA valued at up to $112 million for the advancement of the development and manufacturing, as well as the procurement, ofNexoBrid as a medical countermeasure as part of BARDA’s preparedness for mass casualty events. In July 2017, BARDA expanded its committed funds tosupport our research and development activities by an additional $32 million, bringing potential total non‑dilutive funding to a maximum of $132 million.See “—BARDA Contract” below. 32 We believe that the indication of debridement of chronic wound and other hard‑to‑heal‑wounds with EscharEx represents a significant opportunity,having what is believed to be a total addressable patient base of more than 14 million patients in the United States and Europe alone, suffering from disorderssuch as diabetic foot ulcers (“DFUs”), venous leg ulcers (“VLUs”), pressure ulcers and surgical/traumatic hard‑to‑heal wounds. Currently, surgery is aneffective method to debride a wound, however, sharp debridement requires surgically skilled physicians performing surgery with patients under, anesthesia,which in elderly patients with various co‑morbidities is accompanied with a higher risk of local and systemic complications. Surgery may also involvehemorrhage which could be more difficult to control due to a high incidence of use of anticoagulants in this population. Surgery on wounds may very easilybecome infected with the infection propagating to surrounding soft and boney tissues ending in life threatening major complication or amputation. Veryoften even minor, limited sharp debridement exposes other sensitive tissue, such as tendons, deep vessels/nerves and bones that if not becoming infected mayseverely damaged, necessitating additional, more extensive debridement or even amputation. Due to these limitations, chronic wounds are treated byconservative methods such as current enzymes, hydrogels and other topical dressings, which require numerous application sessions and a long time toachieve a clean wound bed, if they achieve this at all. Thus, there is an unmet need for a non‑surgical product that will be effective like surgery but withoutits limitations, significantly enhancing the rate of and time to achieve complete debridement. As documented in the Phase 2 study described above, EscharExsignificantly improves the rate of complete debridement after few once‑daily applications, thus facilitating wound debridement without the need for surgery. We are also using our patented proteolytic enzyme technology, which underlies NexoBrid, and our wealth of data and experience gained during theNexoBrid development, to support the development of additional indications such as treatment of connective tissue disorders, such as Dupuytren’s andPeyronie’s diseases. In ex‑vivo model studies, which are laboratory studies conducted on tissues or cells extracted from a living organism, which in our casewere conducted on diseased contracted cords that had been surgically removed from patients with a Dupuytren contracture, our technology confirmed withstatistical significance that it could dissolve the pathological cords. We are developing an injectable formulation and conducted toxicology studies to enableinitiation of clinical studies. We continue to explore additional indications as well. Our Focus: Burn Wounds Severe burns require specialized care in hospitals or burn centers. Approximately 100,000 patients with severe burns are hospitalized every year inthe United States and Europe. The prevalence of patients with severe burns is even higher in emerging economies. For example, approximately 400,000patients are hospitalized every year with burns in India according to a study conducted by IMS Health. We believe these patients can benefit fromNexoBrid’s effective and selective, non‑surgical eschar removal. Burns are life threatening and debilitating traumatic injuries causing considerable morbidity and mortality. A burn may result from thermal,electrical or chemical means that destroy the skin to varying depths. According to Critical Care, an international clinical medical journal, burns are alsoamong the most expensive traumatic injuries because of long and costly hospitalization, rehabilitation and wound and scar treatment. Most burn injuries involve part of or the entire thickness of the skin and in some cases, the deeper subcutaneous fat tissue or underlying structures.The severity of the burn depends on three main factors: ·The extent of the surface the burn occupies is usually referred to as percent of total body surface area (“TBSA”). A burn on an adult’s entire palmwould generally amount to 1% TBSA, and the average hospitalized patient has a burn covering approximately 9% TBSA. Burns covering morethan 15‑20% TBSA usually require hospitalization and may result in dehydration, shock and increased risk of mortality. 33 ·The depth of the burn, referred to in terms of “degree” is generally classified into four categories: oSuperficial or first degree burns. Such burns do not penetrate the basal membrane and usually heal naturally. oDermal/partial thickness or second degree burns. Such burns are characterized by varying amounts of damaged dermis and can be furthersubdivided into superficial and deep partial‑thickness burns. Superficial partial‑thickness burns may heal spontaneously after removal ofthe covering thin eschar. Conversely, deep partial‑thickness burns are often difficult for physicians to accurately diagnose before escharremoval and may progress and transform into full‑thickness burns if not debrided in a timely manner, depending on the magnitude of latenttissue death of the surrounding skin. oFull thickness or third degree burns. Such burns are characterized by death of the entire dermal tissue down to the subcutaneous fat andmust be debrided and treated by autografting, which is the process of harvesting skin from healthy donor sites on a patient’s body andtransplanting it on the post‑debridement, clean wound bed. oFourth degree burns. Such burns, which are rare, extend beyond the subcutaneous fat tissue into the underlying structures, such as muscleor bone, and also require debridement and further substantial treatment. ·Other factors include the age of the victim, the body part where the burn occurred and any co‑morbidities of the patient. For example, somepatients may require hospitalization regardless of the TBSA or degree of the burn, such as children, the elderly or victims with burns to theextremities, joints or head/neck area or with co‑morbidities such as smoke inhalation, diabetes or obesity. When patients are hospitalized for a severe burn, the first step in the treatment after patient stabilization and resuscitation is usually eschar removal.The eschar is the burned tissue in the wound, which is deprived of blood and isolated from all natural systemic defense mechanisms. Debridement is anessential first step in the treatment of patients with severe burns, allowing for: ·the prevention of local infection, sepsis (a systemic inflammatory response caused by severe infection) and additional damage to surroundingviable tissue; and ·the initiation of the body’s healing process and scar prevention. In addition to minimizing the possibility of additional complications, once the eschar is removed, a physician may properly diagnose the true extentof the trauma by a direct visual assessment of the clean wound bed. An informed treatment strategy can be decided upon only if the depth of the burn andextent of the tissue damage is known. Diagnosis of burn depth is difficult, especially because the burn commonly changes its appearance during the first daysafter injury due to burn progression. Burns that are initially difficult to classify due to the presence of eschar are referred to as “indeterminate” burns. Thisambiguity can delay the assessment of the burn depth and formulation of proper treatment. Unless the burns are life‑threatening, definitive treatment ispostponed for several days post‑injury until diagnosis is clearer, when burn progression by death of the surrounding and underlying tissue has alreadyoccurred and ended. During this delay, local and systemic effects of post‑burn inflammation and bacterial contamination can occur. Therefore, earlier,selective eschar removal is essential to prevent eschar‑related complications and to allow the physician to reach an informed decision on further treatment. Currently, there are two main treatment modalities for debridement: ·Surgical debridement oSurgical debridement predominantly includes tangential excision, a procedure in which a surgeon amputates the entire dead tissue mass,layer after layer, down to healthy, viable tissue. The excision is extended into healthy intact tissue to make sure that no trace of the escharremains, resulting in up to an estimated 30‑50% of healthy tissue being excised during this procedure. Other methods includedermabrasion, in which a mechanically powered, hand‑held rotating abrading cylinder is used to slowly scrape off tissue, and hydrosurgery, in which a high‑pressure flow of water abrades the tissue. These alternative methods have attempted to limit the trauma associatedwith tangential excision, but entail spray of contaminated eschar or take a significantly longer time to complete than tangential excision. 34 oThe benefits of surgical eschar removal are that it is usually fast and effective. Disadvantages include the significant trauma of theprocedure, associated blood loss, risk of surgery in delicate areas of the body such as hands, added costs, and, most importantly, the loss ofviable tissue that necessitates additional surgical procedures for harvesting skin from healthy donor sites and autografting. oDue to the disadvantages of surgery in extensive burns some surgeons limit their debriding surgery to only a part of the affected area in asingle session (15‑30% TBSA in most centers), thus delaying full debridement by days. After several days, complications related to escharcontamination may begin and some of the benefits of the earlier debridement may not be realized. On the other hand, when excising burnsimmediately, all suspected necrotic tissue will be excised, inevitably resulting in over‑excision, especially in “indeterminate” burns, asafter surgical excision, the remaining skin often no longer has any spontaneous healing potential and will heal only by autografting. ·Non‑surgical debridement oNon‑surgical debridement includes many different treatment options that do not require direct surgical removal of the skin to removeeschar. With non‑surgical debridement, the eschar is naturally, but slowly, removed by contaminant microorganisms, tissue autolysis, orself‑decomposition, and the inflammatory process that may lead to serious local and systemic complications. In seeking to facilitate suchnatural processes, topical medication, anti‑microbial agents, enzymes and biological/chemical applications are often applied onto theeschar. oThe benefits of this approach are that it is non‑surgical, reduces trauma to the patient and is easier to apply. Disadvantages includenumerous dressing changes and mechanical scraping with limited debridement efficacy. This prolongs the eschar removal process, whichmay lead to death of the tissue surrounding the initial burn wound, causing partial‑thickness wounds to transform into full‑thicknesswounds and forming granulation tissue that may develop into heavy scars. As demonstrated in our clinical trials, NexoBrid combines the advantages of surgical and non‑surgical debridement modalities by providing fast andeffective eschar removal while not harming viable tissues. This allows for earlier direct visual assessment of the burn wound in order to formulate propertreatment. Chronic and Other Hard‑to‑Heal Wounds The chronic and other hard‑to‑heal wound market consists of a broader addressable population of more than 14 million patients in Europe and theUnited States alone suffering from chronic wounds such as DFUs, VLUs and pressure ulcers and additional patients suffering from surgical/traumatichard‑to‑heal wounds. Chronic and other hard‑to‑heal wounds represent a $25 billion burden to the U.S. healthcare system. Chronic and hard‑to‑heal woundsare caused by impairment in the biochemical and cellular healing processes due to local or systemic conditions and generally can take several weeks to heal,if not longer. Such wounds can lead to significant morbidity, including pain, infection, impaired mobility, hospitalization, reduced productivity, amputationand mortality. In each of the various wound types, the presence of the eschar is a frequent cause for “chronification” of wounds and the removal of eschar isthe key step to commence healing. Eschar needs to be removed to prevent further deterioration of the wound that may result in additional adverse patientoutcomes. If not effectively treated, these wounds can lead to potentially severe complications including further infection, osteomyelitis, fasciitis,amputation and mortality. Most advanced wound care therapies, including negative pressure wound therapy, such as V.A.C. Therapy, and skin substitutessuch as Apligraf andDermagraft and human amniotic tissue products, are complementary to our lead product candidate, EscharEx, as these products require aclean wound bed to effectively heal a wound. Four common chronic and other hard‑to‑heal wounds are: ·Diabetic foot ulcers. Diabetes can lead to a reduction in blood flow, which can cause patients to lose sensation in their feet and may preventthem from noticing injuries, sometimes leading to the development of DFUs, which are open sores or ulcers on the feet that may take severalweeks to heal, if ever. In the United States alone, over 23 million people, or approximately 8% of the population, suffer from diabetes, a chronic,life‑threatening disease. Based on our comprehensive market research study conducted in 2015 on EscharEx that involved more than 200healthcare professionals in the U.S. and Europe, every year, in the United States alone, over 900,000 people develop a DFU and over 600,000undergo debridement of DFUs. 35 ·Venous leg ulcers. VLUs develop as a result of vascular insufficiency, or the inability for the vasculature of the leg to return blood back towardthe heart properly. Based on our comprehensive market research study on EscharEx that involved more than 200 healthcare professionals in theU.S. and Europe, in the United States alone, affect approximately 1.25 million people per year, out of which over 650,000 undergo debridementof VLUs. These ulcers usually form on the sides of the lower leg, above the ankle and below the calf, and are slow to heal and often recur ifpreventative steps are not taken. The risk of VLUs can increase as a result of a blood clot forming in the deep veins of the legs, obesity, smoking,lack of physical activity or work that requires many hours of standing. ·Pressure ulcers. Pressure ulcers form as a result of pressure sores, or bed sores, which are injuries to the skin or the tissue beneath the skin.Constant pressure on an area of skin reduces blood supply to the area and over time can cause the skin to break down and form an open ulcer.These often occur in patients who are hospitalized or confined to a chair or bed, and usually form over bony areas, where there is little cushionbetween the bone and the skin, such as lower parts of the body. Annually, 2.5 million pressure ulcers are treated in the United States in acutecare facilities alone. ·Surgical/traumatic wounds. Surgical wounds form as a result of various types of surgical procedures such as investigative or corrective, minoror major, open (traditional) or minimal access surgery, elective or emergency, and incisions (simple cuts) or excision (removal of tissue), amongothers. Traumatic wounds form as a result of cuts, lacerations or puncture wounds, which have caused damage to the skin and underlying tissue.Severe traumatic wounds may require surgical intervention to close the wound and stabilize the patient. Surgical/traumatic hard‑to‑heal woundsdevelop for various reasons, such as local surgical complications, suboptimal closure techniques, presence of foreign materials, exposed bonesor tendons and infection. In the United States, millions receive post‑surgical wound care annually. Connective Tissue Disorders In addition to severe burns and chronic and other hard‑to‑heal wound indications, we are developing an injectable product based on our patentedproteolytic enzyme technology for connective tissue pathologies and indications, such as: ·Dupuytren’s disease: a condition where one or more fingers are permanently flexed, caused by the formation of scar‑like tissues below thepalmar skin (Palmar Fascia), forming hard “cords” that freeze the fingers in non‑functional flexion contraction. This condition affectsapproximately 6.2 million people in the United States alone. ·Peyronie’s disease: the development of scar‑like tissue, similar to Dupuytren’s cords in the shaft of the penis, causing pain and distortion onerection, preventing intercourse. Peyronie’s disease is typically caused by trauma and affects men over 50 years old. Surgical treatment may bean option in some cases, but can cause complications and may result in a shortening and even greater distortion of the penis. Approximately3.7% to 7.1% of the male population above the age of 50 suffers from Peyronie’s disease in the United States and approximately 3.2% of suchage group suffer from the disease in Europe. ·Frozen shoulder syndrome: a disorder that causes the smooth tissues of the shoulder capsule to become thick, stiff and inflamed, affectingapproximately 2% to 5% of the worldwide population and 10% to 20% of people with diabetes according to industry sources. 36 ·Excessive/unaesthetic scars: A scar is a mark on the skin which is formed due to infection, injury, surgery, inflammation of tissue, burns, andacne. Scars can be of various sizes, shapes, and colors, depending on the age of the scar, the site of the scar and family history. Scar formation isunpredictable and varies from person to person. Excessive scarring can have unpleasant physical, aesthetic, psychological and socialconsequences. Estimates indicate that each year around 100 million people in the developed world acquire scars following elective surgery andsurgery for trauma. Of these, approximately 15% have excessive or unaesthetic scars. Currently, SOC for connective tissue disorders involves surgery, with a very high recurrence rate, and some non‑surgical alternatives. One suchalternative for the treatment of Dupuytren’s and Peyronie’s diseases is Xiaflex, a collagenase‑based injectable enzyme that has received orphan drug status inthe United States. BARDA Contract In September 2015, BARDA awarded us a contract valued at up to $112 million. In July 2017, BARDA expanded its commitment by an additional$32 million, bringing potential total non‑dilutive funding to a maximum of $132 million. The contract is for the advancement of the development andmanufacturing, as well as the procurement, of NexoBrid as a medical countermeasure as part of BARDA preparedness for mass casualty events. The term of the base contract is five years and presently includes $56 million of funding to support development activities to complete the FDAapproval process for NexoBrid for use in thermal burn injuries, as well as $16.5 million for procurement of NexoBrid, which is contingent upon FDAEmergency Use Authorization (“EUA”) or FDA marketing authorization for NexoBrid. In addition, the contract includes options for further funding of up to$10 million for expanding NexoBrid’s indications and up to $50 million for additional procurement of NexoBrid. The agreement may be terminated byBARDA at any time at BARDA’s discretion. As of December 31, 2017 the Company has recorded $14.9 million in funding from BARDA under the contract. NexoBrid and Our Clinical History NexoBrid, our innovative biopharmaceutical product, received marketing authorization from the EMA and the Israeli and Argentinean Ministries ofHealth for the removal of eschar in adults with deep partial‑ and full‑thickness thermal burns. The active ingredient in NexoBrid is a mixture of proteolyticenzymes enriched in bromelain prepared from an extract of pineapple plant stems. Proteolysis is a breakdown of proteins into smaller building blocks,polypeptides or amino acids. Our research and development team further developed and optimized this patented proteolytic enzyme technology, which is thebasis for NexoBrid and all of our current pipeline product candidates. One vial of NexoBrid containing 2 grams of concentrate of proteolytic enzymesenriched in bromelain is sufficient for treating a burn wound area of 100cm2. We developed NexoBrid to fulfill the previously unmet need for an effective and selective debriding agent that combines the efficacy and speed ofsurgery with the non‑invasiveness of non‑surgical methods. NexoBrid enhances the ability of physicians to conduct an earlier direct visual assessment of theburn depth to reach an informed decision on further treatment as well as to reduce the surgical burden and achieve a favorable long‑term patient outcome. NexoBrid has been investigated in hundreds of patients across 15 countries and four continents in seven completed Phase 2 and Phase 3 clinicalstudies. While we are marketing our product for the removal of eschar in burn wounds under the name “NexoBrid,” in clinical trials the product has beenreferred to as “Debridase” and “Debrase.” 37 The following table sets forth information regarding the completed clinical trials of NexoBrid: Trial 1Trial 2Trial 3Trial 4Trial 5Trial 6Trial 7Study Type• RetrospectivePhase 2• Investigatorinitiated• Dose rangePhase 2• ProspectivePhase 2• IND/FDA• Phase 2• IND/FDA• Phase 3• EMA• Phase 3b• EMA• Phase 2• EMADesign• Data collectedfrom files ofpatients treatedwith NexoBrid• Parallel,controlled,observer‑blind,randomized,single‑center• Parallel,controlled,observer‑blind, three‑arm,randomized,multi‑center• Parallel,controlled, openlabel, three‑arm,randomized,single‑center• Parallel,controlled, openlabel, two‑arm,randomized,multi‑center• Parallel,controlled,blinded,two‑arm,multi‑center• Open label,single‑arm,multi‑centerMainObjectives• Safety• Efficacy• Comparison ofefficacy andsafety• Safety• Efficacy• Safety• Safety• Efficacy• Long‑term scarassessment• Quality of life• Safety andpharmacokinetics• EfficacyWound Types• Deeppartial/fullthicknessthermal burns• Deep partial/fullthicknessthermal burns• Deeppartial/fullthicknessthermal burns• Deep partial/fullthicknessthermal burns• Deeppartial/fullthicknessthermal burns• Scar formation• Deep partial/fullthickness thermalburnsNumber ofPatients• 154• 20• 140• 30• 182• 89• 36Study Length• 1985‑2000• 2002‑2005• 2003‑2004• 2006‑2007• 2006‑2009• 2011• 2009‑2015Location• Israel• Israel• International• United States• International• International• International Trial 1: Retrospective Phase 2—Israel Trial 1 evaluated the safety and efficacy of NexoBrid in hospitalized subjects between six months and 82 years of age with severe burns of up to67% TBSA. Data from 154 subjects with complete file documentation were analyzed, including a signed informed consent form and pre‑ and post‑escharremoval photographs. According to the trial, NexoBrid allowed early and fast debridement, reduced surgical burden and was determined to be safe locallyand systemically. Trial 2: Dose Range Phase 2—Israel Trial 2 evaluated the efficacy and safety of three doses of NexoBrid. Twenty hospitalized adult subjects with severe burns of 1‑15% TBSA wererandomized and provided a one‑, two‑ or four‑gram dose of NexoBrid powder per 20 grams of a sterile gel substance (“Gel Vehicle”). The study confirmedthat the use of two grams of NexoBrid mixed with 20 grams of Gel Vehicle per 100cm2 was a safe and effective dose. Trial 3: Prospective Phase 2—International/Investigational New Drug (“IND”) Trial 3 evaluated the safety and enzymatic eschar removal efficacy of NexoBrid as compared to the Gel Vehicle and SOC. A total of 140 hospitalizedadult subjects with severe burns of 2‑15% TBSA (but not more than 30% TBSA in total), were randomized in a 2:1:1 ratio to NexoBrid, Gel Vehicle and SOCtreatment. The trial results showed that NexoBrid was a fast and effective enzymatic debriding agent, combining the advantage of early eschar removal withreduced surgical burden. 38 Trial 4: Prospective Phase 2—United States/IND Trial 4 evaluated the safety and exploratory efficacy of NexoBrid in comparison to the Gel Vehicle and SOC in hospitalized adult subjects withsevere burns of 1‑5% TBSA. Thirty hospitalized subjects were randomized and provided NexoBrid, the Gel Vehicle or SOC treatment. Although this studywas designed as a safety study and was conducted in a limited number of patients, the results suggest that NexoBrid provided effective debridement and maybe an alternative to surgical debridement. According to the trial, NexoBrid had a similar safety profile to the Gel Vehicle and SOC and the Gel Vehicle wasnot shown to have any deleterious effect. Trial 5: Phase 3—EMA Trial 5 evaluated the safety and efficacy of NexoBrid. The study was a prospective, controlled, two‑arm, parallel, open‑label, randomized,multi‑center design. It included 182 enrolled patients between the ages of four and 55, who were hospitalized with severe burn wounds covering from 5‑30%TBSA. The two arms consisted of patients who were treated with NexoBrid and patients who were treated with SOC, which included surgical and non‑surgicaleschar removal. The treatment of the study arms differed only by the studied eschar removal modalities. The co‑primary endpoints were the percentage ofwound area that was excised and the percentage of wound area that was autografted. The secondary endpoints included need for and extent of escharexcision, time to wound closure, time to complete eschar removal (≥ 90%) and blood loss. The study was successfully concluded when pre‑planned interimanalysis demonstrated a statistically significant difference in both primary endpoints between the groups. The results showed that NexoBrid significantly reduced both the percentage of wounds requiring excision or autografting and the percentage ofwound area requiring excision or autografting. P‑value is a measure of statistical significance, with P<0.05 considered statistically significant. In patients who received NexoBrid, 24.5% of wounds required excision, whereas, in patients who received SOC, 70.0% of wounds required excision(P<0.0001). With regard to the proportion of wound area excised when excision was required, patients who received NexoBrid had 13.1% of wound areaexcised, compared to 56.7% of wound area excised for patients receiving SOC (P<0.0001). The results were similar for autografting, although this endpointcould only be evaluated for deep partial‑thickness wounds, as full‑thickness wounds always require autografting due to the lack of viable dermis, regardlessof the technique used to remove the eschar. In patients receiving NexoBrid, 17.9% of deep partial‑thickness wounds required autografting, compared to34.1% for patients receiving SOC (P=0.0099). With regard to the proportion of wound area autografted, patients who received NexoBrid had 8.4% of deeppartial‑thickness wound area autografted, compared to 21.5% for patients receiving SOC (P<0.0054). (1)Only deep partial‑thickness wounds are presented, as full‑thickness wounds always require autografting due to the lack of viable dermis, regardless of thetechnique used to remove the eschar. NexoBrid successfully removed the eschar in 96.3% of the wounds compared to 93.5% of the wounds debrided by SOC. The results also showed that NexoBrid significantly reduced the time required to achieve successful eschar removal, allowing for early and directassessment of the wound bed. For patients with successful eschar removal, defined as at least 90%, those who received NexoBrid achieved successful escharremoval in 0.8 days, compared to 6.7 days for patients receiving SOC, as measured from the time of signing informed consent (P<0.0001), which representsthe time at which a patient can start being treated with an investigational product in a clinical trial setting. 39 With regard to hand burns, results showed that the use of NexoBrid significantly reduced surgical burden in terms of the need for excision, graftingor escharotomy. In patients who received NexoBrid, 9.7% required excision, compared to 70.7% for patients receiving SOC (P<0.0001). When excision wasrequired, the proportion of wound area excised was 3.5% for patients receiving NexoBrid and 52.0% for patients receiving SOC (P<0.0001). As forautografting, 4.2% of patients treated with NexoBrid required autografting, compared to 50.0% of patients treated with SOC (P=0.0005). When autograftingwas performed, the proportion of wound area autografted was 2.1% for patients who received NexoBrid and 30.5% for patients who received SOC (P=0.0017).With respect to escharotomies, no escharotomy was needed for hand burns treated with NexoBrid, whereas 9.7% of hand burns treated with SOC requiredescharotomies (P=0.07). Trial 6: Phase 3b—EMA Trial 6 assessed long‑term scar formation and quality of life in adults and children who received NexoBrid or SOC during the Phase 3 clinical study.The follow‑up was completed two to four years after injury. The study was a prospective, controlled, two‑arm, parallel, blinded, multi‑center design andincluded 89 patients. Scar quality was assessed using the Modified Vancouver Scar Scale (“MVSS”). The MVSS measures pliability, height, vascularity, andpigmentation, as well as pain and pruritus, on a scale of 0 to 18, with a higher score indicating a more severe scar. To assess quality of life, the study used theShort Form‑36 questionnaire (“SF‑36”) for adults and the Burn Outcome Questionnaire (“BOQ”) for children. The results confirmed that based on the MVSS the quality of scars was comparable between the patients who received NexoBrid and those who weretreated with SOC (3.12 and 3.38, respectively, P=0.88). However, patients who received NexoBrid experienced a significantly reduced overall quantity ofscarring as compared to those who received SOC; with NexoBrid, 40% of patients had donor site scars, as compared to 68% of patients with SOC (P=0.01).Donor site scars on those who received NexoBrid were also 30% smaller than scars on those who received SOC (P=0.108). It was also confirmed that qualityof life using the SF‑36 and BOQ was comparable in both groups. 40Clinical development overall safety assessment The most commonly reported adverse reactions when using NexoBrid are local pain and transient pyrexia/hyperthermia. The data from its clinicaldevelopment showed that the frequency of pain and pyrexia/hyperthermia was reduced through precautionary measures, including preventive analgesia asroutinely practiced for extensive dressing changes in burn patients as well as antibacterial soaking of the treatment area before and after NexoBridapplication. NexoBrid was not found to be associated with a significantly increased risk of serious or severe adverse events compared to SOC. Seriousinfections occurred with similar frequency in the SOC and NexoBrid cohorts and the incidence was low. Adverse events occurring in ≥3.0% of treatedsubjects (e.g. pruritus, or itching, anemia, insomnia, nausea, vomiting and skin graft failure) are common in burn patients and their rate was comparablebetween NexoBrid and SOC treated patients and below the rates reported in the literature. NexoBrid debridement was associated with a slightly higher rate ofwound complications, general infections, wound infections/wound cultures and extent in antibiotic‑use. The imbalances were small, wound infections wereonly mild to moderate in severity and each responded well to treatment. No detrimental effect on long‑term outcome has been detected for the NexoBridtreated patients. During the above mentioned completed trials, there were five deaths (four reported in the Phase 2 study) resulting from medical reasons in NexoBridpatients compared to one non‑related death in the SOC group. Neither the analysis of the narratives contained in the death investigative report, nor theopinions of the physicians who treated the patients, nor the Data Safety Monitoring Board have associated NexoBrid with the deaths in patients who receivedthe treatment. The EMA concluded that the benefit‑risk of NexoBrid for the removal of eschar in adults with deep partial, mixed and full‑thickness burns ispositive. Trial 7: Phase 2—EMA Trial 7 evaluated the safety, pharmacokinetics (transcutaneous absorption) and efficacy of NexoBrid in hospitalized children and adults withthermal burns. The multicenter, open‑label, single‑arm study was conducted in Europe, Israel and India and included 36 patients with severe burns of 4% to30% total body surface area (TBSA). NexoBrid was applied to burns of up to 15% TBSA in one session, and when the wound area to be treated was more than15% TBSA, NexoBrid was applied in two separate sessions, each up to 15% TBSA. Trial results showed that the use of NexoBrid was safe and effective.Furthermore, the pharmacokinetic profile following NexoBrid’s first and second topical application was comparable, suggesting no concern withaccumulation following a second topical application of NexoBrid. Ongoing and future clinical trials U.S. Phase 3 Study – DETECT study In April 2015, we commenced a multicenter, multinational, randomized, controlled, assessor blinded Phase 3 study, performed in subjects withthermal burns, to evaluate the efficacy and safety of NexoBrid compared to Gel Vehicle and compared to SOC in 175 patients hospitalized patients withsevere burns of 3‑15% TBSA randomized in a 3:1:3 ratio, with 12‑month and 24‑month follow‑ups. During the third quarter of 2016, the protocol for our U.S.Phase 3 study of NexoBrid was amended to increase the TBSA of patients eligible for inclusion from 15% to 30% TBSA. We believe this amendment willallow for the inclusion of patients with larger TBSA and, subject to the treatment of a sufficient number of such patients in the study, may support a broadermarketing label. The study objectives are (i) to demonstrate the efficacy of enzymatic eschar removal with NexoBrid by providing complete eschar removalas compared with Gel Vehicle (primary endpoint) and by providing earlier complete eschar removal and reduction in patients’ surgical burden and its relatedblood loss as compared to SOC (secondary endpoints); and (ii) to assess the safety of NexoBrid compared to SOC, including demonstration that treatmentwith NexoBrid does not have a deleterious effect on wound closure outcome and long term outcomes of cosmesis and function (safety endpoints). At thecurrent recruitment rate, we plan to complete the recruitment of 175 patients to our ongoing NexoBrid DETECT Phase 3 study around mid-year 2018 and toreport the primary, secondary and safety acute topline data around year-end following 3-month follow-up post wound closure. The long‑term 12‑month and24‑month follow‑up results is expected 9 months and 21 months following the top‑line results, respectively. Based on the approved study protocol and thecurrent availability of the product to treat severe burn patients in Europe, the company may also discuss with the FDA the possibility of submitting a BLAafter completion of the acute phase (primary/secondary/safety data) of the study, with plans to supplement the 12‑month and 24‑month long‑term follow‑upnon‑inferiority safety data when available. The study also serves to address our post approval commitment to EMA. This study is funded by BARDA. See “—BARDA Contract” above. 41 Pediatric investigational plan – CIDS study The CIDS study is a Phase 3, multicenter, multinational, randomized, controlled, open‑label study in children with thermal burns. The studyobjectives are to evaluate the efficacy and safety of treatment with NexoBrid compared with SOC in hospitalized children with severe thermal burns of 1% to30% total body surface area (TBSA). Based on the recommendation of the study’s Data Safety Monitoring Board (“DSMB”), after blindly reviewing theaccumulated CIDS data, and the EMA Pediatric Committee (PDCO) endorsement, we will initiate the second stage of the study that allows inclusion ofyounger pediatric burn patients beginning at the minimum age of one year old instead of four years of age. The study is underway in accordance with a studydesign endorsed by the FDA and the EMA as part of the agreed Pediatric Investigational Plan (“PIP”) to support extension of the indication to pediatricpatients. The study includes three pre‑defined stages: Stage 1 includes patients from age four to 18; Stage 2 includes patients from age one to 18; and Stage 3includes patients from birth to age 18. The primary endpoints evaluate early eschar removal, surgical burden and cosmesis and function with a 24‑monthfollow‑up. We are currently expanding the pediatric CIDS study into the U.S. We have submitted the protocol to the IRBs and expect to open the sites in thefirst half of 2018. Interim results with predefined stopping rules after a 12‑month follow‑up of all patients are expected to be available in the second half of2022, with final results available in the second half of 2023. This study is funded by BARDA. See “—BARDA Contract” above. European observational retrospective data collection study As part of our post marketing commitment in Europe and as is customary for recently approved drugs, we agreed with European regulatoryauthorities to conduct an observational retrospective data collection study to assess risk minimization measures in burn patients who were treated withNexoBrid. We initiated the survey in December 2017, which will include 160 patients. The data will be collected by investigators who will fill in reportbased on medical records of patients who received NexoBrid treatment at burn centers in the first two years from product launch and signed on informconsent form. The main objective of this study is assessing the effectiveness of the risk minimization activities and their effect on the incidence rate of painand pyrexia compared to the incidence rate reported during Trial 5 (Phase 3—EMA). This study is funded by BARDA. See “—BARDA Contract” above. EscharEx and Our Clinical History EscharEx is a topical agent being developed for debridement of chronic and other hard‑to‑heal wounds, in order to fulfill an unmet need for aneffective and non‑surgical debridement mean. EscharEx is based on the same patented proteolytic enzyme technology as NexoBrid but differs in otheraspects, such as in formulation and presentation. We completed a first Phase 2 feasibility study in Israel for chronic and other hard‑to‑heal wound technology. In January 2017 we announced thefinal results of a second Phase 2 prospective study in Israel and Europe. In November 2017, we announced the final results of a second cohort of the secondPhase 2 study. Based on the completed studies, we believe that our technology may be effective for debridement of chronic and other hard‑to‑heal wounds. First Phase 2 feasibility study—Israel This first Phase 2 feasibility study was conducted in Israel to study the efficacy of our technology on chronic and other hard‑to‑heal wounds. Thestudy assessed 24 patients at two sites. The results showed that our technology was effective in debriding various chronic and other hard‑to‑heal woundetiologies, such as DFUs, VLUs, pressure sores and trauma on diseased skin. 42 Second Phase 2 study—Israel/E.U. – First Cohort This second Phase 2 prospective study was conducted in Israel and Europe to evaluate the efficacy and safety of EscharEx in comparison to the GelVehicle1 at a ratio of 2:1 for the treatment of a variety of chronic and other hard‑to‑heal wounds, in three etiologies, DFUs, VLUs and post‑surgical ortraumatic hard‑to‑heal wounds. This was a prospective, controlled, assessor‑blinded, randomized, multi‑center Phase 2 study in Israel and Europe. The primary endpoint assessed incidence of complete non‑viable tissue removal (debridement) at the end of the debridement period (up to 10treatment days) and the secondary endpoints assessed various efficacy and safety endpoints, including wound bed preparation and wound healing. In January 2017 we reported final results of the first cohort of 73 patients. The average wound age in the EscharEx arm was more than double (72.8 weeks) that of the gel vehicle group (30.8 weeks). The average wound sizewas 33.6 cm2 in the EscharEx arm vs. 25.8 cm2 in the gel vehicle group. Despite the larger wounds and that wounds treated with EscharExwere older thanwounds treated with gel vehicle (72.8 vs. 30.8 weeks), the study met its primary endpoint, as EscharEx demonstrated a statistically significant higherincidence of complete debridement at the end of the debridement period. Patients treated with EscharEx demonstrated a higher incidence of completedebridement (55% or 27/49) compared with patients treated with the hydrogel vehicle (29% or 7/24) with p=0.047. Predefined sub‑group analyses showed that 50% of patients with DFUs treated with EscharEx (8/16) achieved complete debridement at the end ofthe debridement period compared with 14.3% of patients with DFUs treated with hydrogel vehicle (1/7). In addition, 62.5% of patients with VLUs treatedwith EscharEx (10/16) achieved complete debridement at the end of the debridement period compared with 25% of patients with VLUs treated with hydrogelvehicle (2/8). Post hoc analysis showed that 56.3% of patients with DFU or VLU in the EscharEx group had complete debridement at the end of thedebridement period compared with 20.0% in hydrogel vehicle group (p=0.028). The study included secondary endpoints that provide further insight into number of efficacy and safety parameters. The secondary endpoint of timeto complete debridement demonstrated a clear trend (p=0.075) that strongly suggests that not only is there a difference in the incidence of debridement, asconfirmed by the primary endpoint, but that debridement occurred earlier in the group treated by EscharEx. The advantage in time to complete debridementwas corroborated by the statistically significant post hoc result in the subgroup of patients with DFUs or VLUs that were treated with EscharEx (p=0.024). Post hoc analysis shows that of patients that achieved complete debridement in the EscharEx group, 93% (25/27) completed the debridement within7 days (4‑5 applications on average). The overall patient demographics were comparable across both arms. No deleterious effect on wound healing was observed and no materialdifferences were found in reported adverse events. The overall safety was comparable between the arms. Second Phase 2 study—Israel/E.U. – Second Cohort After successfully completing the first cohort of the study which included 73 patients recruited in 15 clinical sites, we initiated a second cohort ofpatients to demonstrate safety over extended periods of application to further support the product’s convenient application. In this second cohort, werecruited patients from two etiologies, either DFUs or VLUs, over extended periods of application (24‑72 hours) in up to eight applications, randomizing thepatients to two study arms EscharEx or gel vehicle at a ratio of 2:1. The second cohort of the study included 38 patients. The primary objective was to assesssafety. In September 2017 we reported final results of the second cohort of 38 patients. EscharEx met its primary safety endpoint in this cohort, and the overall patient demographics and wound baseline characteristics were comparableacross the arms in the second cohort. No related systemic adverse events were reported and adverse events related to local application were mild to moderate,reversible and resolved during the trial. Vital signs, pain scores, infection rates, laboratory parameters and blood loss were comparable between the two armsof the trial. Overall, no material safety concerns were identified. 1 Hydrogel is not a true sham placebo as it is a common and widely used treatment for the debridement of chronic wounds.43 Following discussions with the FDA regarding the clinical program for EscharEx to treat chronic and hard‑to‑heal wounds, we were able to obtainFDA concurrence that complete debridement will be the primary endpoint of the studies and wound closure will be measured as a safety outcome todocument that EscharEx has no deleterious effect on wound closure. This design was used in our recently reported successful second Phase 2 study as well asin our on‑going NexoBrid U.S. Phase 3 study in burns. We have been working with U.S. experts to optimize the EscharEx clinical program and plan tofinalize the preparations and submit a protocol to the FDA in the second half of 2018.In tandem, we have been working on a second generation of EscharEx, or EX‑02. This advanced formulation is designed to have several advantages.Based on our current pre-clinical studies, EX‑02 demonstrated even higher potency in lower doses, which should further contribute to EscharEx’s efficacyand tolerability. In addition, we believe EX‑02 would be even easier to prepare and applied, which will further support compliance by the patient orcaregiver. The development of EscharEx for chronic and other hard‑to‑heal wound indications is in Phase 2 studies, and there is no certainty that EscharEx willachieve all the objectives of the trials as required or that FDA will allow at this stage to initiate Phase 3 studies or that we will successfully complete thedevelopment to obtain a marketing authorization for EscharEx. See “ITEM 3.D. Risk Factors—Development and commercialization of NexoBrid in theUnited States and our pipeline product candidates worldwide requires successful completion of the regulatory approval process, and may suffer delays orfail.” MWPC003 and Our Pre‑Clinical History We have performed preclinical model studies in Israel for the use of our patented proteolytic enzyme technology in treating connective tissuedisorders. Our technology has shown promising results in preclinical model studies for the treatment of connective tissue pathologies. We are advancing thein‑house production capacity of the injectable formulation and completed local toxicology studies to potentially allow us to initiate the clinicaldevelopment of our pipeline product candidate, MWPC003, for connective tissue disorders. We have 6 patents (in the United States and in other international markets) and 8 patent applications for MWPC003. These patents provide broadprotection for the specific mixture of proteolytic enzymes in the treatment of a variety of connective tissue diseases. The patents expire on July 19, 2032. Preclinical model study—Israel In preclinical model studies, excised Dupuytren cords were injected with either MWPC003 or a saline solution (control) following Starkweather’sex‑vivo validated model. MWPC003 repeatedly provided enzymatic degradation of Dupuytren cords (fasciotomy) in a tearing test model confirming withstatistical significance that MWPC003 completely dissolves Dupuytren’s cords (Fisher Exact test p<0.0001). In a second ex vivo study conducted in 71 cordsinjected with MWPC003 in descending doses, it was demonstrated that even very small doses of MWPC003 can dissolve the pathological cord in more than80% of cases with the Cochran‑Armitage test (p=0.0021) indicating that the probability for cord dissolution increases as the dose increases. Toxicologystudies conducted in two species did not indicate systemic toxicity and the intra‑dermal local effect was reversible. Although we have conducted preclinical trials, the development of MWPC003 for connective tissue disorder indications is still in its preliminaryphase and there is no certainty that it will achieve all the aims of the trials as required and/or successfully complete the approval process for such indication.See “ITEM 3.D. Risk Factors—Development and commercialization of NexoBrid in the United States and our pipeline product candidates worldwiderequires successful completion of the regulatory approval process, and may suffer delays or fail.” Research and Development Our research and development strategy is centered on developing our patented proteolytic enzyme technology, which underlies NexoBrid andEscharEx, into additional product candidates for high‑value indications. For more information regarding our research and development expenses, see “ITEM5.C. Research and Development, Patents and Licenses, etc.” 44 Clinical Trials We conduct clinical tests and preclinical studies to support the efficacy and safety of our products and their ingredients and to extend and validatetheir benefits for human health. Preclinical studies allow us to substantiate the safety of our products and obtain preliminarily indications of theirpharmacological profile. As of the date hereof, we had conducted more than 20 preclinical studies, according to the principles of Good Laboratory Practices(“GLP”), and more than seven clinical studies, according to the principles of Good Clinical Practices (“GCP”), for NexoBrid, EscharEx and our pipelineproduct candidates. As a result, we have developed significant experience in planning, designing, executing, analyzing and publishing clinical studies. Our research and development team manages our clinical studies and coordinates the project planning, trial design, execution, outcome analysesand clinical study report submission. During the design, execution and analyses of our studies, our research and development team consults with key opinionleaders and top‑tier consultants in the relevant field of research to optimize both design and execution, as well as to strengthen the scientific, medical andregulatory compliance level of the investigational plan. Our clinical studies have been conducted in collaboration with leading medical and research centersthroughout the world. Manufacturing, Supply and Production We operate a manufacturing facility in Yavne, Israel, in a building that we sub‑lease from Clal Life Sciences L.P., with 60 employees as ofDecember 31, 2017. This facility allows us to manufacture sterile biopharmaceutical products, such as NexoBrid. The facility meets current cGMPrequirements, as certified by each of the EMA and the Israeli Ministry of Health. Our facility was approved and, after passing a periodic ministry of healthaudit in May 2017, reapproved as cGMP‑compliant for an additional three‑year term as of the audit date, until 2020 during which the Israeli Ministry ofHealth is scheduled to conduct its periodic audit for assessment of cGMP compliance renewal. Additionally, as we seek regulatory approval in the UnitedStates and other international jurisdictions for NexoBrid, the FDA or other regional applicable authorities may inspect our plant to confirm it meets allregulatory requirements. Applicable changes in our production processes for NexoBrid must be approved by the EMA and similar authorities in otherjurisdictions. While we believe that our current manufacturing capacity at the facility is sufficient to meet the expected near‑term commercial demand forNexoBrid, we are planning to increase the capacity by constructing a new manufacturing facility, which we estimate will be valid and qualified, subject tosuccessful authorities cGMP audit, during 2022, and which we expect to cost approximately $12‑15 million. The intermediate drug substance used by us in the manufacturing of NexoBrid is bromelain SP, which is derived from pineapple plant stems. Wehave entered into an agreement with CBC, dated January 11, 2001, as amended on February 28, 2010, pursuant to which CBC uses proprietary methods tomanufacture bromelain SP and supplies us with this intermediate drug substance in bulk quantities. According to the terms of the agreement, CBC shall not,and shall not permit related companies or a third party to, manufacture, use, supply or sell the raw materials for the use or production of a product directly orindirectly competing with any of our products. Our supply agreement with CBC has no fixed expiration date and can be voluntarily terminated by us, with atleast six months’ advance written notice, or by CBC, with at least 24 months’ advance written notice. Upon obtaining bromelain SP from CBC, we further process it into the drug substance and then into the drug product to finally create the powderform of NexoBrid. The necessary inactive ingredients contained in NexoBrid, or the excipients, are readily available and generally sold to us by multiplesuppliers. In addition to this powder, we manufacture a gel substance by combining water for injections produced by us at our facility and additionalexcipients. The powder and gel are kept in separate containers in one package of NexoBrid and are simply mixed by a healthcare professional prior to use.NexoBrid is authorized to be sold in Europe, Israel and Argentina in packages containing either a vial of two grams of powder and a jar of 20 grams of gel, ora vial of five grams of powder and a jar of 50 grams of gel. Once the powder and gel are mixed, NexoBrid should be applied within 15 minutes at a ratio ofeither 2 grams of powder and 20 grams of gel to a burn wound area of 100 cm2 or 5 grams of powder and 50 grams of gel to a burn wound area of 250 cm2, asapplicable; however, under current usage, NexoBrid’s label provides that it should not be applied to more than 15% TBSA. Prior to mixture and application,NexoBrid has a shelf life of three years when stored under refrigeration. 45 Marketing, Sales and Distribution We sell NexoBrid in Europe and Israel through our own commercial organization and launched NexoBrid in Argentina through our local distributorin 2016. We are marketing NexoBrid by targeting a focused segment of burn specialists treating patients with severe burns in burn centers throughout theEuropean Union. We believe that additional burn units in large hospitals as well as smaller hospitals will follow the treatment trends once established by theburn centers. In Europe, the marketing, sales and distribution of NexoBrid is carried out by our wholly‑owned German subsidiary, MediWoundGermany GmbH, which consists of a marketing team of specialized and knowledgeable sales representatives throughout Europe. During 2016 we obtainednational reimbursement in Belgium and Italy and we continue to locally execute our market access strategy for most of Europe to obtain procurement byhospitals as part of their budget, or under local, regional or national reimbursement, depending on the specific process required in each country. See “—Government Legislation and Regulation—Pharmaceutical Coverage, Pricing and Reimbursement.” In addition to receiving marketing authorization forNexoBrid in the European Union, key opinion leaders in the burn care field worldwide are already aware of NexoBrid’s efficiency in removing eschar due tohundreds of scientific presentations and award winning abstracts at international and national conferences, over 30 peer‑reviewed papers as well as a chapterin Total Burn Care, the leading medical textbook on burns. As part of the awarded contract with BARDA, we anticipate that, contingent upon the FDA Emergency Use Authorization and/or FDA marketingauthorization for NexoBrid, BARDA’s procurement of $16.5 million of NexoBrid as a medical countermeasure for preparedness for mass casualty events willbe initiated following the completion of the DETECT study acute phase. In addition, upon FDA marketing authorization, we anticipate that NexoBrid will require a focused commercial team on the ground in the UnitedStates to cover the specialty hospital call point and maximize NexoBrid’s commercial value. We plan to enter other international markets through collaboration with local distributors and leverage our approved registration file in Europe toobtain regional marketing authorizations. We have signed local distribution agreements for distribution in Argentina, Russia, South Korea, Mexico,Colombia, Peru, Chile, Ecuador, Panama, India, Bangladesh, Sri Lanka, Japan and Taiwan. Our distributor in Argentina obtained marketing authorization andlaunched NexoBrid during 2016. Our additional distributors have filed or are in the process of filing for market authorization in their respective territoriesand are expected to launch NexoBrid after receipt of local regulatory approval, which may take a year or more to be granted and consequently may occur incertain markets during 2018. Intellectual Property Our intellectual property and proprietary technology are important to the development, manufacture and sale of NexoBrid, EscharEx and our futurepipeline product candidates. We seek to protect our intellectual property, core technologies and other know‑how through a combination of patents,trademarks, trade secrets, non‑disclosure and confidentiality agreements, licenses, assignments of invention and other contractual arrangements with ouremployees, consultants, partners, suppliers, customers and others. Additionally, we rely on our research and development program, clinical trials, know‑howand marketing and distribution programs to advance our products and product candidates. As of December 31, 2017, we had been granted a total of 65patents and have 15 pending patent applications. The family of patents that covers NexoBrid specifically includes 35 granted patents worldwide and 1pending national phase application. EscharEx is covered by 2 international patent applications (“PCT”) and 4 national phase applications. A patentapplication submitted under the Patent Cooperation Treaty (“PCT”) provides a unified procedure for filing a single initial patent application that allows theapplicant to seek protection in any of the member states through national phase applications. The main patents for our proteolytic enzyme technology which underlies NexoBrid, EscharEx and our current pipeline product candidates havebeen issued in Europe, the United States and other international markets. Our patents which cover NexoBrid claim specific mixtures of proteolytic enzymes,methods of producing such mixtures and methods of treatment using such mixtures. Although the protection achieved is significant for NexoBrid, EscharExand our pipeline product candidates, when looking at our patents’ ability to block competition, the protection offered by our patents may be, to some extent,more limited than the protection provided by patents which claim chemical structures which were previously unknown. Absent patent‑term extensions, theNexoBrid family patents are nominally set to expire in 2025 in Europe and 2029 in the United States. Patents issued in other foreign jurisdictions willnominally expire in 2025. The international PCT patent applications and the national phase applications relating to EscharEx were filed on January 30,2017, January 31, 2017 and February 2, 2017. If national phase applications corresponding to these PCT applications are granted, the expiration date of thegranted patents is expected to be January 30, 2037, absent any patent‑term adjustment and/or extensions. 46 While our policy is to obtain patents by application, license or otherwise, to maintain trade secrets and to seek to operate without infringing on theintellectual property rights of third parties, technologies related to our business have been rapidly developing in recent years. Additionally, patentapplications that we may file or license from third parties may not result in the issuance of patents, and our issued patents and any issued patents that we mayreceive in the future may be challenged, invalidated or circumvented. For example, we cannot predict the extent of claims that may be allowed or enforced inour patents nor be certain of the priority of inventions covered by pending third‑party patent applications. If third parties prepare and file patent applicationsthat also claim technology or therapeutics to which we have rights, we may have to participate in proceedings to determine priority of invention, which couldresult in substantial costs to us, even if the eventual outcome is favorable to us. Moreover, because of the extensive time required for clinical developmentand regulatory review of a product we may develop, it is possible that, before NexoBrid can be commercialized in additional jurisdictions and/or before anyof our future products can be commercialized, related patents will have expired or will expire a short period following commercialization, thereby reducingthe advantage of such patent. Loss or invalidation of certain of our patents, or a finding of unenforceability or limited scope of certain of our intellectualproperty, could have a material adverse effect on us. See “ITEM 3.D. Risk Factors—Our success depends in part on our ability to obtain and maintainprotection for the intellectual property relating to, or incorporated into, our technology and products.” In addition to patent protection, we also rely on trade secrets, including unpatented know‑how, technology innovation, drawings, technicalspecifications and other proprietary information in attempting to develop and maintain our competitive position. We also rely on protection available undertrademark laws, and we currently hold various registered trademarks, including “MediWound,” “NexoBrid” and “EscharEx” in various jurisdictions,including the United States, the European Union and Israel. Klein License Agreement In September 2000, we signed an exclusive license agreement, as amended in June 2007, with Mark Klein, a third party, for use of certain patentsand intellectual property (the “Klein License Agreement”). Under the Klein License Agreement, we received an exclusive license to use the third party’spatents and intellectual property to develop, manufacture, market and commercialize NexoBrid and its pipeline product candidates for the treatment of burnsand other wounds. The claims of such patents are directed to a process of preparing a mixture of escharase and proteolytic enzymes and cover the underlyingproteolytic mixture of escharase and proteolytic enzymes prepared by that specific process. Pursuant to the Klein License Agreement, we are obligated tokeep accounting records related to the sales of NexoBrid and its pipeline product candidates and pay royalties as discussed below. The Klein LicenseAgreement may be terminated by Mark Klein, subject to notice and dispute resolution provisions of the Klein License Agreement, in the event of our breach,bankruptcy petition, insolvency or failure to achieve a development milestone within six months of a target date. We have already achieved all developmentmilestones under the Klein License Agreement. In consideration for the Klein License Agreement, we paid an aggregate amount of $1.0 million following the achievement of certain developmentmilestones. In addition, we undertook to pay royalties of 1.5‑2.5% from revenues, 10% of royalties received from sublicensing and 2% of lump‑sum paymentsreceived from sublicensing, in each case relating to products based on the licensed patents and intellectual property, for a term of 10‑15 years, as applicable,from the date of the first commercial delivery in a major country. In addition, under the Klein License Agreement, we agreed to pay a one‑time lump‑sumamount of $1.5 million upon reaching aggregate revenues of $100 million from the sale of such products. 47 LR License Agreement In August 2016, we signed an exclusive, perpetual, worldwide license agreement with L.R. Research and Development Ltd. (“LR”), an entitycontrolled by Prof. Rosenberg, for use of a certain patent and related intellectual property (the “LR License Agreement”). For additional information, see“ITEM 7.B. Major Shareholders and Related Party Transactions – Related Party Transactions.” Competition NexoBrid received orphan drug status in the European Union on July 31, 2002 and in the United States on August 20, 2003 for debridement of deeppartial‑ and full‑thickness burns in hospitalized patients. In the United States and the European Union, a sponsor that develops an orphan drug has marketingexclusivity for seven years post‑approval by the FDA and for ten years post‑approval by the EMA, respectively. The exclusive marketing rights in bothregions are subject to certain exceptions, including the development of a clinically significant benefit over the prevalent SOC. Once the market exclusivityfor our orphan indication expires in a given jurisdiction, subject to other protections such as patents, we could face competition from other companies thatmay attempt to develop other products for the same indication. The medical, biotechnology and pharmaceutical industries are intensely competitive and subject to significant technological change and changes inpractice. While we believe that our innovative technology, knowledge, experience and scientific resources provide us with competitive advantages, we mayface competition from many different sources with respect to NexoBrid, EscharEx, our existing pipeline product candidates or any product candidates that wemay seek to develop or commercialize in the future. Possible competitors may include medical practitioners, pharmaceutical and wound care companies,academic and medical institutions, governmental agencies and public and private research institutions, among others. Any product that we successfullydevelop and commercialize will compete with existing therapies and new therapies that may become available in the future. In addition, we face competition from the current SOC. The current SOC for eschar removal in severe burns is surgery, where debridement can beperformed by tangential excision, dermabrasion or hydro jet, or non‑surgical alternatives, such as applying topical medications to the eschar to facilitate thenatural healing process. Consequently, we face competition from traditional surgical procedures and topical agents’. However, based on our clinical trials, webelieve that NexoBrid has a sustainable competitive advantage over the current non‑surgical alternatives and is less invasive than surgery in removing escharin patients with burn wounds. See “—NexoBrid and Our Clinical History” for the results of our clinical trials. Although we are in the clinical and preclinical phases for our pipeline product candidates for debridement of chronic and other hard‑to‑heal woundsand treatment of connective tissue disorders and other indications, respectively, if one of our pipeline product candidates receives approval in the future, wewould compete with traditional surgery and existing non‑surgical and other treatments. In chronic and other hard‑to‑heal wounds, we expect to facecompetition from other debriding agents and wound bed preparation techniques, such as sharp debridement and surgery and topical medication such as gelsand enzymes, such as Smith & Nephew Plc’s Santyl. In addition to the currently available products, other products may be introduced to debride chronic and other hard‑to‑heal wounds or treatconnective tissue disorders during the time that we engage in necessary development. Accordingly, if one of our pipeline product candidates is approved, ourmain challenge in the market would be to convince physicians seeking alternatives to surgery to use our product instead of already existing treatments.While we are still in the development stages, based on our studies, we believe that our pipeline product candidates will be more effective than the currentnon‑surgical alternatives and less invasive than surgery in removing eschar in chronic and other hard‑to‑heal wounds and may be comparable or perhapsbetter than currently available treatments for connective tissue disorders. Government Legislation and Regulation Our business is subject to extensive government regulation. Regulation by governmental authorities in the United States, the European Union andother jurisdictions is a significant factor in the development, manufacture and marketing of NexoBrid and in ongoing research and development activities.NexoBrid has completed the EMA’s preclinical and clinical trials and other pre‑marketing approval requirements and received marketing authorization forthe European Union on December 18, 2012. Our pipeline product candidates would also have to complete such steps in the European Union. Additionally,we must also complete the approval processes in the United States and other jurisdictions in order to market NexoBrid, EscharEx or our pipeline productcandidates. 48 European Union The approval process of medicinal products in the European Union generally involves satisfactorily completing each of the following: ·laboratory tests, animal studies and formulation studies all performed in accordance with the applicable E.U. GLP or GMP regulations; ·submission to the relevant national authorities of a clinical trial application (“CTA”), which must be approved before human clinical trials maybegin; ·performance of adequate and well‑controlled clinical trials to establish the safety and efficacy of the product for each proposed indication; ·submission to the relevant competent authorities of a marketing authorization application (“MAA”), which includes the data supportingpreclinical and clinical safety and efficacy as well as detailed information on the manufacture and composition and control of the productdevelopment and proposed labeling as well as other information; ·inspection by the relevant national authorities of the manufacturing facility or facilities and quality systems (including those of third parties) atwhich the product is produced, to assess compliance with strictly enforced cGMP; ·potential audits of the non‑clinical and clinical trial sites that generated the data in support of the MAA; and ·review and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the product. Quality/preclinical studies In order to assess the potential safety and efficacy of a product, tests include laboratory evaluations of product characterization, analytical tests andcontrols, as well as studies to evaluate toxicity and pharmacological effects in animal studies. The conduct of the preclinical tests and formulation of thecompounds for testing must comply with the relevant E.U. regulations and requirements. The results of such tests, together with relevant manufacturingcontrol information and analytical data, are submitted as part of the CTA. Clinical trial approval Pursuant to the Clinical Trials Directive 2001/20/EC, as amended, a system for the approval of clinical trials in the European Union has beenimplemented through national legislation of the member states. Under this system, approval must be obtained from the competent national authority of aEuropean Union member state in which a study is planned to be conducted. To this end, a CTA is submitted, which must be supported by an investigationalmedicinal product dossier and additional supporting information prescribed by the Clinical Trials Directive and other applicable guidance documents.Furthermore, a clinical trial may only be started after a competent ethics committee has issued a favorable opinion on the clinical trial application in thatcountry. Clinical drug development is often described as consisting of four temporal phases (Phase 1‑4). See, for example, the EMA’s note for guidance ongeneral considerations for clinical trials (CPMP/ICH/291/95). ·Phase 1 (Most typical kind of study: Human Pharmacology); ·Phase 2 (Most typical kind of study: Therapeutic Exploratory); 49 ·Phase 3 (Most typical kind of study: Therapeutic Confirmatory); and ·Phase 4 (Variety of Studies: Therapeutic Use). Studies in Phase 4 are all studies other than routine surveillance performed after drug approval and are related to the approved indication. Forexample, as part of the EMA regulatory approval process, we agreed to provide further data from our post‑marketing clinical trial of NexoBrid, the U.S. Phase3 study initiated in April 2015. While we believe that the EMA will accept this study to satisfy one of our post‑marketing commitments, if the EMA does notaccept the study or is not satisfied by the study results, we will need to perform another costly study to provide such data. The phase of development provides an inadequate basis for classification of clinical trials because one type of trial may occur in several phases. Thephase concept is a description, not a set of requirements. The temporal phases do not imply a fixed order of studies since for some drugs in a developmentplan the typical sequence will not be appropriate or necessary. Pediatric investigation plan (“PIP”) We initiated a PIP study in November 2014. On January 26, 2007, Regulation (EC) 1901/2006 came into force with its primary purpose being the improvement of the health of children withoutsubjecting children to unnecessary trials, or delaying the authorization of medicinal products for use in adults. The regulation established the PediatricCommittee (“PDCO”), which is responsible for coordinating the EMA’s activities regarding pharmaceutical drugs for children. The PDCO’s main role is todetermine which studies the applicant needs to perform in the pediatric population as part of the PIP. All applications for marketing authorization for new pharmaceutical products that were not authorized in the European Union prior to January 26,2007 must include the results of studies carried out in children of different ages. The PDCO determines the requirements and procedures of such studies,describing them in a PIP. This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for amedicine that is already authorized. The PDCO can grant deferrals for some medicines, allowing a company to delay development of the medicine in childrenuntil there is enough information to demonstrate its effectiveness and safety in adults. The PDCO can also grant waivers when development of a medicine inchildren is not needed or is not appropriate, such as for diseases that only affect the elderly population. Before a marketing authorization application can be filed, or an existing marketing authorization can be amended, the EMA confirms that theapplicant complied with the studies’ requirements and measures listed in the PIP. Since the regulation became effective, several incentives for thedevelopment of medicines for children become available in the European Union, including: ·medicines that have been authorized for marketing in the European Union with the results of PIP studies included in the product information areeligible for an extension of their patent protection by six months. This is the case even when the studies’ results are negative; ·for orphan medicines, such as NexoBrid, the incentive is an additional two years of market exclusivity instead of one; ·scientific advice and protocol assistance at the EMA are free of charge for questions relating to the development of medicines for children; and ·medicines developed specifically for children that are already authorized, but are not protected by a patent or supplementary protectioncertificate, can apply for a pediatric use marketing authorization (“PUMA”). If a PUMA is granted, the product will benefit from 10 years ofmarket protection as an incentive. 50 Marketing authorization Authorization to market a product in the European Union member states proceeds under one of four procedures: a centralized authorizationprocedure, a mutual recognition procedure, a decentralized procedure or a national procedure. Marketing authorization may be granted only to an applicantestablished in the European Union. Through our wholly‑owned German subsidiary, we received approval for NexoBrid pursuant to the centralizedauthorization procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all E.U. member states as well as the EuropeanEconomic Area (“EEA”) member states, Norway, Iceland and Lichtenstein. The centralized procedure is compulsory for medicines produced by certainbiotechnological processes, products designated as orphan medicinal products and products with a new active substance indicated for the treatment of certaindiseases, and is optional for products that are highly innovative or for which a centralized process is in the interest of patients. Products that have receivedorphan designation in the European Union, such as NexoBrid, will qualify for this centralized procedure, under which each product’s marketingauthorization application is submitted to the EMA. Under the centralized procedure in the European Union, the maximum time frame for the evaluation of amarketing authorization application is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant inresponse to questions asked by the Committee of Medicinal Products for Human Use). In general, if the centralized procedure is not followed, there are three alternative procedures where applications are filed with one or more membersstate medicines regulators, each of which will grant a national marketing authorization: ·Mutual recognition procedure. If an authorization has been granted by one member state, or the Reference Member State, an application may bemade for mutual recognition in one or more other member states, or the Concerned Member State(s). ·Decentralized procedure. The decentralized procedure may be used to obtain a marketing authorization in several European member stateswhen the applicant does not yet have a marketing authorization in any country. ·National procedure. Applicants following the national procedure will be granted a marketing authorization that is valid only in a singlemember state. Furthermore, this marketing authorization is not based on recognition of another marketing authorization for the same productawarded by an assessment authority of another member state. If marketing authorization in only one member state is preferred, an applicationcan be filed with the national competent authority of a member state. The national procedure can also serve as the first phase of a mutualrecognition procedure. It is not always possible for applicants to follow the national procedure. In the case of medicinal products in the category for which the centralizedauthorization procedure is compulsory, that procedure must be followed. In addition, the national procedure is not available in the case of medicinal productdossiers where the same applicant has already obtained marketing authorization in one of the other European Union member state or has already submitted anapplication for marketing authorization in another member state and the application is under consideration. In the latter case, applicants must follow a mutualrecognition procedure. After a drug has been authorized and launched, it is a condition of maintaining the marketing authorization that all aspects relating to its quality,safety and efficacy must be kept under review. Sanctions may be imposed for failure to adhere to the conditions of the marketing authorization. In extremecases, the authorization may be revoked, resulting in withdrawal of the product from sale. Period of authorization and renewals Marketing authorization is valid for an initial five‑year period and may be renewed thereafter on the basis of a re‑evaluation of the risk‑benefitbalance by the EMA or by the competent authority of the authorizing member state. To this end, the marketing authorization holder shall provide the EMAor other applicable competent authority a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced sincethe marketing authorization was granted, at least six months before the end of the initial five‑year period. Once renewed, the marketing authorization is validfor an unlimited period, unless the EMA or other applicable competent authority decides, on justified grounds relating to pharmacovigilance, to proceed withone additional five‑year renewal. Any authorization which is not followed by the actual placing of the drug on the E.U. market (in case of centralizedprocedure) or on the market of the authorizing member state within three years after authorization shall cease to be valid. On November 2017, the EuropeanCommission granted a five‑year renewal of our NexoBrid marketing authorization. 51 Orphan designation On July 31, 2002, NexoBrid received orphan drug status in the European Union, and on December 20, 2012, the EMA confirmed NexoBrid’sdesignation as an orphan drug for marketing authorization. In the European Union, the Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products thatare intended for the diagnosis, prevention or treatment of a life‑threatening or chronically debilitating condition affecting not more than five in 10,000persons 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 and when, without incentives, it is unlikely that sales of the drug in the European Union would besufficient to justify the investment necessary to develop the drug or biological product. In the European Union, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years ofmarket exclusivity following drug or biological product approval. This period may be reduced to six years if the orphan drug designation criteria are nolonger met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity or a safer, more effective orotherwise clinically superior product is available. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. Regulatory data protection Without prejudice to the law on the protection of industrial and commercial property, some marketing authorizations benefit from an “8+2(+1)” yearperiod of regulatory protection. During the first eight years from the grant of the innovator company’s marketing authorization, data exclusivity applies. Afterthe eight years have expired, a generic company can make use of the preclinical and clinical trial data of the originator in their regulatory applications butstill cannot market their product until the end of 10 years. An additional one year of market exclusivity can be obtained if, during the first eight years of those10 years, the marketing approval holder obtains an approval for one or more new therapeutic indications which, during the scientific evaluation prior to theirapproval, are determined to bring a significant clinical benefit in comparison with existing therapies. Under the current rules, a third party may reference thepreclinical and clinical data of the reference product beginning eight years after first approval, but the third party may market a generic version only after 10(or 11) years have lapsed. Additional data protection can be applied for when an applicant has complied with all requirements as set forth in an approved PIP. Manufacturing The manufacturing of authorized drugs, for which a separate manufacturer’s license is mandatory, must be conducted in strict compliance with theEMA’s cGMP requirements and comparable requirements of other regulatory bodies, which mandate the methods, facilities and controls used inmanufacturing, processing and packing of drugs to assure their safety and proper identification. The EMA enforces its cGMP requirements throughmandatory registration of facilities and inspections of those facilities. The EMA may have a coordinating role for these inspections while the responsibilityfor carrying them out rests with the competent authority of the member state under whose responsibility the manufacturer falls. Failure to comply with theserequirements could interrupt supply and result in delays, unanticipated costs and lost revenues, and could subject the applicant to potential legal orregulatory action, including but not limited to warning letters, suspension of manufacturing, seizure of product, injunctive action or possible civil andcriminal penalties. In January 2013, the European Union and Israel signed the Protocol on Conformity Assessment and Acceptance of Industrial Products (the“ACAA”), which covers medicinal products. The ACAA provides for mutual recognition of the conclusions of inspections of compliance of manufacturersand importers with the principles and guidelines of European Union cGMP and equivalent Israeli cGMP. Certification of the conformity of each batch to itsspecifications by either the importer or the manufacturer established in Israel or in the European Union shall be recognized by the other party withoutre‑control at import from one party to the other. 52 Marketing and promotion The marketing and promotion of authorized drugs, including industry‑sponsored continuing medical education and advertising directed toward theprescribers of drugs and/or the general public, are strictly regulated in the European Union, notably under Directive 2001/83, as amended by Directive2004/27. The applicable legislation aims to ensure that information provided by holders of marketing authorizations regarding their products is truthful,balanced and accurately reflects the safety and efficacy claims authorized by the EMA or by the applicable national authority of the authorizing memberstate. Failure to comply with these requirements can result in adverse publicity, warning letters, mandated corrective advertising and potential civil andcriminal penalties. United States Review and approval of biologics In addition to E.U. regulations, NexoBrid is an investigational drug in the United States and is therefore subject to various U.S. regulations. In theUnited States, the FDA regulates drugs and biologics under the FDCA and implementing regulations and other laws, including the Public Health Service Act.On March 24, 2011, the FDA classified NexoBrid as a biological product. Biologics require the submission of a BLA and approval by the FDA prior to beingmarketed in the United States. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreignstatutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at anytime during the product development process, approval process or after approval may subject an applicant to a variety of administrative or judicial sanctionsas well as enforcement actions brought by the FDA, the U.S. Department of Justice or other governmental entities. Possible sanctions may include the FDA’srefusal to approve pending BLAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, totalor partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminalpenalties. The process required by the FDA prior to marketing and distributing a biologic in the United States generally involves the following: ·completion of laboratory tests, animal studies and formulation studies in compliance with the FDA’s GLP or GMP regulations, as applicable; ·submission to the FDA of an investigational new drug application (“IND”), which must become effective before clinical trials may begin; ·approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; ·performance of adequate and well‑controlled clinical trials in accordance with GCP to establish the safety and efficacy of the product for eachindication; ·preparation and submission to the FDA of a BLA or supplemental BLA; ·satisfactory completion of an FDA advisory committee review, if applicable; ·satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof,are produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve theproduct’s identity, strength, quality and purity; and 53 ·payment of user fees and FDA review and approval of the BLA. We commenced the process of seeking FDA approval for NexoBrid for the removal of eschar in adults with severe burns by submitting an INDbriefing package to the FDA on July 30, 2002. Preclinical studies Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess the potentialsafety and efficacy of the product candidate. Preclinical safety tests must be conducted in compliance with FDA regulations regarding good laboratorypractices. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND whichmust become effective before clinical trials may commence. Some preclinical testing may continue even after the IND is submitted. Clinical trials in support of a BLA Clinical trials involve the administration of an investigational product to human subjects under the supervision of qualified investigators inaccordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writingbefore their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of thestudy, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequentprotocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA, unlessbefore that time the FDA raises concerns or questions related to a proposed clinical trial and places the trial on clinical hold. In such a case, the IND sponsorand the FDA must resolve any outstanding concerns before the clinical trial can begin. In addition, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before itcommences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually. The IRB must review and approve,among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDAregulations. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for publicdissemination on their website, ClinicalTrials.gov. Clinical trials are typically conducted in three sequential phases, which may overlap or be combined. In the United States, the three phases aregenerally described as follows: Phase 1:The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety,dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectivenessand to determine optimal dosage. Phase 2:The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarilyevaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. Phase 3:The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, inwell‑controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval,to establish the overall risk‑benefit profile of the product, and to provide adequate information for the labeling of the product. Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverseevents occur. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or thesponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to anunacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted inaccordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. 54 Submission of a BLA to the FDA We initiated a U.S. Phase 3 pivotal study for NexoBrid in April 2015 to support a BLA submission to the FDA. The results of the preclinical studiesand clinical trials, together with other detailed information, including information on the manufacture, control and composition of the product, are submittedto the FDA as part of a BLA requesting approval to market the product candidate for a proposed indication. Under the Prescription Drug User Fee Act, asamended, applicants are required to pay fees to the FDA for reviewing a BLA. These user fees, as well as the annual fees required for commercialmanufacturing establishments and for approved products, can be substantial. The BLA review fee alone can exceed $200,000, subject to certain limiteddeferrals, waivers and reductions that may be available. Each BLA submitted to the FDA for approval is typically reviewed for administrative completenessand reviewability within 45 to 60 days following submission of the application. If found complete, the FDA will “file” the BLA, which triggers a full reviewof the application. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission. The FDA’s establishedgoals are to review and act on 90% of priority BLA applications and priority original efficacy supplements within six months of the 60‑day filing date andreceipt date, respectively. The FDA’s established goals are to review and act on 90% of standard BLA applications and standard original efficacysupplements with 10 months of the 60‑day filing date and receipt date, respectively. The FDA, however, may not be able to approve a biologic within theseestablished goals, and its review goals are subject to change from time to time. Further, the outcome of the review, even if generally favorable, may not be anactual approval but rather an “action letter” that describes additional work that must be completed before the application can be approved. Before approving a BLA, the FDA generally inspects the facilities at which the product is manufactured or facilities that are significantly involvedin the product development and distribution process, and will not approve the product unless cGMP compliance is satisfactory. The FDA may deny approvalof a BLA if applicable statutory or regulatory criteria are not satisfied, or may require additional testing or information, which can delay the approval process.FDA approval of any application may include many delays or may never be granted. If a product is approved, the approval will impose limitations on theindicated uses for which the product may be marketed, will require that warning statements be included in the product labeling, may impose additionalwarnings to be specifically highlighted in the labeling (e.g., a Black Box Warning), which can significantly affect promotion and sales of the product, mayrequire that additional studies be conducted following approval as a condition of the approval and may impose restrictions and conditions on productdistribution, prescribing or dispensing in the form of a risk management plan, or impose other limitations. Once a product is approved, marketing the product for other indicated uses or making certain manufacturing or other changes requires FDA reviewand approval of a supplemental BLA or a new BLA, which may require additional clinical data. In addition, further post‑marketing testing and surveillance tomonitor the safety or efficacy of a product may be required. Also, product approvals may be withdrawn if compliance with regulatory standards is notmaintained or if safety or manufacturing problems occur following initial marketing. In addition, new government requirements may be established thatcould delay or prevent regulatory approval of our product candidates under development. Post‑approval requirements Any drug or biologic products for which we receive FDA approvals are subject to continuing regulation by the FDA. Certain requirements include,among other things, record‑keeping requirements, reporting adverse experiences with the product, providing the FDA with updated safety and efficacyinformation annually or more frequently for specific events, product sampling and distribution requirements, complying with certain electronic records andsignature requirements and complying with FDA promotion and advertising requirements. These promotion and advertising requirements include, amongothers, standards for direct‑to‑consumer advertising, prohibitions against promoting drugs for uses or in patient populations that are not described in thedrug’s approved labeling, known as “off‑label use,” and other promotional activities, such as those considered to be false or misleading. Failure to complywith FDA requirements can have negative consequences, including the immediate discontinuation of noncomplying materials, adverse publicity,enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties. Such enforcement mayalso lead to scrutiny and enforcement by other government and regulatory bodies. Although physicians may prescribe legally available drugs for off‑labeluses, manufacturers may not encourage, market or promote such off‑label uses. As a result, “off‑label promotion” has formed the basis for litigation under theFederal False Claims Act, violations of which are subject to significant civil fines and penalties. 55 The manufacturing of NexoBrid, EscharEx and our pipeline product candidates is and will be required to comply with applicable FDAmanufacturing requirements contained in the FDA’s cGMP regulations. NexoBrid is manufactured at our production plant in Yavne, Israel, which is cGMPcertified. The FDA’s cGMP regulations require, among other things, quality control and quality assurance, as well as the corresponding maintenance ofcomprehensive records and documentation. Drug and biologic manufacturers and other entities involved in the manufacture and distribution of approveddrugs and biologics are also required to register their establishments and list any products they make with the FDA and to comply with related requirementsin certain states. These entities are further subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP andother laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMPcompliance. In addition, a BLA holder must comply with post‑marketing requirement, such as reporting of certain adverse events. Such reports can presentliability exposure, as well as increase regulatory scrutiny that could lead to additional inspections, labeling restrictions or other corrective action to minimizefurther patient risk. Discovery of problems with a product after approval may result in serious and extensive restrictions on the product, manufacturer orholder of an approved BLA, as well as lead to potential market disruptions. These restrictions may include recalls, suspension of a product until the FDA isassured that quality standards can be met, and continuing oversight of manufacturing by the FDA under a “consent decree,” which frequently includes theimposition of costs and continuing inspections over a period of many years, as well as possible withdrawal of the product from the market. In addition,changes to the manufacturing process generally require prior FDA approval before being implemented. Other types of changes to the approved product, suchas adding new indications and additional labeling claims, are also subject to further FDA review and approval. The FDA also may impose a number of post‑approval requirements as a condition of approval of a BLA. For example, the FDA may requirepost‑marketing testing, or Phase 4 testing, as well as risk minimization action plans and surveillance to monitor the effects of an approved product or placeother conditions on an approval that could otherwise restrict the distribution or use of NexoBrid. Orphan designation and exclusivity On August 20, 2003, NexoBrid received orphan drug status in the United States. Under the Orphan Drug Act, the FDA may designate a drug productas an “orphan drug” if it is intended to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States,or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States fortreatment of the disease or condition will be recovered from sales of the product). A company must request orphan product designation before submitting aBLA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan drug designation entitles a party toseven years of market exclusivity following drug or biological product approval, but does not convey any advantage in or shorten the duration of theregulatory review and approval process. If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation, the product will beentitled to orphan product exclusivity. Orphan product exclusivity means that FDA may not approve any other applications for the same product for the sameindication for seven years, except in certain limited circumstances. Competitors may receive approval of different products for the indication for which theorphan product has exclusivity and may obtain approval for the same product but for a different indication. If a drug or drug product designated as an orphanproduct ultimately receives marketing approval for an indication broader than that designated in its orphan product application, it may not be entitled toexclusivity. Pediatric studies and exclusivity Under the Pediatric Research Equity Act of 2003, a BLA or supplement thereto must contain data that are adequate to assess the safety andeffectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for eachpediatric subpopulation for which the product is safe and effective. With enactment of the Food and Drug Administration Safety and Innovation Act (the“FDASIA”) in 2012, sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposedpediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other informationrequired by regulation. The applicant, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with eachother and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time. 56 The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approvalof the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferralrequests and requests for extension of deferrals are contained in the FDASIA. Unless otherwise required by regulation, the pediatric data requirements do notapply to products with orphan designation. Accordingly, if NexoBrid is approved by the FDA for adults, it will be exempt from such requirements uponexpanding its indication to children. However, our pipeline product candidates may be subject to such requirements. Pediatric exclusivity is another type of non‑patent marketing exclusivity in the United States and, if granted, provides for the attachment of anadditional six months of marketing protection to the term of any existing regulatory exclusivity, including the non‑patent and orphan exclusivity. Thissix‑month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data donot need to show that the product is effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request,the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits,whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension,but it effectively extends the regulatory period during which the FDA cannot accept or approve another application. Patent term restoration and extension A patent claiming a new drug product may be eligible for a limited patent term extension under the Drug Price Competition and Patent TermRestoration Act of 1984 (the “Hatch‑Waxman Act”), which permits a patent restoration of up to five years for the patent term lost during productdevelopment and the FDA regulatory review. The restoration period granted is typically one‑half the time between the effective date of an IND and thesubmission date of a BLA, plus the time between the submission date of a BLA and the ultimate approval date. Patent term restoration cannot be used toextend the remaining term of a patent past a total of fourteen years from the product’s approval date. Only one patent applicable to an approved drug productis eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that coversmultiple drugs for which approval is sought can only be extended in connection with one of the approvals. The U.S. Patent and Trademark Office reviews andapproves the application for any patent term extension or restoration in consultation with the FDA. Biosimilar products As part of the Patient Protection and Affordable Care Act of 2010, Public Law No. 111‑148 (the “Affordable Care Act”), under the subtitle ofBiologics Price Competition and Innovation Act of 2009 (“BPCI”), a statutory pathway has been created for licensure, or approval, of biological productsthat are biosimilar to or interchangeable with an FDA‑licensed reference biological product. To date, eight biosimilars have been licensed under the BPCIA,and numerous biosimilars have been approved in Europe. The FDA has issued several guidance documents outlining an approach to review and approval ofbiosimilars. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in termsof safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that aproduct is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the referenceproduct in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternatedor switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the referencebiologic. However, complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which suchproducts are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA. 57 Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the referenceproduct was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date onwhich the reference product was first licensed. During this 12‑year period of exclusivity, another company may still market a competing version of thereference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate andwell‑controlled clinical trials to demonstrate the safety, purity and potency of their product. The approval of a biologic product biosimilar to NexoBrid couldhave a materially adverse impact on our business, may be significantly less costly to bring to the market and may be priced significantly lower thanNexoBrid, but such approval may only occur after our 12‑year exclusivity period. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whetherproducts deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. The BPCIA iscomplex and continues to be interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12‑year referenceproduct exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recentlitigation. As a result, the ultimate impact, implementation, and meaning of the BPCIA remains subject to significant uncertainty. Review and Approval of Drug Products Outside the European Union and the United States In addition to the above regulations, we must obtain approval of a product by the comparable regulatory authorities of foreign countries outside ofthe European Union and the United States before we can commence clinical trials or marketing of NexoBrid in those countries. The approval process variesfrom country to country and the time may be longer or shorter than that required for FDA or EMA approval. In addition, the requirements governing theconduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. In all cases, clinical trials are conducted inaccordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. Pharmaceutical Coverage, Pricing and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any products for which we obtain regulatory approval. In the UnitedStates, European Union and other markets, sales of any products for which we receive regulatory approval for commercial sale will depend to a large extenton the availability of reimbursement from third‑party payors. Third‑party payors include governments, government health administrative authorities,managed care providers, private health insurers and other organizations. The process for determining whether a payor will provide coverage for a drugproduct may be separate from the process for setting the price or reimbursement rate that the payor will pay for the drug product. Third‑party payors may limitcoverage to specific drug products on an approved list, or formulary, which might not include all of the drug products approved for a particular indication bythe FDA, EMA or National Ministries of Health. Third‑party payors are increasingly challenging the price and examining the medical necessity andcost‑effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies inorder to demonstrate the medical necessity and cost‑effectiveness of NexoBrid, in addition to the costs required to obtain the FDA or other Ministry of Healthapprovals. Additionally, NexoBrid may not be considered medically necessary or cost‑effective. A payor’s decision to provide coverage for a drug productdoes not guarantee that an adequate reimbursement rate will be approved. Adequate third‑party reimbursement may not be available to enable us to maintainprice levels sufficient to realize an appropriate return on our investment in product development. In the United States, the Affordable Care Act substantially changed the way healthcare is financed by both governmental and private insurers andsignificantly impacted the pharmaceutical industry. The Affordable Care Act contains a number of provisions, including those governing enrollment infederal healthcare programs, reimbursement changes and fraud and abuse provisions, which will impact existing government healthcare programs and willresult in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reportingsystem and feedback program. 58 Additionally, the Affordable Care Act, as limited by the U.S. Supreme Court’s decision in June 2012: ·increases the minimum level of Medicaid rebates payable by manufacturers of brand‑name drugs from 15.1% to 23.1%; ·requires collection of rebates for drugs paid by Medicaid managed care organizations; and ·imposes a non‑deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federalgovernment programs. At this time, it remains unclear whether there will be any changes made to the Affordable Care Act, whether to certain provisions or to the law in itsentirety, in the future, particularly in light of the change in administrations following the U.S. presidential election. In the European Union, pricing and reimbursement schemes vary widely from country to country and often within regions or provinces of countries.Some countries provide that drug products may be marketed only after a reimbursement price has been agreed and may limit the annual budget of coverage orrequest that the company participate in the cost above certain use levels or for treatments perceived as unsuccessful and impose monitoring processes on theuse of the product. Some countries and hospitals may require inclusion into the hospital formulary for payment from the hospital budget. Some countries andhospitals may require the completion of additional studies that compare the cost‑effectiveness of a particular drug candidate to currently available therapies.For example, the European Union provides options for its member states to restrict the range of drug products for which their national health insurancesystems provide reimbursement and to control the prices of medicinal products for human use. European Union member states may approve a specific pricefor a drug product or may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product on the market.Other member states allow companies to fix their own prices for drug products, but monitor and control company profits. The downward pressure on healthcare costs in general, particularly prescription drugs, has become 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 competitive pressure that may reduce pricing within a country. Anycountry that has price controls or reimbursement limitations for drug products may not allow favorable reimbursement and pricing arrangements. Healthcare Law and Regulation Healthcare providers, physicians and third‑party payors play a primary role in the recommendation and prescription of drug products that are grantedmarketing approval. Arrangements with healthcare providers, third‑party payors and other customers are subject to broadly applicable fraud and abuse andother healthcare laws and regulations. Such restrictions under applicable federal and state healthcare laws and regulations, include the following: ·the federal healthcare Anti‑Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receivingor providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase,order or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal healthcare program suchas Medicare and Medicaid; ·the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities forknowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a falsestatement to avoid, decrease or conceal an obligation to pay money to the federal government; ·the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), imposes criminal and civil liability for executing a schemeto defraud any healthcare benefit program or making false statements relating to healthcare matters; ·HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, alsoimposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individuallyidentifiable health information; 59 ·the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making anymaterially false statement in connection with the delivery of or payment for healthcare benefits, items or services; ·the federal physician payment transparency requirements under the Affordable Care Act require certain manufacturers of drugs, devices andmedical supplies to report to Centers for Medicare & Medicaid Services information related to payments and other transfers of value tophysicians and teaching hospitals and physician ownership and investment interests; and ·analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, may apply to sales or marketingarrangements and claims involving healthcare items or services reimbursed by non‑governmental third‑party payors, including private insurers. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevantcompliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments tophysicians and other health care providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information insome circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 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, amongother things: the use, storage, registration, handling, emission and disposal of chemicals, waste materials and sewage; chemicals, air, water and groundcontamination; air emissions and the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properlydispose of chemicals, waste materials and sewage. Our operations at our Yavne manufacturing facility use chemicals and produce waste materials and sewage.Our activities require permits from various governmental authorities including, local municipal authorities, the Ministry of Environmental Protection and theMinistry of Health. The Ministry of Environmental Protection and the Ministry of Health, local authorities and the municipal water and sewage companyconduct 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 failto comply with such laws, regulations or permits, we may be subject to fines and other civil, administrative or criminal sanctions, including the revocation ofpermits and licenses necessary to continue our business activities. In addition, we may be required to pay damages or civil judgments in respect of third‑partyclaims, 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 ourbusiness, 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 newlaws or regulations, we could be subject to new compliance measures or to penalties for activities which were previously permitted. For instance, new Israeliregulations were promulgated in 2012 relating to the discharge of industrial sewage into the sewer system. These regulations establish new and potentiallysignificant fines for discharging forbidden or irregular sewage into the sewage system. Properties Our principal executive offices are located at 42 Hayarkon Street, Yavne 8122745, Israel. We lease these facilities from our largest shareholder, ClalLife Sciences, L.P. (“CLS”), pursuant to a sub‑lease agreement, as amended, that expires on October 30, 2022. The facilities consist of approximately 20,000square feet of space, and the yearly lease fee is approximately $245,000. These facilities house our administrative headquarters, our research anddevelopment laboratories and our manufacturing plant. 60 We also lease offices at Eisenstrasse 5, 65428 Rüsselsheim, Germany. We lease these facilities pursuant to a lease agreement with a term of threeyears that expires on April 30, 2019. The facilities consist of approximately 2,670 square feet of space, and lease payments are approximately €2,800 (or$3,100) per month. These facilities house our European headquarters. Legal Proceedings From time to time, we may be party to litigation or subject to claims incident to the ordinary course of business. On September 15, 2014, a statement of claim was filed against the company by certain shareholders of PolyHeal. The plaintiffs allege that thecompany is obligated to pay them a total amount of approximately $1.3 million plus applicable interest (totaled in $1.5 million as of the ruling date) inexchange for their respective portion of PolyHeal’s shares, following the milestone occurrence under the 2010 PolyHeal Agreement. This claim arises out of adispute with Teva under the 2010 PolyHeal Agreement. On December 14, 2014, the company filed a petition for a right to defend with the Tel Aviv‑JaffaDistrict Court, in which the company: (i) rejected the arguments raised against it in the statement of claim; (ii) emphasized that its obligation under the 2010PolyHeal Agreement to purchase the 7.5% of PolyHeal’s shares is subject to the consumption of the deferred closing, as defined in the 2010 PolyHealAgreement, including the receipt of the funds from Teva on a “back to back” basis; and (iii) stated that since no such payment has been made by Teva, thecompany is not subject to any obligation to purchase PolyHeal shares and/or make any payments to PolyHeal’s shareholders. On November 13, 2017, the Tel Aviv‑Jaffa District Court issued a ruling in favor of the plaintiffs. The court ruled that the we are obligated topurchase PolyHeal’s shares for approximately $6.75 plus applicable interest (totaled in $7.5 million as of the ruling date) million plus applicable interest,which represents the purchase price for the total number of shares that the PolyHeal Agreements contemplate would be acquired by the Company from all theshareholders of PolyHeal. The Court ordered that we are obligated to purchase shares in PolyHeal from the plaintiffs, on the basis of their actual shareholdings in PolyHeal as of January 15, 2013, for approximately $1.5 million, within 15 days from the date of the Court’s ruling. On December 27, 2017, wefiled an appeal to the Supreme Court over the said ruling, alleging, among other things, that the agreement according to which the ruling was granted wasmisinterpreted by the District Court. We further alleged that both the wording of the agreement and the conduct of the parties thereunder prove that ourobligation to purchase PolyHeal’s shares was subject to the prior receipt of funds, which were never received, from Teva. On January 30, 2018, certainPolyHeal shareholders filed a cross appeal, alleging that they are entitled to receive from us a full repayment of their counsel’s fees in a sum equal to 12.5% ofthe consideration to be paid for their shares. The Appeal and Cross Appeal are currently scheduled to be heard on January 7, 2019. Accordingly, a full provision for the purchase price of the shares plus the accrued interest, totaling $7.5 million, was recorded within the loss fromdiscontinued operations in respect of this claim, of which approximately $1.5 million was paid to plaintiffs in consideration for PolyHeal’s shares. If we arenot successful in the appeal or if we are unable to reach a settlement with Teva, we could be required to purchase additional ordinary shares of PolyHeal fromother existing shareholders even if we do not receive such investment from Teva, which could have a material adverse effect on our liquidity and financialcondition. We believe that we have substantive defenses to plaintiff’s claims, and we intend to vigorously advocate our position in our appeal to the IsraeliSupreme Court. However, the outcome of litigation is always uncertain and the actual outcome of any proceeding may materially differ from estimates andcould result in losses material to our consolidated results of operations, liquidity or financial condition. To date, no litigation matter has had a materialimpact on our operations or financial condition. See “ITEM 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings” and “ITEM 3.D. Risk Factors— We may haveliabilities under our former agreements with Teva Pharmaceutical Industries Ltd. and PolyHeal Ltd..” 61 C. Organizational Structure The legal name of our company is MediWound Ltd. and we are organized under the laws of the State of Israel. Our corporate structure consists ofMediWound Ltd., our Israeli parent company, (i) MediWound Germany GmbH, our active wholly‑owned subsidiary, which was incorporated on April 16,2013 under the laws of the Federal Republic of Germany and (ii) MediWound UK Limited, our inactive wholly‑owned subsidiary, which was incorporated onJuly 26, 2004 under the laws of England. To the best of our knowledge, we also hold approximately 8% ownership interest in Polyheal Ltd. D. Property, Plants and Equipment See “ITEM 4.B. Business Overview—Properties” and “ITEM 4.B. Business Overview—Manufacturing, Supply and Production.” Item 4A. UNRESOLVED STAFF COMMENTS None. Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS A. Operating Results The information contained in this section should be read in conjunction with our consolidated financial statements for the year ended December 31, 2017and related notes and the information contained elsewhere in this annual report. Our financial statements have been prepared in accordance with IFRS, asissued by the IASB. Company Overview We are a fully integrated biopharmaceutical company focused on developing, manufacturing and commercializing novel therapeutics products toaddress unmet needs in the fields of severe burns, chronic and other hard‑to‑heal wounds, connective tissue disorders and other indications. Our firstinnovative biopharmaceutical product, NexoBrid, received marketing authorization from the EMA and the Israeli and Argentinean Ministries of Health forremoval of dead or damaged tissue, known as eschar, in adults with deep partial‑ and full‑thickness thermal burns, also referred to as severe burns. NexoBrid,which is based on our patented proteolytic enzyme technology, represents a new paradigm in burn care management and our clinical trials havedemonstrated, with statistical significance, its ability to non‑surgically and rapidly remove the eschar earlier relative to existing standard of care upon patientadmission, without harming viable tissues. We established a commercial organization for the marketing, sales and distribution of NexoBrid, includingEuropean headquarters in Germany and sales and marketing teams throughout Europe. We sell NexoBrid in Europe and Israel through our commercialorganization, and we have launched NexoBrid in Argentina, through our local distributor, during 2016. We are conducting an on‑going U.S. Phase 3 pivotalstudy to support a BLA submission to the FDA and a European pediatric study to broaden the approved indication of NexoBrid, both of which are funded byBARDA. We manufacture NexoBrid in our state‑of‑the‑art, EMA‑certified, cGMP‑compliant, sterile pharmaceutical products manufacturing facility at ourheadquarters in Yavne, Israel. In March 2014, we closed our IPO, at which time we sold a total of 5,750,000 ordinary shares in the offering and received net proceeds ofapproximately $71.7 million. We initially generated revenues in 2014 following the launch of NexoBrid in the EU. Our revenue was $0.6 million, $1.6 million and $2.5 million in2015, 2016 and 2017, respectively. In addition, we have signed local distribution agreements for distribution of NexoBrid in Argentina, Russia, South Korea,Mexico, Colombia, Peru, Chile, Ecuador, Panama, India, Bangladesh, Sri Lanka, Japan and Taiwan. Our future growth will depend, in part, on our ability toexpand the commercialization of NexoBrid throughout Europe and receive marketing approval in the United States and other jurisdictions for NexoBrid andEscharEx. However, our net operating losses were $21.2 million, $20.2 million and $13.7 million for the years ended December 31, 2015, 2016 and 2017,respectively. As of December 31, 2017, we had an accumulated deficit of $129.4 million. We expect to continue to incur significant expenses and operatinglosses for the foreseeable future. 62 In 2017, we completed an underwritten public offering of 5,037,664 ordinary shares and received net proceeds of approximately $22.7 million, afterdeducting the underwriting discount and offering expenses payable by us. We expect to continue to invest in our research and development efforts, including continuing our NexoBrid ongoing clinical trials, as well as theclinical development of EscharEx and our pipeline product candidates. In addition, we expect to continue to advance NexoBrid as a standard of care, expendits commercial reach to additional important international markets and its potential use by countries for preparedness for mass casualty events. Key Components of Statements of Operations Revenues Sources of revenues. We derive revenues from direct and indirect sales of NexoBrid to burn centers and hospitals burn units in Europe and Israel aswell as to local distributors in other countries in accordance with distribution agreements. Therefore, our ability to generate revenues will depend on thesuccessful commercialization of NexoBrid. Cost of Revenues Our total cost of revenues includes expenses for the manufacturing of NexoBrid, including the cost of raw materials, employee‑related expensesincluding salaries, equity based‑compensation and other benefits and related expenses, rental fees, utilities and depreciation. We expect that our cost ofrevenues will increase as we expand the sale of NexoBrid throughout the European Union and internationally. We expect that our cost of revenues as apercentage of our total revenues will decrease to the extent that our sales from NexoBrid increase. Operating Expenses Research and Development Expenses, gross Research and development activities are central to our business model. Product candidates in later stages of clinical development generally havehigher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later‑stage clinical trials.We expect research and development costs to increase significantly for the foreseeable future as EscharEx progresses in its clinical program in the U.S. andour other pipeline product candidates’ progress in clinical trials. However, we do not believe that it is possible at this time to accurately project totalprogram‑specific expenses to reach commercialization. There are numerous factors associated with the successful development of any of our productcandidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on ourstage of development. Additionally, future commercial and regulatory factors beyond our control will affect our clinical development programs andplans. Our actual spending could differ as our plans change and we invest in other drugs or potentially reduce our anticipated funding on research for existingproducts. Research and development consist primarily of compensation for employees engaged in research and development activities including salaries,equity‑based compensation and benefits and related expenses, clinical trials, contract research organization sub‑contractors expenses, development materials,external advisors and the allotted cost of our manufacturing facility for research and development purposes. Since 2015, we have cumulatively spent approximately $37.5 million on research and development primarily of NexoBrid and EscharEx, of which$19.0 million was funded by participation by BARDA funds and the Israeli government grants. Our total research and development expenses, net ofparticipations, were approximately $6.0 million, $7.1 million, and $5.5 million in 2015, 2016, and 2017 respectively. Our research and developmentexpenses related primarily to the development of NexoBrid and EscharEx. We charge all research and development expenses to operations as they areincurred. The successful development of our patented proteolytic enzyme technology used in NexoBrid, EscharEx and additional pipeline product candidatesis highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary tocomplete the remainder of the development of our technology for additional indications. This uncertainty is due to numerous risks and uncertaintiesassociated with developing products, including the uncertainty of: ·the scope, rate of progress and expense of our research and development activities; 63 ·preclinical results; ·clinical trial results; ·the terms and timing of regulatory approvals; ·the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and ·the ability to market, commercialize and achieve market acceptance for NexoBrid or any other product candidate that we may develop in thefuture. A change in the outcome of any of these variables with respect to the development of other products that we may develop could result in asignificant change in the costs and timing associated with their development. For example, if the EMA, the FDA or other regulatory authority were to requireus to conduct preclinical and clinical studies beyond those which we currently anticipate for the completion of clinical development of our productcandidates or if we experience significant delays in enrollment in any clinical trials, we could be required to expend significant additional financial resourcesand time on the completion of the clinical development. Participation by Third Parties Our research and development expenses are net of the following participations by third parties: Participation by the IIA. We receive grants, subject to repayment through future royalty payments, as part of the NexoBrid and EscharEx researchand development programs approved by the IIA. The requirements and restrictions for such grants are found in the Innovation Law. Under the InnovationLaw, royalties of 3% on the revenues derived from sales of products or services developed in whole or in part using IIA grants are payable to the IIA. Themaximum aggregate royalties paid generally cannot exceed 100% of the grants made to us, plus annual interest generally equal to the 12‑month LIBORapplicable to dollar deposits, as published on the first business day of each calendar year. The total gross amount of grants actually received by us from theIIA, including accrued LIBOR interest and net of royalties actually paid as of December 31, 2017, totaled approximately $13.4 million and the amortizedcost (using the effective interest method) of the liability as of that date totaled approximately $7.4 million. As of December 31, 2017, we had accrued andpaid royalties to the IIA totaling $0.2 million. In addition to paying any royalty due, we must abide by other restrictions associated with receiving such grants under the Innovation Law thatcontinue to apply following repayment to the IIA. These restrictions may impair our ability to outsource manufacturing, engage in change of controltransactions or otherwise transfer our know‑how outside of Israel and may require us to obtain the approval of the IIA for certain actions and transactions andpay additional royalties and other amounts to the IIA. In addition, any change of control and any change of ownership of our ordinary shares that would makea non‑Israeli citizen or resident an “interested party,” as defined in the Innovation Law, requires prior written notice to the IIA. If we fail to comply with theInnovation Law, we may be subject to criminal charges. See “Item 3.D. Risk Factors – We received Israeli Government grants for certain research anddevelopment activities. The terms of those grants require us to satisfy specified conditions and to pay penalties in addition to repayment of the grants uponcertain events.” Research and development grants received from the IIA are recognized upon receipt as a liability if future economic benefits are expected from theproject that will result in royalty‑bearing sales. The amount of the liability for the loan is first measured at fair value using a discount rate that reflects amarket rate of interest that reflects the appropriate degree of risks inherent in our business. The change in the fair value of the liability associated with grantsfrom the IIA is reflected as an increase or decrease in our research and development expenses for the relevant period. 64 Participation by BARDA. On September 29, 2015, we were awarded a contract by BARDA valued up to $112 million for the advancement of thedevelopment and manufacturing, as well as the procurement, of NexoBrid in the United States. On July 17, 2017, we entered into an amendment to ourcontract with BARDA that increased its potential value to a maximum of $132 million. See “ITEM 4.B. Business Overview—BARDA Contract.” Pursuant tothe contract, BARDA has committed to fund all development costs of NexoBrid required for achieving marketing authorization by the FDA, either directly orindirectly by reimbursing actual costs incurred by us. As of December 31, 2017, we have recorded $14.9 million in funding from BARDA out of the $56million of committed funds provided for under the contract. Selling and Marketing Expenses Selling and marketing expenses consist primarily of compensation expenses for personnel engaged in sales and marketing, including salaries, equitybased‑compensation and benefits and related expenses, as well as promotion, advertising, market access, medical, sales and distribution activities. Theseexpenses also include costs related to the maintenance of our offices in Germany, which is focused primarily on marketing NexoBrid, and marketingauthorization holder related costs. General and Administrative Expenses General and administrative expenses consist principally of compensation for employees in executive and administrative functions includingsalaries, equity‑based compensation, benefits, and other related expenses, professional consulting services, including legal and audit fees, as well as costs ofoffice and overhead. We expect general and administrative expenses to remain stable. Financial Income/Financial Expense Financial income includes interest income, revaluation of financial instruments, revaluation of derivative instruments and exchange rate differences.Financial expense consists primarily of revaluation of financial instruments and exchange rate differences. The interest due on government grants receivedfrom the IIA is also considered a financial expense, and is recognized beginning on the date we receive the grant until the date on which the grant is expectedto be repaid as part of the revaluation to fair value of liabilities in respect of government grants. Discontinued Operation Following the expiration of our PolyHeal license, we accounted for our operation related to PolyHeal as a discontinued operation in accordance withIFRS accounting standard 5, “Non‑current Assets Held for Sale and Discontinued Operations.” Accordingly, the results of operations of the development,manufacturing and sales of PolyHeal, including impairments of inventories, our exclusive global license of the PolyHeal product and other assets are reportedseparately as a discontinued operation in our statement of operations for the periods presented below, as well as for all historical periods to be presented infuture quarterly and annual releases of our results of operations. Taxes on Income The standard corporate tax rate in Israel was 26.5%, 25% and 24% for the 2015, 2016 and 2017 tax year, respectively. Effective of January 1, 2018,the corporate tax rate is 23%. We do not generate taxable income in Israel, as we have historically incurred operating losses resulting in carry forward tax losses totalingapproximately $115 million as of December 31, 2017. We anticipate that we will be able to carry forward these tax losses indefinitely to future tax years.Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses. Under the Law for the Encouragement of Capital Investments, 5719‑1959 (the “Investment Law”), we have been granted “Beneficiary Enterprise”status, which provides certain benefits, including tax exemptions and reduced corporate tax rates. Income not eligible for Beneficiary Enterprise benefits istaxed at a regular corporate tax rate. The benefit entitlement period starts from the first year that the Beneficiary Enterprise first earns taxable income, and islimited to 12 years from the year in which the company requested to have tax benefits apply. 65 Comparison of Period to Period Results of Operations The following table sets forth our results of operations in dollars and as a percentage of revenues for the periods indicated: Years Ended December 31, 2015 2016 2017 (in thousands) Consolidated statements of operations data: Revenues $601 $1,558 $2,496 Cost of revenues 2,519 2,158 1,578 Gross (loss) profit (1,918) (600) 918 Operating expenses: Research and development, gross 8,139 14,779 14,625 Participation by BARDA and IIA (2,118) (7,711) (9,163)Research and development, net of participations 6,021 7,068 5,462 Selling and marketing 9,284 8,403 5,362 General and administrative 4,004 4,084 3,781 Operating loss (21,227) (20,155) (13,687)Financial income 1,052 2,166 406 Financial expense (1,496) (896) (1,252)Loss from continuing operations (21,671) (18,885) (14,533)Loss from discontinued operation (417) — (7,616)Net loss $(22,088) $(18,885) $(22,149) Year Ended December 31, 2016 Compared to Year Ended December 31, 2017 Revenues We generated revenues from sales of NexoBrid in 2016 of approximately $1.6 million, compared to approximately $2.5 million in revenues fromthe sale of NexoBrid in 2017. The increase was primarily due to an increase in the volume of sales in the EU. Costs and Expenses Cost of revenues Cost of revenues decreased 27% from approximately $2.2 million in the year ended December 31, 2016 to approximately $1.6 million in the yearended December 31, 2017. The cost of revenues consisted primarily of employee related expenses, including salaries and benefit and equity‑based compensation, cost ofmaterials, changes in inventory of finished products and other manufacturing expenses, which is partially offset by an allotment of manufacturing costsassociated with research and development activities to research and development expenses. Allotment of manufacturing costs to research and developmentdecreased $1.0 million in the year ended December 31, 2017, primarily due to a reduction in the development activities of EscharEx in 2017. Change ininventory of finished products decreased $1.8 million from $0.8 million in 2016 to $(1.0) in 2017. Research and development expenses, net of participations Research and development expenses, gross, decreased 1% from approximately $14.8 million in the year ended December 31, 2016 to approximately$14.6 million in the year ended December 31, 2017. The expenses primarily related to development of NexoBrid, which was predominantly funded byBARDA participation, and EscharEx. The decrease resulted primarily from a decrease in the allotment of cost of manufacturing for research and developmentpurposes related to NexoBrid and EscharEx. Salary and related expenses increased $0.6 million in the year ended December 31, 2017 due to an increased headcount of employees focused onresearch and development. Subcontracting costs increased $0.2 million in the year ended December 31, 2017 primarily due to clinical development activityof NexoBrid. 66 Allotment of manufacturing costs for research and development purposes decreased $1.0 million in the year ended December 31, 2017 primarily dueto reduction in the development activities of EscharEx. Moreover, participation from BARDA and the Israeli Innovation Authority increased by approximately $1.5 million from $7.7 million in the yearended December 31, 2016 to $9.2 in the year ended December 31, 2017. Selling and marketing expenses Selling and marketing expenses decreased 36%, from approximately $8.4 million in the year ended December 31, 2016 to approximately $5.4million in the year ended December 31, 2017. The decrease was primarily due to a decrease in marketing activities associated with the launch of NexoBrid inthe E.U. and a decrease of headcount of employees focused on selling and marketing. General and administrative expenses General and administrative expenses decreased 7% from approximately $4.1 million in the year ended December 31, 2016 to approximately $3.8million in the year ended December 31, 2017. Financial income Financial income decreased from approximately $2.2 million in the year ended December 31, 2016 to approximately $0.4 million in the year endedDecember 31, 2017. Financial income in 2016 included $1.6 million due to revaluation of contingent consideration for purchase of shares. Financial expense Financial expense increased from approximately $0.9 million in the year ended December 31, 2016 to approximately $1.3 million in the year endedDecember 31, 2017. Financial expenses in 2017 included $0.4 million due to the revaluation of contingent consideration for the purchase of shares. Year Ended December 31, 2015 Compared to Year Ended December 31, 2016 Revenues We generated revenues from sales of NexoBrid in 2015 of approximately $0.6 million, following the launches in the European Union and Israel,compared to approximately $1.6 million in revenues from the sale of NexoBrid in 2016. Costs and Expenses Cost of revenues Cost of revenues decreased 14% from approximately $2.5 million in the year ended December 31, 2015 to approximately $2.2 million in the yearended December 31, 2016. The cost of revenues consisted primarily of employee related expenses, including salaries and benefit and equity‑based compensation, cost ofmaterials, changes in inventory of finished products and other manufacturing expenses, which was partially offset by an allotment of manufacturing costsassociated with research and development activities to research and development expenses. Allotment of manufacturing costs to research and developmentincreased $1.8 million in the year ended December 31, 2016 primarily as a result of support of manufacturing team to the development of EscharEx. Research and development expenses, net of participations Research and development expenses, gross, increased 82% from approximately $8.1 million in the year ended December 31, 2015 to approximately$14.8 million in the year ended December 31, 2016. The expenses primarily related to development of NexoBrid, which is predominantly funded by BARDAparticipation, and EscharEx. The increase resulted primarily from employee‑related expenses, advancing of ongoing NexoBrid clinical trials, toxicologystudies for EscharEx and other product candidates and the allotment of cost of manufacturing for research and development purposes related to NexoBrid andEscharEx. 67 Salary and related expenses increased $0.6 million in the year ended December 31, 2016 due to an increased headcount of employees focused onresearch and development and share based compensation. Subcontracting costs increased $4.1 million in the year ended December 31, 2016 primarily due toclinical development activity of NexoBrid and pre‑clinical development of EscharEx and other product candidates. Allotment of manufacturing costs for research and development purposes increased $1.8 million in the year ended December 31, 2016 primarily dueto the development of EscharEx. The increase in research and development expenses, gross, was partially offset by an increase of approximately $5.6 million of participation fromBARDA and the Israeli Innovation Authority. Selling and marketing expenses Selling and marketing expenses decreased 9%, from approximately $9.3 million in the year ended December 31, 2015 to approximately $8.4 millionin the year ended December 31, 2016. The decrease was primarily due to decrease in marketing activities associated with the launch of NexoBrid in the E.U. General and administrative expenses General and administrative expenses remained stable at approximately $4.0 ‑ 4.1 million for the years ended December 31, 2015 and December 31,2016. Financial income Financial income increased from approximately $1.1 million in the year ended December 31, 2015 to approximately $2.2 million in the year endedDecember 31, 2016. The increase was primarily due to an increase of $0.9 million in revaluation of contingent consideration for purchase of shares. Financial expense Financial expense decreased from approximately $1.5 million in the year ended December 31, 2015 to approximately $0.9 million in the year endedDecember 31, 2016. Financial expenses in 2015 included $0.6 million related to currency exchanges differences. B. Liquidity and Capital Resources Our primary uses of cash are to fund working capital requirements, research and development expenses of NexoBrid and EscharEx and sales andmarketing activities associated with the commercialization of NexoBrid in Europe. Historically, we have funded our operations primarily through privateplacements of equity securities, loans, convertible loans, participation by government grants from BARDA and the IIA. In March 2014, we closed our IPO,resulting in net proceeds to us of approximately $71.7 million. In September 2015, we were awarded a contract by BARDA, which is currently valued at up to$132 million, for the advancement of the development and manufacturing, as well as the procurement, of NexoBrid in the United States. See “ITEM 4.B.Business Overview—BARDA Contract.” Since we expect a significant portion of the funding for our NexoBrid development plan will be funded by BARDA,we intend to use a portion of our proceeds raised during our IPO initially intended for the development of NexoBrid to further advance the development ofEscharEx. Furthermore, on March 7, 2016, the SEC declared our shelf registration statement on Form F‑3 effective. Under this shelf registration statement, wemay offer from time to time up to $125 million in the aggregate of our ordinary shares, warrants and/or debt securities in one or more series or issuances. InSeptember 2017, we completed an underwritten public offering of 5,037,664 ordinary shares and received net proceeds of approximately $22.7 million, afterdeducting the underwriting discount and offering expenses payable by us. We currently intend to use the net proceeds from the sale of securities offered by uspursuant to our registration statement on Form F‑3 to fund our research and development activities, primarily the clinical development of EscharEx, and theremainder, if any, for working capital and other general corporate purposes. The timing and amount of our actual expenditures will be based on many factors,including cash flows from operations and the anticipated growth of our business. 68 The table below summarizes our sources of financing for the periods presented. Issuance ofOrdinaryShares andWarrants GovernmentGrants andBARDAFunding, net Total (in thousands) Year ended December 31, 2017 $22,665 $8,895 $31,560 Year ended December 31, 2016 $7 $6,466 $6,473 Year ended December 31, 2015 $26 $1,552 $1,578 Our sources of financing in the year ended December 31, 2017 totaled $31.6 million and consisted primarily of the underwritten public offeringproceeds of $22.7 million, IIA government grants totaling $0.3 million and funding under the BARDA contract totaling $8.6 million. Our sources of financing in the year ended December 31, 2016 totaled $6.5 million and consisted primarily of IIA government grants totaling $0.9million and funding under the BARDA contract totaling $5.6 million. Our sources of financing in the year ended December 31, 2015 totaled $1.6 million and consisted primarily of IIA government grants totaling $0.8million and funding under the BARDA contract totaling $0.8 million. As of December 31, 2017, we had $36.1 million of cash and cash equivalents. Our net operating losses were $21.2 million, $20.2 million and $13.7million for the years ended December 31, 2015, 2016 and 2017, respectively. As of December 31, 2017, we had an accumulated deficit of $129.4 million. Weexpect to continue to incur significant expenses and operating losses for the foreseeable future. The net losses we will incur may fluctuate from quarter toquarter. Our capital expenditures for fiscal years 2015, 2016, and 2017 amounted to $0.4 million, $0.7 million and $1.0 million, respectively. Capitalexpenditures consist primarily of investments in manufacturing and laboratory equipment. Our future capital requirements will depend on many factors, including our revenue growth, the timing and extent of our spending on research anddevelopment efforts, and international expansion. We may also seek to invest in or acquire complementary businesses or technologies. To the extent thatexisting cash and cash from operations are insufficient to fund our future activities, we may need to raise additional funding through debt and equityfinancing. Additional funds may not be available on favorable terms or at all. We believe our existing cash, cash equivalents and short‑term bank depositswill be sufficient to satisfy our liquidity requirements for the next 12 months. Cash Flows The following table summarizes our consolidated statement of cash flows for the periods presented: Year Ended December 31, 2015 2016 2017 (in thousands) Net cash provided by (used in): Continuing operating activities $(19,601) $(16,445) $(14,892)Continuing investing activities 36,046 1,816 437 Continuing financing activities 778 907 22,995 Discontinued operating activities — — (1,563) 69 Net cash used in continuing operating activities The use of cash in all periods resulted primarily from our net losses adjusted for non‑cash charges and measurements and changes in components ofworking capital. Adjustments to net income for non‑cash items include depreciation and amortization, equity‑based compensation, revaluation of contingentliabilities and changes in assets and liabilities items. Net cash used in continuing operating activities was approximately $16.4 million in the year ended December 31, 2016 compared to approximately$14.9 million in the year ended December 31, 2017. The decrease was attributed primarily to the decrease in operating loss, which was partially offset by anincrease in change of working capital assets, net. Net cash used in continuing operating activities was approximately $19.6 million in the year ended December 31, 2015 compared to approximately$16.4 million in the year ended December 31, 2016. The decrease was attributed primarily to gross profit of $0.4 million generated in 2016 compared withgross loss of $1.1 million in 2015, as well as certain upfront payment received from distributers classified as differed revenues. Net cash used in discontinued operating activities Net cash used in discontinued operating activities was approximately $0 million in the year ended December 31, 2016 compared to approximately$1.6 million in the year ended December 31, 2017. The increase was attributed primarily to the consideration paid to PolyHeal’s shareholders following thedistrict court ruling. See “ITEM 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings” and “ITEM 3.D. Risk Factors—We mayhave continuing obligations or liabilities under our former agreements with Teva Pharmaceutical Industries Ltd. and PolyHeal Ltd. Net cash provided by continuing investing activities The use of cash in continuing investing activities has historically been primarily related to investments in short‑term banks deposits and purchasesof property and equipment. Net cash provided by investing activities was $1.8 million during the year ended December 31, 2016 compared to cash providedby investing activities of $0.4 million during the year ended December 31, 2017. The decrease was attributable primarily to decrease of proceeds fromshort‑term bank deposits and an increase in purchase of property and equipment. Net cash provided by investing activities was $36.0 million during the year ended December 31, 2015 compared to cash provided by investingactivities of $1.8 million during the year ended December 31, 2016. The decrease was attributable primarily to proceeds from short‑term bank deposits. Net cash provided by continuing financing activities Net cash provided by continuing financing activities was $0.9 million during the year ended December 31, 2016 compared to $23.0 million duringthe year ended December 31, 2017. The increase was attributable primarily to our receipt of $22.7 million net proceeds from our underwritten public offeringin 2017. Net cash provided by continuing financing activities was $0.8 million during the year ended December 31, 2015 compared to $0.9 million duringthe year ended December 31, 2016. Application of Critical Accounting Policies and Estimates Our accounting policies and their effect on our financial condition and results of operations are more fully described in our consolidated financialstatements included elsewhere in this annual report. We have prepared our financial statements in accordance with IFRS as issued by the IASB. Thepreparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and thedisclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reportingperiods. Actual results may differ from these estimates under different assumptions or conditions. See “ITEM 3.D. Risk Factors” for a discussion of thepossible risks which may affect these estimates. 70 While our significant accounting policies are more fully described in the notes to our consolidated financial statements appearing elsewhere in thisannual report, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and futureperformance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate tobe critical if: (a) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at thetime we were making our estimate; and (b) changes in the estimate could have a material impact on our financial condition or results of operations. Revenues Recognition We currently generate revenues from direct and indirect sales of NexoBrid to burn centers and hospital burn units in Europe and Israel as well as tolocal distributors in other countries. Revenues are recognized to the extent that it is probable that the economic benefits will flow to the company and therevenues can be reliably measured, regardless of when the payment is being made. Revenues are measured at the fair value of the consideration received orreceivable, taking into account contractually defined terms of payment and excluding taxes or duty and net of returns and allowances, trade discounts andvolume rebates. Revenues from the sale of products are recognized when all the significant risks and rewards of ownership of the products have passed to the buyerand the seller no longer retains continuing managerial involvement. The delivery date of the products is usually the date of which ownership passes to thebuyer. Revenues from distributor’s agreements which are comprised of multiple elements and provide for varying consideration terms, such as upfrontpayments and milestone payments, are recognized when the criteria for revenue recognition have been met and only to the extent of the consideration that isnot contingent upon completion or performance of future services under the contract. Deferred revenues include unearned amounts received from customers not yet recognized as revenues. In May 2014, IFRS 15, "Revenue from Contracts with Customers" ("the new Standard") was issued by the IASB. The new Standard introduces a five-step model that will apply to revenue earned from contracts with customers and is effective for the Company beginning January 1, 2018. The new Standard allows the option of modified retrospective adoption. Under this option, the Company will recognize the cumulative effect of theinitial adoption of the new Standard as an adjustment to the opening balance of retained earnings as of the date of initial application. Alternatively, the newStandard permits full retrospective adoption. The Company will adopt this standard using the modified retrospective method rather than full retrospectivemethod. The accumulated effect of implementing the new Standard as of January 1, 2018 will be increase of deferred revenues by $ 249 and increase ofaccumulated deficit by $ 249. Research and Development Expenses Research expenses are recognized as expenses when incurred. Costs incurred on development projects are recognized as intangible assets as of thedate as of which it can be established that it is probable that future economic benefits attributable to the asset will flow to us considering its commercialfeasibility. This is generally the case when regulatory approval for commercialization is achieved and costs can be measured reliably. Given the current stageof the development of our products, no development expenditures have yet been capitalized. Intellectual property‑related costs for patents are part of theexpenditure for the research and development projects. Therefore, registration costs for patents are expensed when incurred as long as the research anddevelopment project concerned does not meet the criteria for capitalization. Equity‑Based Compensation We account for our equity‑based compensation for employees in accordance with the provisions of IFRS 2 “Share‑based Payment,” which requiresus to measure the cost of equity‑based compensation based on the fair value of the award on the grant date. We have selected the binominal pricing model as the most appropriate method for determining the estimated fair value of our equity‑based awards.The resulting cost of an equity incentive award is recognized as an expense over the requisite service period of the award, which is usually the vesting period.We recognize compensation expense over the vesting period using the accelerated method pursuant to which each vesting tranche is treated as a separateamortization period from grant date to vest date, and classify these amounts in the consolidated financial statements based on the department to which therelated employee reports. 71 The determination of the grant date fair value of options using an option pricing model is affected by estimates and assumptions regarding a numberof complex and subjective variables. These variables include the expected volatility of our share price over the expected term of the options, share optionexercise and cancellation behaviors, risk‑free interest rates and expected dividends, which are estimated as follows: ·Fair value of our ordinary shares. After March 20, 2014, the date our ordinary shares began trading on Nasdaq, the grant date fair value forequity‑based awards is based on the closing price of our ordinary shares on Nasdaq on the date of grant and fair value for all other purposesrelated to share‑based awards is the closing price of our ordinary shares on Nasdaq on the relevant date. ·Volatility. The expected share price volatility was based on the historical equity volatility of the ordinary shares of comparable companies thatare publicly traded. ·Early exercise factor. Since adequate historical experience is not available to provide a reasonable estimate, the early exercise factor isdetermined based on peer group imperial studies. ·Risk‑free rate. The risk‑free interest rate is based on the yield from U.S. Treasury zero‑coupon bonds with a term equivalent to the contractuallife of the options. ·Expected dividend yield. We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeablefuture. Consequently, we used an expected dividend yield of zero. If any of the assumptions used in the option pricing models change significantly, equity‑based compensation for future awards may differ materiallycompared with the awards granted previously. Government Grants from the Israeli Innovation Authority (formerly the Office of the Chief Scientist) Research and development grants received from the IIA are recognized upon receipt as a liability if future economic benefits are expected from theproject that will result in royalty‑bearing sales. The amount of the liability for the loan is first measured at fair value using a discount rate that reflects amarket rate of interest that reflects the appropriate degree of risks inherent in our business. We used a discount rate of 12% based in part on our cost of capitaldetermined by an independent valuation analysis conducted at the time of our initial recognition of IIA grants as a liability on our balance sheets. Thedifference between the amount of the grant received and the fair value of the liability is accounted for as a government grant and recognized as a reduction ofresearch and development expenses. After initial recognition, the liability is measured at amortized cost using the effective interest method. Royaltypayments are treated as a reduction of the liability. If no economic benefits are expected from the research activity, the grant receipts are recognized as areduction of the related research and development expenses. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS37, “Provisions, Contingent Liabilities and Contingent Assets.” At the end of each reporting period, we evaluate whether there is reasonable assurance that the liability recognized will be repaid based on our bestestimate of future sales and, if not, the appropriate amount of the liability is derecognized against a corresponding reduction in research and developmentexpenses. Government Funding from BARDA Non‑royalty bearing funds from BARDA for funding research and development of NexoBrid are recognized at the time we are entitled to such fundson the basis of the related costs incurred and are recorded as a reduction from our research and development expenses. Contingent Consideration for Purchase of Shares On September 2, 2013, in accordance with the terms of the Teva Shareholders’ Rights Agreement entered into in 2007 and amended in 2010, weexercised our rights to repurchase all of our shares held by Teva in consideration for an obligation to pay Teva future royalty payments of 20% of ourrevenues from the sale or license of NexoBrid resulting in royalty payments up to a total amount of $30.6 million and from the sale or license of the PolyHealProduct resulting in royalty payments up to a total amount of $10.8 million. We account for this obligation as a liability on our balance sheet in an amountequal to the fair value of the future royalty payments. In order to determine the fair value, we estimated the amount and timing of the future payments to Tevabased on our projected results of operations. The obligation to pay Teva future royalty payments no longer includes amounts from the sale or license of thePolyHeal Product since the license to the PolyHeal Product has expired. The resulting liability as of the exercise date was estimated at approximately $19.2million. The contingent consideration was revalued as of December 31, 2016 and 2017 to be approximately $14.5 million and $14.4 million, respectively,and we recorded financial income of $1.6 million in 2016 and financial expense of $0.4 million in 2017. 72 Impairment of Non‑Financial Assets The intangible assets are reviewed for impairment at each reporting date until they begin generating net cash inflows and subsequently wheneverthere is an indication that the asset may be impaired. We evaluate the need to record an impairment of the carrying amount of non‑financial assets wheneverevents or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non‑financial assets exceeds theirrecoverable amount, the assets are reduced to their recoverable amount. The recoverable amount of an asset that does not generate independent cash flows isdetermined for the cash‑generating unit to which the asset belongs and is calculated based on the projected cash flows that will be generated by the cashgenerating unit. An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’srecoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, may not increase the value above the lower of (i)the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prioryears and (ii) its recoverable amount. C. Research and Development, Patents and Licenses, etc. Our research and development strategy is centered on developing our patented proteolytic enzyme technology, which underlies NexoBrid andEscharEx, into additional products for high‑value indications. Our research and development team is located at our facilities in Yavne, Israel, and consists of26 employees as of December 31, 2017 and is supported by highly experienced consultants in various research and development disciplines. We have received government grants (subject to payment of royalties) as part of NexoBrid and EscharEx research and development programsapproved by the IIA (in 2017 only for EscharEx). The total gross amount of grants actually received by us from the IIA, including accrued LIBOR interest andnet of royalties actually paid as of December 31, 2017, totaled approximately $13.4 million and the amortized cost (using the interest method) of the liabilitytotaled approximately $6.9 million and $7.4 million as of December 31, 2016 and 2017, respectively. Because the repayment of IIA grants is in the form offuture royalties, the balance of the commitments to the IIA is presented as an amortized liability on our balance sheet. As of December 31, 2017, we hadaccrued and paid royalties to the IIA totaling $0.2 million. We received funds from BARDA in accordance with the terms of our BARDA contract. As of December 31, 2017 we had accrued $14.9 million. We incurred approximately $6.0 million, $7.1 million, and $5.5 million in research and development expenses (after deducting participation bygovernment grants and funding by BARDA) in the years ended December 31, 2015, 2016 and 2017, respectively. For a description of our research and development policies, see “ITEM 4.B. Business Overview—Research and Development.” D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the periodfrom January 1, 2017 to December 31, 2017 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity orcapital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition. 73Name Age PositionExecutive Officers Gal Cohen 45 President and Chief Executive OfficerSharon Malka 46 Chief Financial and Operations OfficerLior Rosenberg M.D. 72 Chief Medical Technology OfficerEty Klinger Ph.D. 56 Chief Research and Development OfficerCarsten Henke 52 Chief Commercial Officer EUYaron Meyer 39 General Counsel and Corporate Secretary Directors Stefan T. Wills(3) 61 Chairman of the Board of DirectorsOfer Gonen 44 DirectorAssaf Segal 46 DirectorVickie R. Driver M.D(1)(2)(3) 64 DirectorNissim Mashiach(1)(2)(3)(4) 57 DirectorSharon Kochan(1)(2)(3)(4) 49 Director E. Off‑Balance Sheet Arrangements We do not currently engage in off‑balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variableinterest entities, which includes special purposes entities and other structured finance entities. F. Contractual Obligations Our significant contractual obligations as of December 31, 2017 are summarized in the following table: Payments Due by Period Total 2018 2019 2020 andthereafter (in thousands) Operating lease obligations(1) $1,719 $522 $450 $747 (1)Operating lease obligations consist of payments pursuant to lease agreements for office and laboratory facilities, as well as lease agreements for 18vehicles, which generally run for a period of three years. Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth the name, age and position of each of our executive officers and directors as of March 15, 2018: (1)Member of our audit committee. (2)Member of our compensation committee. (3)Independent director under the rules of the Nasdaq Stock Market. (4)External director under the Companies Law. Executive Officers Gal Cohen has served as our President and Chief Executive Officer since November 2006. From 2004 to 2006, Mr. Cohen served as Director ofStrategic Business Planning and New Ventures at Teva, a public Israeli pharmaceutical company. He also launched Copaxone in Europe and the UnitedStates while he served as Projects Manager for Teva’s Global Products Division from 2000 to 2004 and for its Corporate Industrial Engineering Departmentfrom 1998 to 2000. Mr. Cohen holds a B.Sc. in Industrial Engineering and Management (cum laude) from the Technion—Israel Institute of Technology andan M.B.A. (cum laude) from Tel Aviv University. 74 Sharon Malka has served as our Chief Financial and Operations Officer since April 2007. From 2002 to 2007, Mr. Malka was a partner at VarianceEconomic Consulting Ltd., a multi‑disciplinary consulting boutique that specializes in financial and business services. Mr. Malka also served as a SeniorManager at Kesselman Corporate Finance, a division of PricewaterhouseCoopers Global Network, from 1998 to 2002. Mr. Malka holds a B.Sc. in BusinessAdministration from the Business Management College in Israel and an M.B.A. from Bar Ilan University, Israel. Lior Rosenberg is one of our co‑founders and has served as our Chief Medical Technology Officer since 2001 and served as a member of our boardof directors from 2001 to 2013. Since 2001, Dr. Rosenberg has headed the unit for Cleft Lip Palate and Craniofacial Deformities at Soroka University MedicalCenter and Meir Medical Centers in Beer Sheva and Kfar Saba, Israel, respectively. Since 1987, he has served as a Full Professor of plastic surgery at theBen‑Gurion University Medical School in Beer Sheva, Israel. He also serves as the Chairman of the Burn Disaster Committee for the International Society ofBurn Injuries and the Israeli Ministry of Health. From 1987 to 2012, Dr. Rosenberg served as the chairman of the Department of Plastic Surgery and Burn Unitat Soroka University Medical Center in Beer Sheva, Israel. He is a founding member of the Israeli Burn Association and the Mediterranean Burn Council, amember of the American Burn Association and a national representative at the European Burn Association. Dr. Rosenberg holds a M.D. degree from Tel‑AvivUniversity, Israel and a Professor of Plastic Surgery degree from the Ben Gurion University, Israel. Ety Klinger has served as our Chief Research and Development Officer since May 2014. Prior to joining MediWound, Dr. Klinger was Vice Presidentof Research and Development at Proteologics Ltd since July 2011, where she was responsible for discovery projects in the ubiquitin system, conducted incollaboration with GlaxoSmithKline plc and Teva. Prior to this, Dr. Klinger served for 17 years in numerous leadership positions at Teva’s global innovativeR&D division and served as Teva’s Board representative at various biotechnology companies. Dr. Klinger was a key member of the Copaxone® developmentteam. As a project leader she led the chemistry, manufacture and control, preclinical, clinical and post‑marketing R&D activities of various innovativetreatments for multiple sclerosis (MS), autoimmune and neurological diseases. From 2006 to 2011, as a Senior Director at Teva, Dr. Klinger was a member ofTeva’s global innovative R&D management team. From 2006 to 2008, she served as the Head of MS and Autoimmune Diseases at Teva, and led the LifeCycle Management (LCM) of innovative R&D. Dr. Klinger holds a B.Sc. in Biology from the Hebrew University in Jerusalem, a M.S. and a Ph.D. inBiochemistry from Tel‑Aviv University and an MBA degree from Tel Aviv University and Northwestern University. Carsten Henke has served as our Chief Commercial Officer for the European organization since October 2014 and is acting as the Managing Directorof our wholly‑owned subsidiary, MediWound Germany GmbH, since July 2013. From February 2009 to December 2012, Mr. Henke served as Teva’s GeneralManager in Spain, and from January 2004 to January 2009, he served as Teva’s Director of Marketing and Sales in Germany. Mr. Henke holds a B.Sc. inEuropean Management from the ESB Business School at Reutlingen University and a Graduado Superior in International Business Administration—E‑4 fromComillas Pontifical University ICAI—ICADE in Madrid, Spain. Yaron Meyer has served as our General Counsel and Corporate Secretary since December 2013. From April 2008 to November 2013, he served as theCorporate Secretary of Clal Biotechnology Industries Ltd. (CBI). From November 2010 to November 2013, he served as the General Counsel and CorporateSecretary of D‑Pharm Ltd. From April 2008 to May 2010, he served as a legal counsel of Clal Industries Ltd. From May 2005 to April 2008, he worked as anassociate at Shibolet & Co. Advocates. Mr. Meyer holds an LL.B. degree from Haifa University, Israel. Directors Stefan T. Wills has served as a member of our board of directors since May 2017 and as Chairman of our board since October 2017. Mr. Wills hasserved, since 1997, as Executive Vice President, Secretary, Treasurer and Chief Financial Officer of Palatin Technologies, Inc. (“Palatin”), a publicly‑heldbiopharmaceutical company developing targeted, receptor‑specific peptide therapeutics for the treatment of diseases with significant unmet medical needand commercial potential. He has served in various roles at Palatin since 1997, including as Executive Vice President of Operations from 2005 until June2011 and as Chief Operating Officer and Executive Vice President from 2011 to present. Mr. Wills served as Executive Chairman and Interim PrincipalExecutive Officer of Derma Sciences, Inc. (“Derma”), a publicly‑held company providing advanced wound care products, from December 2015 until February2017 when Derma was acquired by Integra Life Sciences Holding Corporation. Mr. Wills also served as the lead director of Derma until December 2015 andas Derma’s Chief Financial Officer from 1997 to 2000. Mr. Wills serves on the board of trustees and executive committee of The Hun School of Princeton,and, from 1991 to 2000, he was the President and Chief Operating Officer of Golomb, Wills & Company, P.C., a public accounting firm. Mr. Wills, a certifiedpublic accountant, received his B.S. in accounting from West Chester University, and an M.S. in taxation from Temple University. 75 Ofer Gonen has served as a member of our board of directors since September 2003. Mr. Gonen is also the Chief Executive Officer of ClalBiotechnology Industries Ltd. (“CBI”). Mr. Gonen manages CBI’s life science investments, business development, U.S.‑based operations and investmentsupport of CBI’s portfolio companies. Mr. Gonen serves as an executive chairman and board member of several companies: Gamida Cell Ltd., CureTech Ltd.,Campus Bio L.P., Clal Life Sciences L.P. and Clal Application Center Ltd. Prior to joining CBI, Mr. Gonen was the general manager of BiomedicalInvestments as well as a technology consultant to various Israeli venture capital funds and an Academic Aide to the Governor of the Bank of Israel. Mr.Gonen gained extensive experience in R&D the management in defense‑oriented projects within the prestigious “Talpiot” program of the Israel DefenseForces, for which he was awarded the Israeli National Security Medal. Mr. Gonen holds a B.Sc. in Physics, Mathematics and Chemistry from the HebrewUniversity of Jerusalem and an M.A. in Economics and Finance from Tel Aviv University, Israel. Assaf Segal has served as a member of our board of directors since October 2017. Mr. Segal has served as the Chief Financial Officer at ClalBiotechnology Industries Ltd. since July 2015. Prior to that time, Mr. Segal was a Partner at Variance Economic Consulting Ltd., from 2004 until June 2015,where he provided in‑depth consulting for international and local clients in a wide range of industries, including telecommunications, internet, biotech,heavy industry and financial sectors. Previously, he founded a start‑up software company. Mr. Segal also previously held a managerial position atPriceWaterhouseCoopers Corporate Finance and was an Economic Department manager at the North American division of Amdocs Inc. His experience alsoincludes risk management and house account (“Nostro”) trading at the Union Bank of Israel, and serving as an economist for capital markets in the ResearchDepartment of the Bank of Israel. Mr. Segal also has many years of experience in economic consulting and company valuations, joint ventures and financialinstruments for investments, M&A, and IPOs. He has 15 years of experience in economic consulting for international and local clients in the Bio‑Tech sectoras well as in Hi‑Tech, financial and other sectors. He holds a B.A. in Economics and Statistics and an M.B.A. (Finance and Information Systems) from theHebrew University of Jerusalem. Vicki R. Driver has served as a member of our board of directors since May 2017. Dr. Driver is board certified in foot surgery by the American Boardof Podiatric Surgery and is a Fellow at the American College of Foot and Ankle Surgeons, licensed in Rhode Island. Her career as a podiatric physician andsurgeon has included a special emphasis on limb preservation and wound healing in her medical practice, as well as, research and education. Dr. Driver hasbeen a Professor of Surgery in the Department of Orthopedics at Brown University (Clinical) since 2014. She has served for 9 years on the Board of Directorsfor the Association for the Advancement of Wound Care (“AAWC”), and recently completed her tenure as President for this international organization. Dr.Driver is also the chair of Wound Care Experts and U.S. Food and Drug Administration (“FDA”) Clinical Endpoints Project. She has just been named to serveas member at large to the Board of Directors of the Wound Healing Society (“WHS”) and Board Member to the Critical Limb Ischemia (“CLI”) GlobalSociety. In addition, she serves on multiple national and international clinical committees that focus on preventing limb loss and improving wound healingin the high‑risk population. She has served as an investigator for more than 70 important multi‑center randomized clinical trials, as well as developed andsupervised multiple research fellowship training programs. She has served and chaired multiple committees for large national and international pivotalclinical trials and has authored over 120 publications and abstracts. Dr. Driver is credited with the development and directorship of multiple majormultidisciplinary Limb Preservation – Wound Healing Centers of Excellence, including Military/VA, Hospital and University based programs. Since 2015,she has served as Director, Translational Medicine, Wound Healing at the Novartis Institute for Biomedical Research. From 2011 to 2014, she was ProgramDirector, Inaugural Educational Committee at the American College of Wound Healing and Tissue Repair at University of Illinois School of Medicine. From2011 to 2015, she was also Scientific Director, Colorado Prevention Center, Wound Care Laboratory at the University of Colorado. From 2012 to 2015, Dr.Driver held a number of positions at the Providence Veterans Administration Medical Center in Rhode Island, including Chief, Section of Podiatric Surgeryand Director, Clinical Research, Limb Preservation and Wound Healing. Prior thereto, she held various positions at multiple major multidisciplinary LimbPreservation – Wound Healing Centers of Excellence. Dr. Driver received a Doctorate of Podiatric Medicine and Surgery from the California College ofPodiatric Medicine and Surgery and a Masters in Medical Education from Samuel Merritt University. 76 Nissim Mashiach has served as a member of our board of directors since June 2017. Mr. Mashiach served as President and Chief Executive Officer ofMacrocure Ltd., a Nasdaq‑listed biotechnology company focused on the treatment of chronic and other hard‑to‑heal wounds, from June 2012 to January2017. From 2009 to 2012, he served as General Manager at Ethicon, a Johnson & Johnson company. Prior to Ethicon, he served as President and ChiefOperating Officer at Omrix Biopharmaceuticals, Inc., which was acquired by Johnson & Johnson in 2008. Prior to Omrix, Mr. Mashiach held leadershippositions at several pharmaceutical companies. He holds an MBA from the University of Manchester in Manchester, England, an MPharmSc from the HebrewUniversity in Jerusalem, Israel, and a B.Sc, Chemical Engineering from the Technion‑Israel Institute of Technology in Haifa, Israel. Sharon Kochan has served as a member of our board of directors since June 2017. Mr. Kochan has served as Executive Vice President & President,International, for Perrigo Company Plc., a global, over‑the‑counter, consumer goods and specialty pharmaceutical company listed on the New York StockExchange, since 2012, and has been a member of the Perrigo Executive Committee since 2007. From March 2007 to July 2012, he served as Executive VicePresident, General Manager of Prescription Pharmaceuticals for Perrigo and from 2005 to 2007, he was Senior Vice President of Business Development andStrategy for Perrigo. Mr. Kochan was Vice President, Business Development of Agis Industries (1983) Ltd. from 2001 until Perrigo acquired Agis in 2005. Hecompleted the Senior Management Program at the Technion Institute of Management in Haifa, Israel, received a Master of Science in Operations Research &Management Science from Columbia University in New York City and received a Bachelor of Science in Industrial and Management Engineering fromTel‑Aviv University in Tel‑Aviv, Israel. B. Compensation Compensation of Directors and Executive Officers The table below reflects the compensation granted to our five most highly compensated officers during or with respect to the year ended December31, 2017. All amounts reported in the table reflect the cost to the company, as recognized in our financial statements for the year ended December 31, 2017. Name and Position Salary &SocialBenefits(1) Bonus Share‑BasedPayment(2) OtherCompensation(3) Total (U.S. dollars)(4) Gal Cohen, President and Chief Executive Officer 391,116 129,972 175,284 (22,175) 674,197 Sharon Malka, Chief Financial and Operations Officer 260,450 98,599 161,581 34,822 555,453 Lior Rosenberg, M.D., Chief Medical Technology Officer 291,990 96,078 91,265 36,630 515,964 Carsten Henke, Chief Commercial Officer EU & ManagingDirector of MediWound Germany GmbH 270,734 98,223 104,044 50,874 523,875 Ety Klinger, Chief Research & Development Officer 220,303 77,311 104,424 11,625 413,662 (1)Represents the officer’s gross salary plus payment of mandatory social benefits made by the company on behalf of such officer. Such benefits mayinclude, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy),education funds (referred to in Hebrew as “keren hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and paymentsfor social security. (2)Represents the equity‑based compensation expenses recorded in the company’s consolidated financial statements for the year ended December 31, 2017based on the options’ grant date fair value in accordance with accounting guidance for equity‑based compensation. (3)Represents the other benefits to such officer, which includes either or both of (i) car expenses, including lease costs, gas and maintenance, provided tothe officers, (ii) vacation benefits and (iii) severance pay. (4)Converted (i) from NIS into U.S. dollars at the rate of 3.57 = U.S.$1.00, based on the average representative rate of exchange between the NIS and the U.S.dollar in the year ended December 31, 2017 and (ii) from Euro into U.S. dollars at the rate of Euro 0.885 = U.S$1.00, based on the average representativerate of exchange between the Euro and the U.S. dollar as reported by the Bank of Israel in the year ended December 31, 2017. The aggregate compensation paid and equity‑based compensation and other payments expensed by us and our subsidiaries to our directors andexecutive officers with respect to the year ended December 31, 2017 was $3.1 million. As of December 31, 2017, options to purchase 1,198,037 ordinaryshares granted to our directors and executive officers were outstanding under our share option plans at a weighted average exercise price of $9.44 per share.We do not have any written agreements with any director providing for benefits upon the termination of such director’s relationship with our company or itssubsidiaries. 77 Employment Agreements with Executive Officers We have entered into written employment agreements with all of our executive officers, which include standard provisions for a company in ourindustry regarding non‑competition/solicitation, confidentiality of information and assignment of inventions. Except for Prof. Rosenberg, our Chief MedicalTechnology Officer, our executive officers will not receive benefits upon the termination of their respective employment with us, other than payment ofsalary and benefits (and limited accrual of vacation days) during the required notice period for termination of their employment, which varies for eachindividual. Upon termination of his employment, Prof. Rosenberg is entitled to a one‑time termination payment of ten months of salary. Directors’ Service Contracts Other than with respect to our directors that are also executive officers, there are no arrangements or understandings between us, on the one hand,and any of our directors, on the other hand, providing for benefits upon termination of their service as directors of our company. 2003 Israeli Share Option Plan In November 2003, we adopted our 2003 Israeli Share Option Plan (the “2003 Plan”). The 2003 Plan provides for the grant of options to our and oursubsidiaries’ directors, employees, officers, consultants and service providers, among others. The initial reserved pool under the 2003 Plan was 1,710,000 ordinary shares and subsequently increased to a total of 3,230,000 ordinary shares. The2003 Plan expired on December 31, 2013. The 2003 Plan is administered by our board of directors or a committee designated by our board of directors, whichdetermines, subject to Israeli law, the grantees of options, the terms of the options, including exercise prices, vesting schedules, acceleration of vesting, thetype of option and the other matters necessary or desirable for, or incidental to the administration of the 2003 Plan. The 2003 Plan provides for the issuanceof options under various tax regimes including, without limitation, pursuant to Sections 102 and 3(i) of the Israeli Income Tax Ordinance (New Version) 1961(the “Ordinance”). Section 102 of the Ordinance allows employees, directors and officers who are not controlling shareholders and who are Israeli residents to receivefavorable tax treatment for compensation in the form of shares or options. Section 102 of the Ordinance includes two alternatives for tax treatment involvingthe 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 sharesdirectly to the grantee. Section 102(b)(2) of the Ordinance, which provides the most favorable tax treatment for grantees, permits the issuance to a trusteeunder the “capital gains track.” In order to comply with the terms of the capital gains track, all options granted under a specific plan and subject to theprovisions of Section 102 of the Ordinance, as well as the shares issued upon exercise of such options and other shares received following any realization ofrights with respect to such options, such as share dividends and share splits, must be registered in the name of a trustee selected by the board of directors andheld in trust for the benefit of the relevant employee, director or officer. The trustee may not release these options or shares to the relevant grantee before thesecond anniversary of the registration of the options in the name of the trustee. However, under this track, we are not allowed to deduct an expense withrespect to the issuance of the options or shares. The 2003 Plan provides that options granted to our employees, directors and officers who are not controlling shareholders and who are consideredIsraeli residents are intended to qualify for special tax treatment under the “capital gains track” provisions of Section 102(b)(2) of the Ordinance. Our Israelinon‑employee service providers and controlling shareholders may only be granted options under Section 3(i) of the Ordinance, which does not provide forsimilar tax benefits. Options granted under the 2003 Plan are subject to vesting schedules and generally expire ten years from approval of the option and vest over afour‑year period commencing on the date of grant, such that 25% of the granted options vest annually on each of the first, second, third and fourthanniversaries of the date of grant. Under the 2003 Plan, in the event of termination of employment or services for reasons of disability or death, the grantee, orin the case of death, his or her legal successor, may exercise options that have vested prior to termination within a period of six months after the date oftermination. If a grantee’s employment or service is terminated for cause, all of the grantee’s vested and unvested options expire on the date of termination. Ifa grantee’s employment or service is terminated for any other reason, the grantee may exercise his or her vested options within 90 days after the date oftermination. Any expired or unvested options are returned to the pool for reissuance. 78 The 2003 Plan provides that in the event of a merger or consolidation of our company or a sale of all, or substantially all, of our assets, theunexercised options outstanding may be assumed, or substituted for an appropriate number of shares of each class of shares or other securities as weredistributed to our shareholders in connection with such transaction and the exercise price will be appropriately adjusted. If not so assumed or substituted, allnon‑vested and non‑exercised options will expire upon the closing of the transaction. Our board of directors or its designated committee, as applicable, mayprovide in the option agreement that if the acquirer does not agree to assume or substitute the options, vesting of the options shall be accelerated so that anyunvested option or any portion thereof will vest 10 days prior to the closing of the transaction. In the event that such consideration received in thetransaction is not solely in the form of ordinary shares of another company, the board of directors or the designated committee, as applicable, may, with theapproval of the acquirer, provide that in lieu of the assumption or substitution of the options, the options will be substituted by another type of asset orproperty, including cash. 2014 Equity Incentive Plan In March 2014, we adopted and obtained shareholder approval for our 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan provides for thegrant of options, restricted shares, restricted share units and other share‑based awards to our and our subsidiaries’ and affiliates’ directors, employees, officers,consultants and advisors, among others and to any other person whose services are considered valuable to us or them, to continue as service providers, toincrease their efforts on our behalf or behalf of a subsidiary or affiliate and to promote the success of our business. Following the approval of the 2014 Plan bythe Israeli tax authorities, we are only granting options or other equity incentive awards under the 2014 Plan, although previously‑granted options andawards will continue to be governed by our 2003 Plan and the shares underlying such options and awards will count against the reserved pool for the2014 Plan. The initial reserved pool under the 2014 Plan was 3,032,742 ordinary shares, which will automatically increase on January 1 of each year by anumber of ordinary shares equal to the lowest of (i) 2% of our outstanding shares, (ii) 600,000 shares and (iii) a number of shares determined by our board ofdirectors, if so determined prior to January 1 of the year in which the increase will occur. The reserved pool was increased by 431,006 and 540,955 ordinaryshares as of January 1, 2015 and January 1, 2018, respectively, representing 2% of our outstanding shares as of each such date. We did not increase thereserved pool in 2016 or 2017. The 2014 Plan is administered by our board of directors or by a committee designated by the board of directors, which determine, subject to Israelilaw, the grantees of awards and the terms of the grant, including exercise prices, vesting schedules, acceleration of vesting and the other matters necessary inthe administration of the 2014 Plan. The 2014 Plan enables us to issue awards under various tax regimes, including, without limitation, pursuant to Sections102 and 3(i) of the Ordinance, as discussed under “—2003 Share Incentive Plan” above, and under Section 422 of the U.S. Internal Revenue Code of 1986, asamended (the “Code”). Options granted under the 2014 Plan to U.S. residents may qualify as “incentive stock options” within the meaning of Section 422 of the Code, ormay 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. We currently intend to grant awards under the 2014 Plan under the capital gains track of Section 102(b)(2) of the Ordinance only to our employees,directors and officers who are not controlling shareholders and are considered Israeli residents. Awards under the 2014 Plan may be granted until ten years from the date on which the 2014 Plan was approved by our board of directors. 79 Options granted under the 2014 Plan generally vest over three or four years commencing on the date of grant, such that 33% or 25%, respectively,vests annually on the anniversary of the date of grant. Options, other than certain incentive share options, that are not exercised within ten years from thegrant date expire, unless otherwise determined by our board of directors or its designated committee, as applicable. Share options that qualify as “incentivestock options” and are granted to a person holding more than 10% of our voting power will expire within five years from the date of the grant. In the event ofthe death of a grantee while employed by or performing service for us or a subsidiary or within three months thereafter, or the termination of a grantee’semployment 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 totermination within a period of one year from the date of disability or death. If we terminate a grantee’s employment or service for cause, all of the grantee’svested 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 mayexercise his or her vested options within three months of the date of termination. Any expired or unvested options return to the pool for reissuance. 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 asimilar 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 award to be assumed or an equivalent award to be substituted by such successor corporation, or (ii) in case the successor corporationrefuses to assume or substitute the award (a) provide the grantee with the option to exercise the award as to all or part of the shares or (b) cancel the optionsagainst payment in cash in an amount determined by the board of directors or the committee as fair in the circumstances. Notwithstanding the foregoing, ourboard of directors or its designated committee may upon such event amend or terminate the terms of any award, including conferring the right to purchaseany other security or asset that the board of directors shall deem, in good faith, appropriate. Our board of directors or its designated committee may, in itsdiscretion, approve that any awards granted under the 2014 Plan shall be subject to additional conditions in the case of a merger or a consolidation. Restricted share awards are ordinary shares that are awarded to a participant subject to the satisfaction of the terms and conditions established by theboard of directors or a committee designated by the board of directors. Until such time as the applicable restrictions lapse, restricted shares are subject toforfeiture and may not be sold, assigned, pledged or otherwise disposed of by the participant who holds those shares. Generally, if a grantee’s employment orservice is terminated for any reason prior to the expiration of the time when the restrictions lapse, shares that are still restricted will be forfeited. The following table provides information regarding the outstanding options to purchase our ordinary shares held by each of our directors andexecutive officers who beneficially own greater than 1% of our ordinary shares or options to purchase more than 1% of our ordinary shares as of March 15,2018: Name Number ofOptions Grant Date Exercise Price Vested Optionsas of March15, 2018 Expiration DateGal Cohen, President and Chief Executive Officer 208,332 11/14/2006 $2.63 208,332 11/13/2020 45,600 1/15/2011 $9.82 45,600 1/14/2021 152,000 12/24/2013 $12.89 152,000 12/23/2023 70,000 1/28/2016 $9.58 35,000 12/22/2025Lior Rosenberg, Chief Medical Technology Officer 76,000 12/24/2013 $12.89 76,000 12/23/2023 25,000 12/23/2015 $9.58 12,500 12/22/2025 C. Board Practices Board of Directors Under the Israeli Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise all powersand may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day‑to‑daymanagement and have individual responsibilities established by our board of directors. Our Chief Executive Officer is appointed by, and serves at thediscretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers are also appointedby our board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them. 80 Under our articles of association, our board of directors must consist of at least five and not more than nine directors, including at least two externaldirectors required to be appointed under the Israeli Companies Law. At any time the minimum number of directors (other than the external directors) shall notfall below three. Other than external directors, for whom special election requirements apply under the Israeli Companies Law, as detailed below, the IsraeliCompanies Law and our articles of association provide that directors are elected annually at the general meeting of our shareholders by a vote of the holdersof a majority of the voting power represented present and voting, in person or by proxy, at that meeting. We have only one class of directors. In accordance with the exemption available to foreign private issuers under Nasdaq rules, we do not follow the requirements of the Nasdaq rules withregard to having a majority of independent directors on our board of directors, and instead, follow Israeli law and practice, in accordance with which ourboard of directors includes at least two external directors. Our board of directors has determined that four of our directors are independent under the NasdaqStock Market rules. The definition of “independent director” under the Nasdaq Stock Market rules and “external director” under the Israeli Companies Lawoverlap to a significant degree such that we would generally expect the two directors that serve as external directors to qualify as independent under theNasdaq Stock Market rules. However, it is possible for a director to qualify as an “external director” under the Israeli Companies Law without qualifying as an“independent director” under the Nasdaq Stock Market rules, or vice‑versa. The definition of external director under the Israeli Companies Law includes a setof statutory criteria that must be satisfied, including criteria whose aim is to ensure that there is no factor that would impair the ability of the external directorto exercise independent judgment. The definition of independent director under the Nasdaq Stock Market rules specifies similar, although less stringent,requirements in addition to the requirement that the board of directors consider any factor which would impair the ability of the independent director toexercise independent judgment. In addition, external directors serve for a period of three years pursuant to the requirements of the Israeli Companies Law.However, external directors must be elected by a special majority of shareholders while independent directors may be elected by an ordinary majority. See“—External Directors” for a description of the requirements under the Israeli Companies Law for a director to serve as an external director. In accordance with the exemption available to foreign private issuers under Nasdaq rules, we do not follow the requirements of the Nasdaq rules withregard to the process of nominating directors, and instead follow Israeli law and practice, in accordance with which our board of directors (or a committeethereof) is authorized to recommend to our shareholders director nominees for election. Under the Israeli Companies Law and our articles of association, nominees for directors may also be proposed by any shareholder holding at least1% of our outstanding voting power. However, any such shareholder may propose a nominee only if a written notice of such shareholder’s intent to propose anominee has been given to our Secretary (or, if we have no such Secretary, our Chief Executive Officer). Any such notice must include certain information,including, among other things, a description of all arrangements between the nominating shareholder and the proposed director nominee(s) and any otherperson pursuant to which the nomination(s) are to be made by the nominating shareholder, the consent of the proposed director nominee(s) to serve as ourdirector(s) if elected and a declaration signed by the nominee(s) declaring that there is no limitation under the Israeli Companies Law preventing theirelection, and that all of the information that is required under the Israeli Companies Law to be provided to us in connection with such election has beenprovided. In addition, our articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors for a term of officeequal to the remaining period of the term of office of the director(s) whose office(s) have been vacated. External directors are elected for an initial term ofthree years and may be elected for additional three‑year terms under the circumstances described below. External directors may be removed from office onlyunder the limited circumstances set forth in the Israeli Companies Law. See “—External Directors.” Under the Israeli Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting andfinancial expertise. See “—External Directors” below. In determining the number of directors required to have such expertise, our board of directors mustconsider, 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 theminimum number of directors of our company who are required to have accounting and financial expertise is one. 81 We are not a party to, and are not aware of, any voting agreements among our shareholders. In addition, there are no family relationships among ourexecutive officers and directors. Under regulations recently promulgated under the Israeli Companies Law, Israeli public companies whose shares are traded on certain U.S. stockexchanges, such as the Nasdaq Global Market, and that lack a controlling shareholder (as defined below) are exempt from the requirement to appoint externaldirectors. Any such company is also exempt from the Israeli Companies Law requirements related to the composition of the audit and compensationcommittees of the Board. Eligibility for these exemptions is conditioned on compliance with U.S. stock exchange listing rules related to majority Boardindependence and the composition of the audit and compensation committees of the Board, as applicable to all listed domestic U.S. companies. Because wehave a controlling shareholder (CBI), we are not eligible for these exemptions under the new regulations. External Directors Under the Israeli Companies Law, we are required to include at least two members who qualify as external directors. Our current external directors areNissim Mashiach and Sharon Kochan, each of whom serves on our audit committee and compensation committee. The provisions of the Israeli Companies Law set forth special approval requirements for the election of external directors. External directors must beelected by a majority vote of the shares present and voting at a meeting of shareholders, provided that either: ·such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personalinterest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder)that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or ·the total number of shares voted by non‑controlling shareholders and by shareholders who do not have a personal interest in the election of theexternal director against the election of the external director does not exceed 2% of the aggregate voting rights in the company. The term “controlling shareholder” as used in the Israeli Companies Law for purposes of all matters related to external directors and for certain otherpurposes (such as the requirements related to appointment to the audit committee or compensation committee, as described below), means a shareholder withthe 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 ifthe shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its generalmanager. With respect to certain matters, a controlling shareholder is deemed to include a shareholder that holds 25% or more of the voting rights in a publiccompany if no other shareholder holds more than 50% of the voting rights in the company, but excludes a shareholder whose power derives solely from his orher position as a director of the company or from any other position with the company. The initial term of an external director is three years. Thereafter, an external director may be reelected by shareholders to serve in that capacity for upto two additional three‑year terms, provided that either: (i)his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rightsand is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non‑controlling, disinterestedshareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company, subject to additional restrictions set forth inthe Israeli Companies Law with respect to affiliations of external director nominee; or (ii)his or her service for each such additional term is recommended by the board of directors and is approved at a meeting of shareholders by thesame majority required for the initial election of an external director (as described above). 82 The term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the Nasdaq Global Market, maybe extended indefinitely in increments of additional three‑year terms, in each case provided that the audit committee and the board of directors of thecompany confirm that, in light of the external director’s expertise and special contribution to the work of the board of directors and its committees, thereelection for such additional period(s) is beneficial to the company, and provided that the external director is reelected subject to the same shareholder voterequirements (as described above regarding the reelection of external directors). Prior to the approval of the reelection of the external director at a generalmeeting of shareholders, the company’s shareholders must be informed of the term previously served by him or her and of the reasons why the board ofdirectors and audit committee recommended the extension of his or her term. External directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves suchdismissal by the same shareholder vote percentage required for their election or by a court, in each case, only under limited circumstances, including ceasingto meet the statutory qualifications for appointment, or violating their duty of loyalty to the company. If an external directorship becomes vacant and there are fewer than two external directors on the board of directors at the time, then the board ofdirectors is required under the Israeli Companies Law to call a shareholders’ meeting as soon as practicable to appoint a replacement external director. Eachcommittee of the board of directors that exercises the powers of the board of directors must include at least one external director, except that the auditcommittee and the compensation committee must include all external directors then serving on the board of directors and an external director must serve aschair thereof. Under the Israeli Companies Law, external directors of a company are prohibited from receiving, directly or indirectly, any compensation fromthe company other than for their services as external directors pursuant to the Israeli Companies Law and the regulations promulgated thereunder.Compensation of an external director is determined prior to his or her appointment and may not be changed during his or her term subject to certainexceptions. The Israeli Companies Law provides that a person is not qualified to be appointed as an external director if (i) the person is a relative of a controllingshareholder of the company, or (ii) if that person or his or her relative, partner, employer, another person to whom he or she was directly or indirectlysubordinate, or any entity under the person’s control, has or had, during the two years preceding the date of appointment as an external director: (a) anyaffiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative of such person, or with anyentity controlled by or under common control with the company; or (b) in the case of a company with no shareholder holding 25% or more of its votingrights, had at the date of appointment as an external director, any affiliation or other disqualifying relationship with a person then serving as chairman of theboard or chief executive officer, a holder of 5% or more of the issued share capital or voting power in the company or the most senior financial officer. The term “relative” is defined in the Israeli Companies Law as a spouse, sibling, parent, grandparent or descendant; spouse’s sibling, parent ordescendant; and the spouse of each of the foregoing persons. Under the Israeli Companies Law, the term “affiliation” and the similar types of disqualifyingrelationships include (subject to certain exceptions): ·an employment relationship; ·a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships); ·control; and ·service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares if such directorwas appointed as a director of the private company in order to serve as an external director following the initial public offering. The term “office holder” is defined in the Israeli Companies Law as a general manager, chief business manager, deputy general manager, vice generalmanager, any other person assuming the responsibilities of any of these positions regardless of that person’s title, a director and any other manager directlysubordinate to the general manager. 83 In addition, no person may serve as an external director if that person’s position or professional or other activities create, or may create, a conflict ofinterest with that person’s responsibilities as a director or otherwise interfere with that person’s ability to serve as an external director or if the person is anemployee of the Israel Securities Authority of an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or shereceived direct or indirect compensation from the company including amounts paid pursuant to indemnification or exculpation contracts or commitmentsand insurance coverage for his or her service as an external director, other than as permitted by the Israeli Companies Law and the regulations promulgatedthereunder. Following the termination of an external director’s service on a board of directors, such former external director and his or her spouse and childrenmay not be provided a direct or indirect benefit by the company, its controlling shareholder or any entity under its controlling shareholder’s control. Thisincludes engagement as an office holder of the company or a company controlled by its controlling shareholder or employment by, or provision of servicesto, any such company for consideration, either directly or indirectly, including through a corporation controlled by the former external director. Thisrestriction extends for a period of two years with regard to the former external director and his or her spouse or child and for one year with respect to otherrelatives of the former external director. If at the time at which an external director is appointed all members of the board of directors who are not controlling shareholders or relatives ofcontrolling shareholders of the company are of the same gender, the external director to be appointed must be of the other gender. A director of one companymay not be appointed as an external director of another company if a director of the other company is acting as an external director of the first company atsuch time. According to the Israeli Companies Law and regulations promulgated thereunder, a person may be appointed as an external director only if he or shehas professional qualifications or if he or she has accounting and financial expertise (each, as defined below); provided that at least one of the externaldirectors must be determined by our board of directors to have accounting and financial expertise. However, if at least one of our other directors (i) meets theindependence requirements under the Exchange Act, (ii) meets the standards of the Nasdaq Stock Market rules for membership on the audit committee and(iii) has accounting and financial expertise as defined under the Israeli Companies Law, then neither of our external directors is required to possessaccounting and financial expertise as long as each possesses the requisite professional qualifications. A director with accounting and financial expertise is a director who, due to his or her education, experience and skills, possesses an expertise in, andan understanding of, financial and accounting matters and financial statements, such that he or she is able to understand the financial statements of thecompany and initiate a discussion about the presentation of financial data. A director is deemed to have professional qualifications if he or she has any of (i)an academic degree in economics, business management, accounting, law or public administration, (ii) an academic degree or has completed another form ofhigher education in the primary field of business of the company or in a field which is relevant to his/her position in the company or (iii) at least five years ofexperience serving in one of the following capacities, or at least five years of cumulative experience serving in two or more of the following capacities: (a) asenior business management position in a company with a significant volume of business, (b) a senior position in the company’s primary field of business or(c) a senior position in public administration or service. The board of directors is charged with determining whether a director possesses financial andaccounting expertise or professional qualifications. Our board of directors has determined that Sharon Kochan has accounting and financial expertise and possesses professional qualifications asrequired under the Israeli Companies Law. Leadership Structure of the Board In accordance with the Israeli Companies Law and our articles of association, our board of directors is required to appoint one of its members to serveas chairman of the board of directors. Our board of directors has appointed Stefan T. Wills to serve as chairman of the board of directors. 84 Audit Committee Israeli Companies Law requirements Under the Israeli Companies Law, we are required to have an audit committee comprised of at least three directors, including all of the externaldirectors, one of whom must serve as chairman of the committee. The audit committee may not include the chairman of the board, a controlling shareholder ofthe company, a relative of a controlling shareholder, a director employed by or providing services on a regular basis to the company, to a controllingshareholder or to an entity controlled by a controlling shareholder, or a director who derives most of his or her income from a controlling shareholder. Inaddition, under the Israeli Companies Law, the audit committee of a publicly traded company must consist of a majority of unaffiliated directors. In general,an “unaffiliated director’’ under the Israeli Companies Law is defined as either an external director or as a director who meets the following criteria: ·he or she meets the qualifications for being appointed as an external director, except for the requirement (i) that the director be an Israeli resident(which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed for trading outside of Israel)and (ii) for accounting and financial expertise or professional qualifications; and ·he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than twoyears in the service shall not be deemed to interrupt the continuation of the service. Nasdaq listing rules Under the Nasdaq Stock Market rules, we are required to maintain an audit committee consisting of at least three independent directors, each ofwhom is financially literate and one of whom has accounting or related financial management expertise or, if we choose to follow requirements under Israelilaw, we must disclose that fact in this annual report. Our audit committee consists of Sharon Kochan (chairperson), Vickie R. Driver and Nissim Mashiach, each of whom is an independent director inaccordance with Rule 10A‑3(b)(1) under the Exchange Act and satisfies the independent director requirements under the Nasdaq Stock Market rules. Allmembers of our audit committee meet the requirements for financial literacy under the applicable rules of the Nasdaq Stock Market. Our board of directors hasdetermined that Sharon Kochan is an “audit committee financial expert,” as defined in the SEC regulations. Audit committee role Our board of directors has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent with the rules andregulations of the SEC and the Nasdaq Stock Market rules, as well as the requirements for such committee under the Israeli Companies Law, including thefollowing: ·oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination ofengagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; ·recommending the engagement or termination of the person filling the office of our internal auditor; and ·recommending the terms of audit and non‑audit services provided by the independent registered public accounting firm for pre‑approval by ourboard of directors. Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving ouraccounting, auditing, financial reporting, internal control and legal compliance functions by pre‑approving the services performed by our independentaccountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit committee alsooversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independentof management. 85 Under the Israeli Companies Law, our audit committee is responsible for: ·determining whether there are deficiencies in the business management practices of our company, including in consultation with our internalauditor or the independent auditor, and making recommendations to the board of directors to improve such practices; ·determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest andwhether such transaction is extraordinary or material under the Israeli Companies Law) (see “—Approval of Related Party Transactions UnderIsraeli Law”); ·establishing the approval process (including, potentially, the approval of the audit committee and conducting a competitive proceduresupervised by the audit committee) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personalinterest; ·where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the boardof directors and proposing amendments thereto; ·examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient resources andtools to fulfill his responsibilities; ·examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors orshareholders, depending on which of them is considering the appointment of our auditor; and ·establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided tosuch employees. Our audit committee may not approve any actions requiring its approval (see “—Approval of Related Party Transactions Under Israeli Law”), unlessat the time of the approval a majority of the committee’s members are present, which majority consists of unaffiliated directors including at least one externaldirector. Compensation Committee and Compensation Policy Our Compensation Committee consists of Sharon Kochan (chairperson), Vickie R. Driver and Nissim Mashiach, each of whom is independent underthe Nasdaq Stock Market rules. Under the Israeli Companies Law, the board of directors of a public company must appoint a compensation committee. The compensation committeemust be comprised of at least three directors, including all of the external directors, who must constitute a majority of the members of, and include thechairperson of, the compensation committee. However, subject to certain exceptions, Israeli companies whose securities are traded on stock exchanges suchas the Nasdaq Global Market, and who do not have a controlling shareholder, do not have to meet this majority requirement so long as the compensationcommittee meets other Israeli Companies Law composition requirements, as well as the requirements of the jurisdiction where the company’s securities aretraded. Each compensation committee member who is not an external director must be a director whose compensation does not exceed an amount that may bepaid to an external director. The compensation committee is subject to the same Israeli Companies Law restrictions as the audit committee as to who may notbe a member of the compensation committee. The duties of the compensation committee include the recommendation to the company’s board of directors of a policy regarding the terms ofengagement of office holders, which we refer to as a compensation policy. That policy must be adopted by the company’s board of directors, after consideringthe recommendations of the compensation committee, and must be approved by the company’s shareholders, which approval requires what we refer to as aSpecial Majority Approval for Compensation. Special Majority Approval for Compensation requires shareholder approval by a majority vote of the sharespresent and voting at a meeting of shareholders called for such purpose, provided that either (a) such majority includes at least a majority of the shares heldby all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement or (b) the total number ofshares of non‑controlling shareholders and shareholders who do not have a personal interest in the compensation arrangement and who vote against thearrangement does not exceed 2% of the company’s aggregate voting rights. 86 We have adopted a compensation policy, which serves as the basis for decisions concerning the financial terms of employment or engagement ofoffice holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment or other benefit in respect ofemployment or engagement. Under the Israeli Companies Law, the compensation policy must relate to certain factors, including advancement of thecompany’s objectives, the company’s business plan and its long‑term strategy, and creation of appropriate incentives for office holders. It must also consider,among other things, the company’s risk management, size and the nature of its operations. The compensation policy must furthermore consider the followingadditional factors: ·the knowledge, skills, expertise and accomplishments of the relevant office holder; ·the office holder’s roles and responsibilities and prior compensation agreements with him or her; ·the relationship between the terms offered and the average compensation of the other employees of the company, including those employedthrough manpower companies; ·the impact of disparities in salary upon work relationships in the company; ·the possibility of reducing variable compensation at the discretion of the board of directors; ·the possibility of setting a limit on the exercise value of non‑cash variable equity‑based compensation; and ·as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, thecompany’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and themaximization of its profits, and the circumstances under which the person is leaving the company. The compensation policy must also include the following principles: ·the link between variable compensation and long‑term performance, which variable compensation shall, other than office holder who report tothe CEO, be primarily based on measurable criteria; ·the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation; ·the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data uponwhich such compensation was based was inaccurate and was required to be restated in the company’s financial statements; ·the minimum holding or vesting period for variable, equity‑based compensation; and ·maximum limits for severance compensation. The compensation committee is responsible for (a) recommending the compensation policy to the company’s board of directors for its approval (andsubsequent approval by its shareholders) and (b) duties related to the compensation policy and to the compensation of a company’s office holders as well asfunctions previously fulfilled by a company’s audit committee with respect to matters related to approval of the terms of engagement of office holders,including: ·recommending whether a compensation policy should continue in effect, if the then‑current policy has a term of greater than three years(approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years,other than following a company’s initial public offering, in which case such approval must occur within 5 years of the initial public offering); 87 ·recommending to the board of directors periodic updates to the compensation policy and assessing implementation of the compensation policy; ·approving compensation terms of executive officers, directors and employees that require approval of the compensation committee; ·determining whether the compensation terms of a chief executive officer nominee, which were determined pursuant to the compensation policy,will be exempt from approval of the shareholders because such approval would harm the ability to engage with such nominee; and ·determining, subject to the approval of the board and under special circumstances, whether to override a determination of the company’sshareholders regarding certain compensation related issues. Nasdaq listing rules Under Nasdaq corporate governance rules, we are required to maintain a compensation committee consisting of at least two independent directors or,if we choose to follow requirements under Israeli law, we must disclose that fact in this annual report. Each of the members of the compensation committee isrequired to be independent under Nasdaq rules relating to compensation committee members, which are different from the general test for independence ofboard and committee members. Each of the members of our compensation committee satisfies those requirements. Compensation committee role Our board of directors has adopted a compensation committee charter setting forth the responsibilities of the compensation committee, whichinclude: ·the responsibilities set forth in the compensation policy; ·reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board of directors;and ·reviewing, evaluating and making recommendations regarding the compensation and benefits for our non‑employee directors. Internal Auditor Under the Israeli Companies Law, the board of directors of an Israeli public company must appoint an internal auditor recommended by the auditcommittee. An internal auditor may not be: ·a person (or a relative of a person) who holds 5% or more of the company’s outstanding shares or voting rights; ·a person (or a relative of a person) who has the power to appoint a director or the general manager of the company; ·an office holder (including a director) of the company (or a relative thereof); or ·a member of the company’s independent accounting firm, or anyone on its behalf. The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internalauditor’s work plan. Our internal auditor is Mr. Yisrael Gewirtz. 88 Approval of Related Party Transactions Under Israeli Law Fiduciary Duties of Directors and Executive Officers The Israeli Companies Law codifies the fiduciary duties that office holders owe to a company. Each person listed in the table under “—ExecutiveOfficers and Directors” is an office holder under the Israeli Companies Law. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level ofcare with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an officeholder act in good faith and in the best interests of the company. The duty of care includes a duty to use reasonable means 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 any such action. The duty of loyalty includes a duty to: ·refrain from any conflict of interest between the performance of his or her duties to 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 to receive a personal gain for himself or herself or 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 herposition as an office holder. Disclosure of personal interests of an office holder and approval of certain transactions The Israeli Companies Law requires that an office holder promptly disclose to the board of directors any personal interest that he or she may beaware of and all related material information or documents concerning any existing or proposed transaction with the company. An interested office holder’sdisclosure 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. A personalinterest includes an interest of any person in an act or transaction of a company, including a personal interest of such person’s relative or of a corporate bodyin which such person or a relative of such person is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint atleast one director or the general manager, but excluding a personal interest stemming from one’s ownership of shares in the company. A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest ofthe office holder with respect to his or her vote on behalf of a person for whom he or she holds a proxy even if such shareholder has no personal interest in thematter. An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in atransaction that is not considered an extraordinary transaction. Under the Israeli Companies Law, an extraordinary transaction is defined as any of thefollowing: ·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 a company’s profitability, assets or liabilities. 89 If it is determined that an office holder has a personal interest in a transaction which is not an extraordinary transaction, approval by the board ofdirectors is required for the transaction, unless the company’s articles of association provide for a different method of approval. Further, so long as an officeholder has disclosed his or her personal interest in a transaction, the board of directors may approve an action by the office holder that would otherwise bedeemed a breach of his or her duty of loyalty. However, a company may not approve a transaction or action that is not in the best interest of the company orthat is not performed by the office holder in good faith. An extraordinary transaction in which an office holder has a personal interest requires approval firstby the company’s audit committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify or insure, an officeholder who is not a director requires approval first by the company’s compensation committee, then by the company’s board of directors. If suchcompensation arrangement or an undertaking to indemnify or insure is inconsistent with the company’s stated compensation policy, or if the office holder isthe chief executive officer (apart from a number of specific exceptions), then such arrangement is further subject to a Special Majority Approval forCompensation. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee,board of directors and shareholders by ordinary majority, in that order, and under certain circumstances, a Special Majority Approval for Compensation. Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may notbe present at such a meeting or vote on that matter unless the chairman of the relevant committee or board of directors (as applicable) determines that he orshe should be present in order to present the transaction that is subject to approval. If a majority of the members of the audit committee or the board ofdirectors (as applicable) has a personal interest in the approval of a transaction, then all directors may participate in discussions of the audit committee or theboard of directors (as applicable) on such transaction and the voting on approval thereof, but shareholder approval is also required for such transaction. Disclosure of personal interests of controlling shareholders and approval of certain transactions Pursuant to Israeli law, the disclosure requirements regarding personal interests that apply to directors and executive officers also apply to acontrolling shareholder of a public company. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includesa shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company.For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated. The approval of the auditcommittee or the compensation committee, the board of directors and the shareholders of the company, in that order, is required for (a) extraordinarytransactions with a controlling shareholder or in which a controlling shareholder has a personal interest, (b) the engagement with a controlling shareholder orhis or her relative, directly or indirectly, including through a company under the control of the controlling shareholder, for the provision of services to thecompany, (c) the terms of engagement and compensation of a controlling shareholder or his or her relative who is an office holder or (d) the employment of acontrolling shareholder or his or her relative by the company, other than as an office holder. In addition, the shareholder approval requires one of thefollowing, which we refer to as a Special Majority: ·at least a majority of the shares held by all shareholders who do not have a personal interest in the transaction and who are present and voting atthe meeting approves the transaction, excluding abstentions; or ·the shares voted against the transaction by shareholders who have no personal interest in the transaction and who are present and voting at themeeting do not exceed 2% of the voting rights in the company. To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once everythree years, unless, with respect to certain transactions, the audit committee determines that the duration of the transaction is reasonable given thecircumstances related thereto. Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity asan office holder require the approval of the compensation committee, board of directors and shareholders by a Special Majority, in that order, and the termsthereof may not be inconsistent with the company’s stated compensation policy. Pursuant to regulations promulgated under the Israeli Companies Law, certain transactions with a controlling shareholder or his or her relative, orwith directors, that would otherwise require approval of a company’s shareholders may be exempt from shareholder approval upon certain determinations ofthe audit committee and board of directors. 90 As of March 15, 2018, Clal Biotechnology Industries Ltd. beneficially owned or controlled, directly and indirectly, 34.9% of our issued andoutstanding ordinary shares. Shareholder duties Pursuant to the Israeli Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and othershareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at a general meeting and at shareholderclass meetings with respect to the following matters: ·an amendment to the company’s articles of association; ·an increase of the company’s authorized share capital; ·a merger; or ·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. In addition, certain shareholders have a duty offairness toward the company. These shareholders include any controlling shareholder, any shareholder who knows that he or she has the power to determinethe outcome of a shareholder vote and any shareholder who has the power to appoint or to prevent the appointment of an office holder of the company orother power towards the company. The Israeli Companies Law does not define the substance of the duty of fairness, except to state that the remedies generallyavailable upon a breach of contract will also apply in the event of a breach of the duty to act with fairness. Exculpation, Insurance and Indemnification of Directors and Officers Under the Israeli Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israelicompany 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 abreach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association include such aprovision. A company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders. Under the Israeli Companies Law, a company may indemnify an office holder in respect of the following liabilities and expenses incurred for actsperformed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles ofassociation include a provision authorizing such indemnification: ·financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s awardapproved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then suchan undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activitieswhen the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable underthe circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria; ·reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) as a result of an investigation or proceeding institutedagainst him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed againstsuch office holder as a result of such investigation or proceeding, and (ii) no financial liability was imposed upon him or her as a substitute forthe criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect toan offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; and 91 ·reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted againsthim or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder wasacquitted, or as a result of a conviction for an offense that does not require proof of criminal intent. Under the Israeli Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or heras an office holder, if and to the extent provided in the company’s articles of association: ·a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that theact would not harm the company; ·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;and ·a financial liability imposed on the office holder in favor of a third party. Under the Israeli Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following: ·a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that theoffice holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; ·a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; ·an act or omission committed with intent to derive illegal personal benefit; or ·a fine or forfeit levied against the office holder. Under the Israeli Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by thecompensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders. See“—Approval of Related Party Transactions Under Israeli Law.” Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by theIsraeli Companies Law. We have obtained directors’ and officers’ liability insurance for the benefit of our office holders and intend to continue to maintainsuch coverage and pay all premiums thereunder to the fullest extent permitted by the Israeli Companies Law. In addition, we have entered into agreementswith each of our directors and executive officers exculpating them from liability to us for damages caused to us as a result of a breach of duty of care andundertaking to indemnify them, in each case, to the fullest extent permitted by our articles of association and Israeli Law. The maximum indemnification amount set forth in such agreements is limited to an amount equal to the greater of (x) 25% of our total shareholders’equity based on our most recently financial statements of the time of the actual payment of the indemnification or (y) $25 million. The maximum amount setforth in such agreements is in addition to amounts actually paid, if any, under insurance policies and/or by a third‑party pursuant to an indemnificationarrangement. D. Employees As of December 31, 2017, we had 76 employees, 60 based in Israel and 16 (including 3 full time service providers) based throughout Europe andemployed by our German subsidiary. The total number of our full‑time employees and the distribution of our employees according to main areas of activity,as of the end of each of the last three years, are set forth in the following table: As of December 31, 2015 2016 2017 Department Administrative 6 7 8 Research and development 16 22 26 Manufacturing 20 23 26 Sales and marketing 25 20 16 Total 67 72 76 92 During the periods covered by the above table, we did not employ a significant number of temporary employees. 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 ofemployment, 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 ofEconomic Organizations (including the Industrialists’ Associations) are applicable to our employees in Israel by order of the Israeli Ministry of the Economy.These provisions primarily concern pension fund benefits for all employees, insurance for work‑related accidents, recuperation pay and travel expenses. Wegenerally provide our employees with benefits and working conditions beyond the required minimums. We have never experienced any employment‑related work stoppages and believe our relationships with our employees are good. E. Share Ownership For information regarding the share ownership of our directors and executive officers, see “ITEM 6.B. Compensation—2014 Equity Incentive Plan”and “ITEM 7.A. Major Shareholders.” Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders The following table sets forth information with respect to the beneficial ownership of our shares as of March 15, 2018 by: ·each person or entity known by us to own beneficially more than 5% of our outstanding shares; ·each of our directors and executive officers individually; and ·all of our executive officers and directors as a group. The beneficial ownership of ordinary shares is determined in accordance with the rules of the SEC and generally includes any ordinary shares overwhich a person exercises sole or shared voting or investment power. The percentage of shares beneficially owned is based on 27,047,737 ordinary sharesoutstanding as of March 15, 2018. We have deemed our ordinary shares subject to stock options that are currently exercisable or exercisable within 60 daysof March 15, 2018 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentageownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. All of our shareholders, including the shareholders listed below, have the same voting rights attached to their ordinary shares. See “ITEM 10.B.Articles of Association.” None of our principal shareholders nor our directors and executive officers will have different or special voting rights with respect totheir ordinary shares. Unless otherwise noted below, each shareholder’s address is c/o MediWound Ltd., 42 Hayarkon Street, Yavne 8122745, Israel. 93 A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the pastthree years is included under “ITEM 7.B. Related Party Transactions.” Name of Beneficial Owner Number ofSharesBeneficiallyHeld Percentage ofClass Directors and Executive Officers Stefan T. Wills * * Ofer Gonen * * Assaf Segal * * Vickie R. Driver * * Nissim Mashiach * * Sharon Kochan * * Gal Cohen(1) 440,932 1.6%Sharon Malka * * Lior Rosenberg(2) 1,939,072 7.1%Carsten Henke * * Ety Klinger * * Yaron Meyer * * All executive officers and directors as a group (12 persons)(3) 2,877,316 10.6%Principal Shareholders Clal Biotechnology Industries Ltd.(4) 9,429,555 34.9%Wellington Management Group LLP(5) 3,642,979 13.5%Migdal Insurance & Financial Holdings Ltd.(6) 2,209,368 8.2%Yelin Lapidot(7) 1,432,381 5.3% *Less than 1%. (1)Shares beneficially owned consist of 440,932 ordinary shares issuable upon exercise of outstanding options that are currently exercisable or exercisablewithin 60 days of March 15, 2018. (2)As reported on a Schedule 13G/A filed on February 8, 2018, shares beneficially owned consist of: (i) 140,367 ordinary shares held directly by Prof.Rosenberg; (ii) 88,500 ordinary shares issuable upon exercise of outstanding options held directly by Prof. Rosenberg that are currently exercisable orexercisable within 60 days of December 31, 2017; and (iii) 1,710,205 ordinary shares held by L.R. Research and Development Ltd. in trust for the benefitof Prof. Rosenberg. Prof. Rosenberg is the sole shareholder of L.R. Research and Development Ltd. (3)Shares beneficially owned consist of 1,856,029 ordinary shares held directly or indirectly by such executive officers and directors and 1,021,287ordinary shares issuable upon exercise of outstanding options that are currently exercisable or exercisable within 60 days of March 15, 2018. (4)Shares beneficially owned consist of: (i) 8,248,973 ordinary shares held by Clal Life Sciences, LP, an Israeli limited partnership, whose managing partneris Clal Application Center Ltd., a wholly‑owned subsidiary of CBI; and (ii) 1,220,582 ordinary shares held by CBI, as reported by CBI on a Schedule13G/A filed on February 6, 2018. As reported on a Schedule 13G/A filed on February 14, 2018 by Access Industries Holdings LLC Access IndustriesHoldings LLC indirectly owns 100% of the outstanding shares of Clal Industries Ltd., which owns the majority of the outstanding shares of, and controls,CBI. The address of Clal Industries Ltd. is the Triangular Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address of Access Industries HoldingsLLC is c/o Access Industries Group, 730 Fifth Avenue, New York, New York 10019, United States. (5)Shares beneficially owned consist of 3,642,979 ordinary shares owned of record by clients of one or more investment advisers directly or indirectlyowned by Wellington Management Group LLP. As reported on a Schedule 13G/A filed on February 8, 2018, of the 3,642,979 shares beneficially owned,Wellington Management Group LLP has shared voting power with respect to 3,357,621 ordinary shares and shared dispositive power with respect to all3,642,979 ordinary shares; Wellington Group Holdings LLP has shared voting power with respect to 3,357,621 ordinary shares and shared dispositivepower with respect to all 3,642,979 ordinary shares; Wellington Investment Advisors Holdings LLP has shared voting power with respect to 3,357,621ordinary shares and shared dispositive power with respect to all 3,642,979 ordinary shares; and Wellington Management Company LLP has sharedvoting power with respect to 3,357,621 ordinary shares and shared dispositive power with respect to 3,567,063 ordinary shares. The address ofWellington Management Group is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210. (6)Shares beneficially owned consist of: (i) 1,992,422 ordinary shares held for members of the public through, among others, provident funds, mutual funds,pension funds and insurance policies, which are managed by subsidiaries of Migdal Insurance & Financial Holdings Ltd (“Migdal”), according to thefollowing segmentation: 1,172,094 ordinary Shares are held by Profit participating life assurance accounts and 820,328 ordinary Shares are held byProvident funds and companies that manage provident funds, , and (ii) 216,946 are beneficially held for their own account (Nostro account), as reportedby Migdal on a Schedule 13G filed on January 22, 2018. Migdal is a widely held public company listed on the Tel Aviv Stock Exchange. The address ofMigdal is 4 Efal Street, Petah Tikva 49512, Israel. (7)Shares beneficially owned consist of 1,432,381 ordinary shares owned of record by Yelin Lapidot Mutual Funds Management Ltd., a wholly‑ownedsubsidiary of Yelin Lapidot Holdings Management Ltd. (“Yelin Lapidot Holdings”), for the benefit of the members of the mutual funds. Yelin LapidotHoldings, Yelin Lapidot Mutual Funds Management Ltd., Dov Yelin and Yair Lapidot each have shared voting and dispositive power with respect to all1,432,381 shares. Dov Yelin and Yair Lapidot each own 24.38% of the share capital and 25% of the voting rights of Yelin Lapidot Holdings, and areresponsible for the day‑to‑day management of Yelin Lapidot Holdings. Yelin Lapidot Mutual Funds Management Ltd. operates under independentmanagement and makes its own independent voting and investment decisions. The address of Yelin Lapidot Holdings is 50 Dizengoff St., DizengoffCenter, Gate 3, Top Tower, 13th floor, Tel Aviv 64332, Israel. 94 Changes in Ownership Prior to our IPO in March 2014, CBI owned 9,789,555, or 63.4%, of our ordinary shares. As of March 15, 2018, primarily due to our issuance ofordinary shares, CBI’s ownership in our ordinary shares decreased to 34.9%. Registered Holders As of March 15, 2018, we had one holder of record of our ordinary shares in the United States, which is Cede & Co., the nominee of The DepositoryTrust Company. This shareholder held in the aggregate 57.3% of the 27,047,737 ordinary shares outstanding as of December 31, 2017. The number of recordholders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident sincemany of these ordinary shares were held by brokers or other nominees. B. Related Party Transactions Information Rights Agreement We have entered into an information rights agreement with CBI which provides CBI with certain information rights relating to our financialinformation of the company and certain other information necessary for CBI to meet Israeli Securities Law requirements. CBI is not required to reimburse usfor expenses we incur in providing such information. Registration Rights Agreement We have entered into a registration rights agreement with certain of our shareholders (the “Registration Rights Agreement”). The Registration RightsAgreement replaces the shareholders’ right agreement, dated August 2, 2007, as amended on December 30, 2010, among us and certain of our shareholders.The Registration Rights Agreement provides that certain holders of our ordinary shares have the right to demand that we file a registration statement orrequest that their ordinary shares be covered by a registration statement that we are otherwise filing. On March 7, 2016, the SEC declared effective our shelfregistration statement on Form F‑3, which registered the resale of the 11,640,827 shares subject to registration rights. The registration rights will terminate onMarch 24, 2021. The registration rights are described in more detail under “ITEM 10.B. Articles of Association.” Founders’ and Shareholders’ Agreement In January 2001, we entered into a founders’ and shareholders’ agreement (the “Founders Agreement”), with CBI, Prof. Lior Rosenberg, our ChiefMedical Technology Officer, and LR, a private company which is wholly‑owned by Prof. Rosenberg. The Founders Agreement was amended in 2006.Pursuant to the Founders Agreement, in exchange for the issuance of ordinary shares and certain rights thereunder and the payment of certain fixed amounts,Prof. Rosenberg granted to us a perpetual, exclusive, non‑revocable, royalty‑free, sub‑licensable, worldwide license for intellectual property relating todebridement using products based on our proteolytic enzyme technology. As of the date hereof, all of the payments under the Founders Agreement were paidby us to Prof. Rosenberg in accordance with the Founders Agreement. The Founders Agreement also provided for anti‑dilution, pre‑emptive rights, a right offirst refusal on the sale of our ordinary shares and bring‑along rights, all of which were subsequently terminated. Patent Purchase Agreement In November 2010, we entered into a patent purchase agreement (the “Patent Purchase Agreement”), with LR. In accordance with the Patent PurchaseAgreement, we acquired from LR a patent family covering an occlusive dressing system for use in the treatment of burns, which is not a part of NexoBrid,EscharEx or our pipeline product candidates, in consideration of our reimbursement of his costs of filing and obtaining the patents and a one‑time payment,in a total amount of $88,000, and in addition, fixed annual payments of $30,000 for every 12 months in which the patent remains valid. The patent expires inMay 2018, and our accumulated outstanding obligation to Prof. Rosenberg was $12,500 as of December 31, 2017. 95 LR License Agreement In September 2016, we signed an exclusive, perpetual, worldwide license agreement with LR for use of a certain patent and related intellectualproperty (the “LR License Agreement”). Under the LR License Agreement, we received an exclusive license to use LR’s patent and intellectual property todevelop, manufacture, market and commercialize a wound dressing that is advantageous for application of a debrided wound bed for the treatment of burnsand other wounds. The LR License Agreement may be terminated by LR or us, subject to the dispute resolution procedures contained in the LR LicenseAgreement, as a result of a material breach by the other party when such breach has not been cured within thirty days of written notification, or the otherparty’s liquidation or entering into any arrangement with its creditors. We may also terminate the LR License Agreement at any time, in whole or in part, bygiving LR 90 days’ written notice and we shall have no obligation to compensate LR as a result of such termination. In consideration for the LR License Agreement, we have agreed to make a one‑time payment of $64,000 within 60 days following the receipt ofmarketing authorization with respect to products we develop pursuant to the LR License Agreement in the US or the EU. In addition, we undertook to payroyalties of 10% from net sales of product developed pursuant to the LR License Agreement and 10% of all consideration actually received by us fromsublicensing the Licensed Products. In the event that a Competitor Product, as defined in the LR License Agreement, is marketed in certain territories, theroyalty payments or sublicense fees paid by us to LR in that territory will be reduced to 5%. Sub‑Lease Agreement In January 2018, we entered into a sub‑lease agreement (the “Sub‑Lease Agreement”), with Clal Life Sciences, L.P. (“CLS”), a subsidiary of CBI, ourindirect parent company. Pursuant to the Sub‑Lease Agreement, we currently sublease approximately 20,000 square feet of laboratory, office and clean roomspace from CLS and our yearly rent is $245,000. The Sub‑Lease Agreement is scheduled to expire on October 30, 2022. Agreements with Directors and Officers We have entered into employment agreements with each of our executive officers, which include standard provisions for a company in our industryregarding non‑competition/solicitation, confidentiality of information and assignment of inventions. However, the enforceability of the non‑competitionprovisions may be limited under applicable law. Our executive officers will not receive benefits upon the termination of their respective employment with us,other than payment of salary and benefits (and limited accrual of vacation days) during the required notice period for termination of their employment, whichvaries for each individual. Options. Since our inception, we have granted options to purchase our ordinary shares to our officers and certain of our directors. Such optionagreements may contain acceleration provisions upon certain merger, acquisition or change of control transactions. We describe our option plans under“ITEM 6.B. Compensation—2003 Israeli Share Option Plan” and “ITEM 6.B. Compensation—2014 Equity Incentive Plan.” If an executive officer isinvoluntarily terminated without cause or the executive officer voluntarily terminates his employment for good reason (as defined in the employmentagreement), all options will immediately vest. Upon the consummation of a merger or acquisition transaction, an executive officer’s options will be assumedor substituted by the surviving company, if applicable, or, in the compensation committee’s sole discretion, will vest immediately or be amended, modifiedor terminated. Our compensation committee approved accelerated vesting in the case of a merger or an acquisition transaction for certain of our executiveofficers with respect to the option grants dated December 23, 2015. Exculpation, indemnification and insurance. Our articles of association permit us to exculpate, indemnify and insure each of our directors and officeholders to the fullest extent permitted by the Israeli Companies Law. Additionally, we have entered into indemnification agreements with each of ourdirectors and executive officers, undertaking to indemnify them to the fullest extent permitted by Israeli law, including with respect to liabilities resultingfrom a public offering of our shares, to the extent that these liabilities are not covered by insurance. We have also obtained Directors and Officers insurancefor each of our executive officers and directors. See “ITEM 6.C. Board Practices—Exculpation, Insurance and Indemnification of Directors and Officers.” 96 Family Relationships We are not aware of any familial relationships between any of our directors and officers. C. Interests of Experts and Counsel Not applicable. Item 8. FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information Consolidated Financial Statements We have appended our consolidated financial statements at the end of this annual report, starting at page F‑2, as part of this annual report. Legal Proceedings From time to time, we may be party to litigation or subject to claims incident to the ordinary course of business. On September 15, 2014, a statement of claim was filed against the company by certain shareholders of PolyHeal. The plaintiffs allege that thecompany is obligated to pay them a total amount of approximately $1.5 million in exchange for their respective portion of PolyHeal’s shares, following themilestone occurrence under the 2010 PolyHeal Agreement. This claim arises out of a dispute with Teva under the 2010 PolyHeal Agreement. On December14, 2014, the company filed a petition for a right to defend (the “Petition”) with the Tel Aviv‑Jaffa District Court, in which the company: (i) rejected thearguments raised against it in the statement of claim; (ii) emphasized that its obligation under the 2010 PolyHeal Agreement to purchase the 7.5% ofPolyHeal’s shares is subject to the consumption of the deferred closing, as defined in the 2010 PolyHeal Agreement, including the receipt of the funds fromTeva on a “back to back” basis; and (iii) stated that since no such payment has been made by Teva, the company is not subject to any obligation to purchasePolyHeal shares and/or make any payments to PolyHeal’s shareholders. On November 13, 2017, the Tel Aviv‑Jaffa District Court issued a ruling in favor of the plaintiffs. The court ruled that we are obligated to purchasePolyHeal’s shares for approximately $6.75 million plus applicable interest (totaled in $7.5 million as of the ruling date), which represents the purchase pricefor the total number of shares that the PolyHeal Agreements contemplate would be acquired by the Company from the shareholders of PolyHeal. The Courtordered that we are obligated to purchase shares in PolyHeal from the plaintiffs, on the basis of their actual share holdings in PolyHeal as of January 15, 2013,for approximately $1.3 million plus applicable interest (totaled in $1.5 million as of the ruling date), within 15 days from the date of the Court’s ruling. OnDecember 27, 2017, we filed an appeal to the Supreme Court over the said ruling, alleging, among other things, that the agreement according to which theruling was granted was misinterpreted by the District Court. We further alleged that both the wording of the agreement and the conduct of the partiesthereunder prove that our obligation to purchase PolyHeal’s shares was subject to the prior receipt of funds, which were never received, from Teva. OnJanuary 30, 2018, certain PolyHeal shareholders filed a cross appeal, alleging that they are entitled to receive from us a full repayment of their counsel’s feesin a sum equal to 12.5% of the consideration to be paid for their shares. The Appeal and Cross Appeal are currently scheduled to be heard on January 7, 2019. Accordingly, a full provision for the purchase price of the shares plus the accrued interest, totaling $7.5 million was recorded within the loss fromdiscontinued operations in respect of this claim, of which approximately $1.5 million was paid to plaintiffs in consideration for PolyHeal’s shares. If we arenot successful in the appeal or if we are unable to reach a settlement with Teva, we will be required to purchase additional ordinary shares of PolyHeal fromother existing shareholders even if we do not receive such investment from Teva, which could have a material adverse effect on our liquidity and financialcondition. We believe that we have substantive defenses to plaintiff’s claims, and we intend to vigorously advocate our position in our appeal to the IsraeliSupreme Court. However, the outcome of litigation is always uncertain and the actual outcome of any such proceedings may materially differ from estimatesand could result in losses material to our consolidated results of operations, liquidity or financial condition. To date, none of these types of litigation mattershas had a material impact on our operations or financial condition. See “ITEM 3.D. Risk Factors—We may have liabilities under our former agreements withTeva Pharmaceutical Industries Ltd. and PolyHeal Ltd.” 97 Dividend Policy We have never declared or paid cash dividends to our shareholders and we do not intend to pay cash dividends in the foreseeable future. We intendto reinvest any earnings in developing and expanding our business. Any future determination relating to our dividend policy will be at the discretion of ourboard of directors 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 maydeem relevant. B. Significant Changes No significant changes have occurred since December 31, 2017, except as otherwise disclosed in this annual report. Item 9. THE OFFER AND LISTING A. Listing Details Our ordinary shares have been traded on Nasdaq under the symbol “MDWD” since March 20, 2014. Prior to that date, there was no public tradingmarket for our ordinary shares. Our IPO was priced at $14.00 per share on March 19, 2014. The following table sets forth for the periods indicated the highand low sales prices per ordinary share as reported on Nasdaq: Low High Annual: 2017 $4.15 $8.25 2016 $4.25 $9.29 2015 $5.00 $10.47 2014 (beginning March 20, 2014) $4.60 $19.31 Quarterly: First Quarter 2018 (through March 15, 2018) $3.95 $4.45 Fourth Quarter 2017 $4.15 $5.37 Third Quarter 2017 $4.75 $7.50 Second Quarter 2017 $5.70 $8.25 First Quarter 2017 $4.55 $6.80 Fourth Quarter 2016 $4.25 $7.91 Third Quarter 2016 $6.32 $8.58 Second Quarter 2016 $7.34 $8.90 First Quarter 2016 $5.66 $9.29 Most Recent Six Months: February 2017 $4.55 $3.56 January 2017 $4.83 $4.30 December 2017 $4.40 $4.95 November 2017 $4.15 $5.10 October 2017 $4.80 $5.37 September 2017 $4.75 $6.70 As of March 15, 2018, the last reported sale price of our ordinary shares on the Nasdaq Global Market was $3.95 per share. As of March 15, 2018, wehad 7 holders of record of our ordinary shares. The actual number of shareholders is greater than this number of record holders, and includes shareholders whoare beneficial owners, but whose shares are held in street name by brokers and other nominees. 98 B. Plan of Distribution Not applicable. C. Markets See “—Listing Details” above. D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the Issue Not applicable. Item 10. ADDITIONAL INFORMATION A. Share Capital Not applicable. B. Articles of Association Our authorized share capital consists of 32,244,508 ordinary shares, par value NIS 0.01 per share, of which 27,047,737 shares are issued andoutstanding as of March 15, 2018. All of our outstanding ordinary shares are validly issued, fully paid and non‑assessable. Our ordinary shares are not redeemable and do not have anypreemptive rights. Our prior articles were replaced in March 2014 by new articles of association and at which time all of our issued and outstanding preferred sharesconverted into ordinary shares. The description below is a summary of the material provisions of our new articles of association and of the Companies Law. Voting rights and conversion. 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 articles of association, unless the transfer isrestricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership orvoting of our ordinary shares by non‑residents of Israel is not restricted in any way by our articles of association or the laws of the State of Israel, except forownership by nationals of some countries that are, or have been, in a state of war with Israel. Election of directors Our ordinary shares do not have cumulative voting rights for the election of directors. As a result, the holders of a majority of the voting powerrepresented at a meeting of shareholders have the power to elect all of our directors, subject to the special approval requirements for external directorsdescribed under “ITEM 6.C. Board Practices—External Directors.” Under our articles of association, our board of directors must consist of at least five andnot more than nine directors, including at least two external directors required to be appointed under the Israeli Companies Law. At any time the minimumnumber of directors (other than the external directors) shall not fall below three. Pursuant to our articles of association, each of our directors, other than theexternal directors, for whom special election requirements apply under the Israeli Companies Law, will be appointed by a simple majority vote of holders ofour voting shares, participating and voting at an annual general meeting of our shareholders. Each director will serve until his or her successor is duly electedand qualified or until his or her earlier death, resignation or removal by a vote of the majority voting power of our shareholders at a general meeting of ourshareholders or until his or her office expires by operation of law, in accordance with the Israeli Companies Law. In addition, our articles of association allowour board of directors to appoint directors to fill vacancies on the board of directors to serve until the next annual general meeting of shareholders. Externaldirectors are elected for an initial term of three years, may be elected for additional terms of three years each under certain circumstances, and may be removedfrom office pursuant to the terms of the Israeli Companies Law. Under regulations recently promulgated under the Israeli Companies Law, Israeli publiccompanies whose shares are traded on certain U.S. stock exchanges, such as the Nasdaq Global Market and that lack a controlling shareholder are exemptfrom the requirement to appoint external directors. See “ITEM 6.C. Board Practices—Board of Directors and External Directors.” 99 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 IsraeliCompanies Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless thecompany’s articles of association provide otherwise. Our articles of association do not require shareholder approval of a dividend distribution and providethat 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 previoustwo years, according to our then last reviewed or audited financial statements, provided that the end of the period to which the financial statements relate isnot 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. Ineach 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 concernthat 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 inproportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distributionrights to the holders of a class of shares with preferential 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 orinterest 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 15months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to in our articlesof association as extraordinary general meetings. Our board of directors may call extraordinary 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 anextraordinary 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 directorsor (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% 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 atgeneral 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 tothe date of the meeting and in certain circumstances, between four and 40 days prior to the date of the meeting. Furthermore, the Israeli Companies Lawrequires that resolutions regarding the following matters must be passed at a general meeting of our shareholders: ·amendments to our articles of association; 100 ·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 ofany of its powers is required for our proper management. The Israeli Companies Law requires that a notice of any annual general meeting or extraordinary general meeting be provided to shareholders atleast 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 officeholders 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 under our articles of association, shareholders are not permitted to take action by way of written consent inlieu of a meeting. Voting Rights Quorum requirements Pursuant to our articles of association, holders of our ordinary shares are entitled to one vote for each ordinary share held on all matters submitted toa vote before the shareholders at a general meeting. As a foreign private issuer, the quorum required for our general meetings of shareholders consists of atleast two shareholders present in person, by proxy or written ballot who hold or represent between them at least 25% of the total outstanding voting rights. Ameeting adjourned for lack of a quorum is generally adjourned to the same day in the following week at the same time and place or to a later time or date if sospecified in the notice of the meeting. At the reconvened meeting, any two or more shareholders present in person or by proxy shall constitute a lawfulquorum. Vote requirements Our articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the IsraeliCompanies Law or by our articles of association. Under the Israeli Companies Law, each of (i) the approval of an extraordinary transaction with a controllingshareholder and (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 described above under “ITEM 6.C. Board Practices—Approval of Related Party TransactionsUnder Israeli Law—Disclosure of personal interests of controlling shareholders and approval of certain transactions.” Under our articles of association, thealteration of the rights, privileges, preferences or obligations of any class of our shares requires a simple majority of the class so affected (or such otherpercentage 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 allclasses of shares voting together as a single class at a shareholder meeting. Further exceptions to the simple majority vote requirement are a resolution for the voluntary winding up, or an approval of a scheme of arrangementor reorganization, of the company pursuant to Section 350 of the Israeli Companies Law, which requires the approval of holders of 75% of the voting rightsrepresented at the meeting and voting on the resolution. 101 Access to corporate records Under the Israeli Companies Law, shareholders are provided access to: minutes of our general meetings; our shareholders register and principalshareholders register, articles of association and annual audited financial statements; and any document that we are required by law to file publicly with theIsraeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request any document related to an action or transactionrequiring shareholder approval under the related party transaction provisions of the Israeli Companies Law. We may deny this request if we believe it has notbeen made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent. Modification of class rights Under the Israeli Companies Law and our articles of association, the rights attached to any class of share, such as voting, liquidation and dividendrights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise inaccordance with the rights attached to such class of shares, as set forth in our articles of association. Registration rights We have entered into the Registration Rights Agreement with certain of our shareholders. Pursuant to the Registration Rights Agreement, holders ofa total of 11,640,827 of our ordinary shares have the right to require us to register these shares under the Securities Act under specified circumstances and willhave incidental registration rights as described below. After registration pursuant to these rights, these shares will become freely tradable without restrictionunder the Securities Act. On March 7, 2016, the SEC declared effective our shelf registration statement on Form F‑3, which registered the resale of the11,640,827 shares subject to registration rights. Demand registration rights At any time, the holders of a majority of the registrable securities (as defined in the Registration Rights Agreement) then outstanding may requestthat we file a registration statement with respect to a majority of the registrable securities then outstanding (or a lesser percentage if the anticipated aggregateoffering price, net of selling expenses, exceeds $5.0 million). Upon receipt of such registration request, we are obligated to file a registration statement.Currently, as we are eligible under applicable securities laws to file a registration statement on Form F‑3, we may be required to effect up to two suchregistrations within any 12‑month period. We will not be obligated to file a registration statement at such time if in the good faith judgment of our board of directors, such registration wouldbe materially detrimental to the company and its shareholders because such action would (i) materially interfere with a significant acquisition, corporatereorganization or other similar transaction involving us, (ii) require premature disclosure of material information that we have a bona fide business purposefor preserving as confidential or (iii) render us unable to comply with requirements under the Securities Act or Exchange Act. In addition, we have the rightnot to effect or take any action to effect a registration statement during the period that is 60 days (or 30 days in the case of a registration statement on FormF‑3) before the date of filing our registration statement (as estimated by us in good faith), and ending on a date that is 180 days (or 90 days in the case of aregistration statement on Form F‑3) after the date of such filing. Piggyback registration rights In addition, if we register any of our ordinary shares in connection with the public offering of such securities solely for cash, the holders of allregistrable securities are entitled to at least 10 days’ notice of the registration and to include all or a portion of their ordinary shares in the registration. If thepublic offering that we are effecting is underwritten, the right of any shareholder to include shares in the registration related thereto is conditioned upon theshareholder accepting the terms of the underwriting as agreed between us and the underwriters and then only in such quantity as the underwriters in their solediscretion determine will not jeopardize the success of our offering. 102 Other provisions We will pay all registration expenses (other than underwriting discounts and selling commissions) and the reasonable fees and expenses of a singlecounsel for the selling shareholders, related to any demand or piggyback registration. The demand and piggyback registration rights described above willexpire on March 24, 2021, five years after our initial public offering. Acquisitions Under Israeli Law Full tender offer A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company’s issued andoutstanding share capital is required by the Israeli Companies Law to make a tender offer to all of the company’s shareholders for the purchase of all of theissued and outstanding shares of the company. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of theissued and outstanding share capital of a certain class of shares is required to make a tender offer to all of the shareholders who hold shares of the relevantclass for the purchase of all of the issued and outstanding shares of that class. If the shareholders who do not accept the offer hold less than 5% of the issuedand outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in theoffer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer willalso be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of theapplicable class of shares. Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder acceptedthe tender offer or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offerwas for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in theterms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above. If a tender offer is not accepted in accordance with the requirements set forth above, the acquirer may not acquire shares from shareholders whoaccepted the tender offer that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the applicable class. Special tender offer The Israeli Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as aresult of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not apply if there isalready another holder of at least 25% of the voting rights in the company. Similarly, the Israeli Companies Law provides that an acquisition of shares in apublic company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of thevoting 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, subject tocertain exceptions. A special tender offer must be extended to all shareholders of a company but the offeror is not required to purchase shares representingmore than 5% of the voting power attached to the company’s outstanding shares, regardless of how many shares are tendered by shareholders. A specialtender offer may be consummated only if (i) the offeror acquired shares representing at least 5% of the voting power in the company and (ii) the number ofshares tendered by shareholders who accept the offer exceeds the number of shares held by shareholders who object to the offer (excluding the purchaser,controlling shareholders, holders of 25% or more of the voting rights in the company or any person having a personal interest in the acceptance of the tenderoffer). If a special tender offer is accepted, the purchaser or any person or entity controlling it or under common control with the purchaser or such controllingperson or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the targetcompany 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 theinitial special tender offer. 103 Merger The Israeli Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements describedunder the Israeli Companies Law are met, by a majority vote of each party’s shareholders. In the case of the target company, approval of the merger furtherrequires a majority vote of each class of its shares. For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of sharesrepresented at the meeting of shareholders that are held by parties other than the other party to the merger, or by any person (or group of persons acting inconcert) who holds (or hold, as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, voteagainst the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personalinterest in the merger, then the merger is instead subject to the same Special Majority approval that governs all extraordinary transactions with controllingshareholders (as described under “ITEM 6.C. Board Practices—Approval of Related Party Transactions Under Israeli Law—Disclosure of personal interests ofcontrolling shareholders and approval of certain transactions.”) If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusionof the votes of certain shareholders as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights ofa company. For such petition to be granted, the court must find that the merger is fair and reasonable, taking into account the respective values assigned toeach of the parties to the merger and the consideration offered to the shareholders of the target company. Upon the request of a creditor of either party to theproposed 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 survivingcompany will be unable to satisfy the obligations of the merging entities, and may further give instructions to secure the rights of creditors. In addition, a merger may not be consummated unless at least 50 days have passed from the date on which a proposal for approval of the merger isfiled with the Israeli Registrar of Companies and at least 30 days have passed from the date on which the merger was approved by the shareholders of eachparty. Anti‑takeover measures under Israeli law The Israeli Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including sharesproviding certain preferred rights with respect to voting, distributions or other matters and shares having preemptive rights. As of March 15, 2018, nopreferred shares are authorized under our articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares, such classof 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 ourshareholders from realizing a potential premium over the market value of their ordinary shares. The authorization and designation of a class of preferredshares will require an amendment to our articles of association, which requires the prior approval of the holders of a majority of the voting power attaching toour issued and outstanding shares at a general meeting. The convening of the meeting, the shareholders entitled to participate and the majority vote requiredto 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.” Transfer Agent and Registrar The transfer agent and registrar for our ordinary shares is American Stock Transfer & Trust Company, New York, New York. C. Material Contracts For a description of the registration rights present in our Registration Rights Agreement, see “ITEM 7.B. Related Party Transactions—RegistrationRights Agreement.” For a description of our contract with the U.S. Biomedical Advanced Research and Development Authority, see “ITEM 4.B. Business Overview—BARDA Contract.” 104 For a description of our license agreement with Mark Klein, see “ITEM 4.B. Business Overview—Klein License Agreement.” We have entered into an agreement with Challenge Bioproducts Corporation Ltd. (“CBC”), a corporation organized and existing under the laws ofthe Republic of China, dated January 11, 2001, as amended on February 28, 2010, pursuant to which CBC uses proprietary methods to manufacturebromelain SP and supplies us with this intermediate drug substance in bulk quantities. According to the terms of the agreement, CBC shall not, and shall notpermit related companies or a third party to, manufacture, use, supply or sell the raw materials for the use or production of a product directly or indirectlycompeting with any of our products. Our supply agreement with CBC has no fixed expiration date and can be voluntarily terminated by us, with at least sixmonths’ advance written notice, or by CBC, with at least 24 months’ advance written notice. D. Exchange Controls In 1998, Israeli currency control regulations were liberalized significantly, so that Israeli residents generally may freely deal in foreign currency andforeign assets, and non‑residents may freely deal in Israeli currency and Israeli assets. There are currently no Israeli currency control restrictions onremittances of dividends on the ordinary shares or the proceeds from the sale of the shares provided that all taxes were paid or withheld; however, legislationremains in effect pursuant to which currency controls can be imposed by administrative action at any time. Non‑residents of Israel may freely hold and trade our securities. Neither our articles of association nor the laws of the State of Israel restrict in anyway the ownership or voting of ordinary shares by non‑residents, except that such restrictions may exist with respect to citizens of countries which are in astate of war with Israel. Israeli residents are allowed to purchase our ordinary shares. E. Taxation The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership anddisposition of our ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any taxconsequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction. Israeli Tax Considerations and Government Programs The following is a brief summary of the material Israeli tax laws applicable to us, and certain Israeli Government programs that benefit us. Thissummary 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 circumstancesor to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities whoare subject to special tax regimes not covered in this discussion. To the extent that the discussion is based on new tax legislation that has not yet been subjectto judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in thisdiscussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrativeinterpretations of Israeli law, which change could affect the tax consequences described below. General Corporate Tax Structure in Israel Generally, Israeli companies are subject to a corporate tax on their taxable income. In 2017 the corporate tax rate was 24%. Effective January 1,2018, the corporate tax rate is 23%. However, the effective tax rate payable by a company that derives income from an Approved Enterprise, a BeneficiaryEnterprise or a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are generally subject to theprevailing regular corporate tax rate. Law for the Encouragement of Industry (Taxes), 5729‑1969 The Law for the Encouragement of Industry (Taxes), 5729‑1969 (the “Industry Encouragement Law”), provides several tax benefits for “IndustrialCompanies.” 105 The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident‑company which was incorporated in Israel, of which 90% ormore 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 inIsrael. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production. The following tax benefits, among others, are available to Industrial Companies: ·amortization of the cost of purchased a patent, rights to use a patent, and know‑how, which are used for the development or advancement of theIndustrial Enterprise, over an eight‑year period, commencing on the year in which such rights were first exercised; ·under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies controlled by it; and ·expenses related to a public offering are deductible in equal amounts over a three years period commencing on the year of the offering. Eligibility for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority. We believe that we currently qualify as an Industrial Company within the meaning of the Industry Encouragement Law. However, there can be noassurance that we will continue to qualify as an Industrial Company or that the benefits described above will be available in the future. Law for the Encouragement of Capital Investments, 5719‑1959 The Investment Law provides certain incentives for capital investments in production facilities (or other eligible assets). The Investment Law was significantly amended several times during recent years, with the two most significant changes effective as of April 1, 2005(the “2005 Amendment”), as of January 1, 2011 (the “2011 Amendment”), and as of January 1, 2017 (the “2017 Amendment”). Pursuant to the 2005Amendment, tax benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force butany benefits granted subsequently are subject to the provisions of the amended Investment Law. Similarly, the 2011 Amendment introduced new benefits toreplace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled tobenefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certainconditions are met, or elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment apply. The 2017 Amendmentintroduces new benefits for Technological Enterprises, alongside the existing tax benefits. Prior to 2011, we did not utilize any of the benefits for which wewere eligible under the Investment Law. The following is a summary of the Investment Law subsequent to its amendments as well as the relevant changes contained in the new legislation. Tax Benefits Subsequent to the 2005 Amendment The 2005 Amendment applies to new investment programs and investment programs commencing after 2004, but does not apply to investmentprograms approved prior to April 1, 2005 (“Approved Enterprise”). The 2005 Amendment provides that terms and benefits included in any certificate ofapproval that was granted before the 2005 Amendment became effective (April 1, 2005) will remain subject to the provisions of the Investment Law as ineffect on the date of such approval. Pursuant to the 2005 Amendment, the Israeli Authority for Investments and Development of the Israeli Ministry ofEconomy (the “Investment Center”) will continue to grant Approved Enterprise status to qualifying investments. The 2005 Amendment, however, limits thescope of enterprises that may be approved by the Investment Center by setting criteria for the approval of a facility as an Approved Enterprise. 106 The 2005 Amendment provides that Approved Enterprise status will only be necessary for receiving cash grants. As a result, it is no longer necessaryfor a company to obtain the advance approval of the Investment Center in order to receive the tax benefits previously available under the alternative benefitstrack. Rather, a company may claim the tax benefits offered by the Investment Law directly in its tax returns, provided that its facilities meet the criteria fortax benefits set forth in the 2005 Amendment. Companies or programs under the new provisions receiving these tax benefits are referred to as BeneficiaryEnterprises. Companies that have a Beneficiary Enterprise, are entitled to approach the Israel Tax Authority for a pre‑ruling regarding their eligibility for taxbenefits under the Investment Law, as amended. Tax benefits are available under the 2005 Amendment to production facilities (or other eligible facilities), which are generally required to derivemore than 25% of their business income from export to specific markets with a population of at least 14 million in 2012 (such export criteria will furtherincrease in the future by 1.4% per annum). In order to receive the tax benefits, the 2005 Amendment states that a company must make an investment whichmeets certain conditions, including exceeding a minimum investment amount specified in the Investment Law. Such investment allows a company to receive“Beneficiary Enterprise” status, and may be made over a period of no more than three years from the end of the year in which the company chose to have thetax benefits apply to its Beneficiary Enterprise. Where the company requests to apply the tax benefits to an expansion of existing facilities, only theexpansion will be considered to be a Beneficiary Enterprise and the company’s effective tax rate will be the weighted average of the applicable rates. In thiscase, the minimum investment required in order to qualify as a Beneficiary Enterprise is required to exceed a certain percentage of the value of the company’sproduction assets before the expansion. The extent of the tax benefits available under the 2005 Amendment to qualifying income of a Beneficiary Enterprise depends on, among otherthings, the geographic location in Israel of the Beneficiary Enterprise. The location will also determine the period for which tax benefits are available. Suchtax benefits include an exemption from corporate tax on undistributed income for a period of between two to ten years, depending on the geographic locationof the Beneficiary Enterprise in Israel, and a reduced corporate tax rate of between 10% to 25% for the remainder of the benefits period, depending on thelevel of foreign investment in the company in each year. A company qualifying for tax benefits under the 2005 Amendment which pays a dividend out ofincome attributed to its Beneficiary Enterprise during the tax exemption period will be subject to corporate tax in respect of the amount of the dividenddistributed (grossed‑up to reflect the pre‑tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate that wouldhave otherwise been applicable. Dividends paid out of income attributed to a Beneficiary Enterprise (or out of dividends received from a company whoseincome is attributed to a Beneficiary Enterprise) are generally subject to withholding tax at source at the rate of 15% or such lower rate as may be provided inan applicable tax treaty, applicable to dividends and distributions out of income attributed to a Beneficiary Enterprise. The reduced rate of 15% is limited todividends and distributions out of income attributed to a Beneficiary Enterprise during the benefits period and actually paid at any time up to 12 yearsthereafter, except with respect to a qualified Foreign Investment Company (as such term is defined in the Investment Law), in which case the 12‑year limitdoes not apply. The benefits available to a Beneficiary Enterprise are subject to the fulfillment of conditions stipulated in the Investment Law and its regulations. Ifa company does not meet these conditions, it would be required to refund the amount of tax benefits, as adjusted by the Israeli consumer price index, andinterest, or other monetary penalties. We currently have Beneficiary Enterprise programs under the Investments Law, which we believe will entitle us to certain tax benefits. The majorityof any taxable income from our Beneficiary Enterprise programs (once generated) would be tax exempt for a period of ten years commencing in the year inwhich we will first earn taxable income relating to such enterprises, subject to the 12 year limitation described above. Tax Benefits Under the 2011 Amendment The 2011 Amendment canceled the availability of the tax benefits granted under the Investment Law prior to 2011 and, instead, introduced new taxbenefits 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, amongother things, Preferred Enterprise status and is controlled and managed from Israel. 107 The tax benefits under the 2011 Amendment for a Preferred Company meeting the criteria of the law include, among others, a reduced corporate taxrate of 15% for preferred income attributed to a Preferred Enterprise in 2011 and 2012, unless the Preferred Enterprise was located in a specified developmentzone, in which case the rate was 10%. Under the 2011 Amendment, such corporate tax rate was reduced in 2013 from 15% and 10%, respectively, to 12.5%and 7%, respectively, and then increased to 16% and 9%, respectively, in 2014 and thereafter until 2016. Pursuant to the 2017 Amendment, in 2017 andthereafter, the corporate tax rate for Preferred Enterprise which is located in a specified development zone was decreased to 7.5%, while the reduced corporatetax rate for other development zones remains 16%. Income attributed to a Preferred Company from a “Special Preferred Enterprise” (as such term is defined inthe Investment Law) would be entitled, during a benefits period of 10 years, to reduced tax rates of 8%, or 5% if the Special Preferred Enterprise is located in acertain development zone. As of January 1, 2017, the definition of “Special Preferred Enterprise” includes less stringent conditions. Dividends paid out ofpreferred income attributed to a Preferred Enterprise or to a Special Preferred Enterprise are generally subject to withholding tax at source at the rate of 20% orsuch lower rate as may be provided in an applicable tax treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowingfor a reduced tax rate). However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if such dividends aresubsequently distributed to individuals or a non‑Israeli company, withholding tax at a rate of 20% or such lower rate as may be provided in an applicable taxtreaty will apply). In 2017‑2019 dividends paid out of preferred income attributed to a Special Preferred Enterprise, directly to a foreign parent company, aresubject to withholding tax at source at the rate of 5% (temporary provisions). The 2011 Amendment also provided transitional provisions to address companies already enjoying existing tax benefits under the Investment Law.These transitional provisions provide, among other things, that: unless an irrevocable request is made to apply the provisions of the Investment Law asamended in 2011 with respect to income to be derived as of January 1, 2011, a Beneficiary Enterprise can elect to continue to benefit from the benefitsprovided to it before the 2011 Amendment came into effect, provided that certain conditions are met. We have examined the possible effect, if any, of these provisions of the 2011 Amendment on our financial statements and have decided, at this time,not to opt to apply the new benefits under the 2011 Amendment. There can be no assurance that we will comply with the conditions required to remaineligible for benefits under the Investment Law in the future or that we will be entitled to any additional benefits thereunder. 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 January1, 2017. The 2017 Amendment provides new tax benefits for two types of “Technology Enterprises,” as described below, and is in addition to the otherexisting 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” andwill thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technology Income,” as defined in the Investment Law. The taxrate is further reduced to 7.5% for a Preferred Technology Enterprise located in development zone A. In addition, a Preferred Technology Company willenjoy 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) toa 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 the Israeli Innovation Authority. The 2017 Amendment further provides that a technology company satisfying certain conditions will qualify as a “Special Preferred TechnologyEnterprise” and will thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technology Income” regardless of the company’s geographic locationwithin Israel. In addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate of 6% on capital gain derived from the sale ofcertain “Benefitted Intangible Assets” to a related foreign company if the Benefitted Intangible Assets were either developed by an Israeli company oracquired from a foreign company on or after January 1, 2017, and the sale received prior approval from IIA. A Special Preferred Technology Enterprise thatacquires 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 tocertain approvals as specified in the Investment Law. 108 Dividends distributed by a Preferred Technology Enterprise or a Special Preferred Technology Enterprise, paid out of Preferred Technology Income,are generally subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty (subject to the recipientin advance of a valid certificate from the Israeli Tax Authority allowing for reduced tax rate). However, if such dividends are paid to an Israeli company, notax is required to be withheld. If such dividends are distributed to a foreign company and other conditions are met, the withholding tax rate will be 4%. Taxation of Our Shareholders Capital gains taxes applicable to non‑Israeli resident shareholders A non‑Israeli resident (whether an individual or a corporation) who derives capital gains from the sale of shares in an Israeli resident company thatwere purchased after the company was listed for trading on the Tel Aviv Stock Exchange or on a recognized stock exchange outside of Israel, will generallybe exempt from Israeli capital gain tax so long as the shares were not held through a permanent establishment that the non‑resident maintains in Israel (andwith respect to shares listed on a recognized stock exchange outside of Israel, so long as neither the shareholder nor the particular capital gain is otherwisesubject to the Israeli Income Tax Law (Inflationary Adjustments) 5745‑1985. These provisions dealing with capital gain are not applicable to a person whosegains from selling or otherwise disposing of the shares are deemed to be business income. However, non‑Israeli corporations will not be entitled to theforegoing exemption if Israeli residents (i) have a controlling interest of 25% or more in such non‑Israeli corporation or (ii) are the beneficiaries of, or areentitled to, 25% or more of the revenues or profits of such non‑Israeli corporation, whether directly or indirectly. Additionally, a sale of shares by a non‑Israeli resident may also be exempt from Israeli capital gains tax under the provisions of an applicable taxtreaty. For example, under the Convention Between the Government of the United States of America and the Government of the State of Israel with respect toTaxes on Income, as amended (the “United States‑Israel Tax Treaty”), the sale, exchange or other disposition of shares by a shareholder who is a United Statesresident (for purposes of the United States‑Israel Tax Treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such aresident by the United States‑Israel Tax Treaty (a “Treaty U.S. Resident”) is generally exempt from Israeli capital gains tax unless: (i) the capital gain arisingfrom such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition isattributed to royalties; (iii) the capital gain arising from the such sale, exchange or disposition can be attributable to a permanent establishment of theshareholder maintained in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of thevoting capital of a company during any part of the 12‑month period preceding such sale, exchange or disposition, subject to certain conditions; or (v) suchTreaty U.S. Resident is an individual and was present in Israel for a period or periods aggregating to 183 days or more during the relevant taxable year. Ineach case, the sale, exchange or disposition of our ordinary shares would be subject to such Israeli tax, to the extent applicable; However, under the UnitedStates‑Israel Tax Treaty, such Treaty U.S. Resident would be permitted to claim a credit for such taxes against the U.S. federal income tax imposed withrespect to such sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign tax credits. 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 besubject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order toavoid 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 amerger or otherwise, the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by thisauthority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non‑Israeli resident, and, in the absence of such declarationsor exemptions, may require the purchaser of the shares to withhold taxes at source. 109 Taxation of non‑Israeli shareholders on receipt of dividends Non‑Israeli residents (whether individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends paid on ourordinary shares at the rate of 25%. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during thepreceding 12 months, the applicable tax rate is 30%. A “substantial shareholder” is generally a person who alone or together with such person’s relative oranother person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of thecorporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets uponliquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. Such dividends are generally subject toIsraeli withholding tax at a rate of 25% so long as the shares are registered with a nominee company (whether or not the recipient is a substantial shareholder),unless relief is provided in a treaty between Israel and the shareholder’s country of residence and provided that a certificate from the Israel Tax Authorityallowing for a reduced withholding tax rate is obtained in advance. However, a distribution of dividends to non‑Israeli residents is subject to withholding taxat source at a rate of 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Beneficiary Enterprise and 20% if the dividendis distributed from income attributed to a Preferred Enterprise, unless a reduced tax rate is provided under an applicable tax treaty, and provided that acertificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance. For example, under the United States‑Israel TaxTreaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a Treaty U.S. Resident is 25%.However, generally, the maximum rate of withholding tax on dividends, not generated by an Approved Enterprise or Beneficiary Enterprise, that are paid to aU.S. corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during theprevious tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest.Notwithstanding the foregoing, dividends distributed from income attributed to an Approved Enterprise or Beneficiary Enterprise are not entitled to suchreduction under the tax treaty but are subject to a withholding tax rate of 15% for such a U.S. corporation, provided that the condition related to our grossincome for the previous year (as set forth in the previous sentence) is met. If the dividend is attributable partly to income derived from an ApprovedEnterprise, Beneficiary Enterprise or Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting therelative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduceshareholders’ tax liability. A non‑Israeli resident who receives dividends from which tax was withheld, is generally exempt from the obligation to file tax returns in Israel withrespect to such income, provided that (i) such income was not derived from a business conducted in Israel by the taxpayer, and (ii) the taxpayer has no othertaxable sources of income in Israel with respect to which a tax return is required to be filed. Excess Tax Individuals who are subject to tax in Israel are also subject to an additional tax at a rate of 3% on annual income exceeding NIS 640,000 for 2017,which amount is linked to the annual change in the Israeli consumer price index, including but not limited to, dividends, interest and capital gain. In 2018,the additional tax will be at a rate of 3% on annual income exceeding NIS 641,880. United States Federal Income Taxation The following is a description of the material U.S. federal income tax consequences of the ownership and disposition of our ordinary shares by a U.S.Holder that holds the ordinary shares as capital assets. This description does not address tax considerations applicable to holders that may be subject tospecial tax rules, including, without limitation: ·banks, financial institutions or insurance companies; ·real estate investment trusts, regulated investment companies or grantor trusts; ·dealers or traders in securities, commodities or currencies; ·tax‑exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of theCode, respectively; ·certain former citizens or long‑term residents of the United States; ·persons that received our shares as compensation for the performance of services; ·persons that holds our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federalincome tax purposes; 110 ·partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass‑through entities, or holders that willhold our shares through such an entity; ·S corporations; ·holders that acquired ordinary shares as a result of holding or owning our preferred shares; ·U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; ·persons subject to special tax accounting rules as a result of any item of gross income with respect to the shares being taken into account in anapplicable financial statement; ·persons that are residents of ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States; or ·holders that own directly, indirectly or through attribution 10.0% or more of the voting power or value of our shares. Moreover, this description does not address the U.S. federal estate, gift or alternative minimum tax consequences, or any state, local or foreign taxconsequences, of the ownership and disposition of our ordinary shares. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions andfinal, temporary and proposed Treasury regulations, all as currently in effect and available. These authorities are subject to change or differing interpretation,possibly with retroactive effect. U.S. Holders should consult their own tax advisers concerning the U.S. federal, state, local and foreign tax consequences ofowning and disposing of our ordinary shares in their particular circumstances. For purposes of this summary, a “U.S. Holder” is a beneficial owner of our ordinary shares who is, for U.S. federal income tax purposes: ·a citizen or individual resident of the United States; ·a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of theUnited States, any state thereof, or the District of Columbia; ·an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or ·a trust that (1) is subject to the primary supervision of a U.S. Court and one or more U.S. persons that have the authority to control all substantialdecisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our ordinary shares, the tax treatment of a partnerin such partnership generally will depend upon the status of the partner and upon the activities of the partnership. Investors who are partners in a partnershipshould consult their tax advisers as to the particular U.S. federal income tax consequences of owning and disposing of our ordinary shares in their particularcircumstances. A “Non‑U.S. Holder” is a beneficial owner of our ordinary shares that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes. Unless otherwise indicated, this discussion assumes that the company is not, and will not become, a “passive foreign investment company,” or aPFIC, for U.S. federal income tax purposes. See “ITEM 10.E. Taxation—United States Federal Income Taxation—Passive Foreign Investment CompanyConsiderations” below. Further, this summary does not address the U.S. federal estate and gift, state, local or non‑U.S. tax consequences to U.S. Holders ofowning and disposing of our ordinary shares. Investors should consult their own tax advisors regarding the U.S. federal, state and local, as well as non‑U.S.income and other tax consequences of owning and disposing of our ordinary shares in their particular circumstances. 111 Distributions If you are a U.S. Holder, the gross amount of any distribution made to you with respect to our ordinary shares before reduction for any Israeli taxeswithheld therefrom, other than certain distributions, if any, of our ordinary shares distributed pro rata to all our shareholders, generally will be includible inyour income as dividend income to the extent such distribution is paid out of our current or accumulated earnings and profits as determined under U.S.federal income tax principles. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles. Therefore, ifyou are a U.S. Holder you should expect that the entire amount of any distribution generally will be reported as dividend income to you. Non‑corporate U.S.Holders may qualify for the lower rates of taxation with respect to dividends on ordinary shares applicable to long‑term capital gains (i.e., gains from the saleof capital assets held for more than one year), provided that certain conditions are met, including certain holding period requirements and the absence ofcertain risk reduction transactions. However, such dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S.Holders. If you are a U.S. Holder, dividends paid to you with respect to our ordinary shares will generally be treated as foreign source income, which may berelevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Israeli tax withheld on dividends may be deductedfrom your taxable income or credited against your U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separatelywith respect to specific classes of income. For this purpose, dividends that we distribute generally should constitute “passive category income,” or, in the caseof certain U.S. Holders, “general category income.” A foreign tax credit for foreign taxes imposed on distributions may be denied if you do not satisfy certainminimum holding period requirements. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisorto determine whether and to what extent you will be entitled to this credit. Subject to the discussion below under “—Backup Withholding Tax and Information Reporting Requirements,” if you are a Non‑U.S. Holder, yougenerally will not be subject to U.S. federal income (or withholding) tax on dividends received by you on your ordinary shares, unless you conduct a trade orbusiness in the United States and such income is effectively connected with that trade or business (or, if required by an applicable income tax treaty, thedividends are attributable to a permanent establishment or fixed base that such holder maintains in the United States). Sale, Exchange or Other Taxable Disposition of Ordinary Shares If you are a U.S. Holder, you generally will recognize gain or loss on the sale, exchange or other taxable disposition of our ordinary shares equal tothe difference between the amount realized on such sale, exchange or other taxable disposition and your adjusted tax basis in our ordinary shares, and suchgain or loss will be capital gain or loss. The initial tax basis in an ordinary share generally will be equal to the cost of such ordinary share. Except asdiscussed below with respect to foreign currency gain or loss, if you are a non‑corporate U.S. Holder, capital gain from the sale, exchange or other taxabledisposition of ordinary shares is generally eligible for a preferential rate of taxation applicable to capital gains, if your holding period for such ordinaryshares exceeds one year (i.e., such gain is long‑term capital gain). The deductibility of capital losses for U.S. federal income tax purposes is subject tolimitations under the Code. Any such gain or loss that a U.S. Holder recognizes generally will be treated as U.S. source income or loss for foreign tax creditlimitation purposes. Subject to the discussion below under “—Backup Withholding Tax and Information Reporting Requirements,” if you are a Non‑U.S. Holder, yougenerally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale or exchange of such ordinary shares unless: ·such gain is effectively connected with your conduct of a trade or business in the United States (or, if required by an applicable income taxtreaty, the gain is attributable to a permanent establishment or fixed base that such holder maintains in the United States); or ·you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certainother conditions are met. 112 Passive Foreign Investment Company Considerations If we were to be classified as a “passive foreign investment company,” or “PFIC,” in any taxable year, a U.S. Holder would be subject to special rulesgenerally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non‑U.S.company that does not distribute all of its earnings on a current basis. A non‑U.S. corporation will be classified as a PFIC for federal income tax purposes in any taxable year in which, after applying certain look‑throughrules with respect to the income and assets of subsidiaries, either: ·at least 75% of its gross income is “passive income”; or ·at least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of our ordinary shares,which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions, theexcess of gains over losses from the disposition of assets which produce passive income, and includes amounts derived by reason of the temporary investmentof funds raised in offerings of our ordinary shares. If a non‑U.S. corporation owns at least 25% by value of the stock of another corporation, the non‑U.S.corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation and as receiving directly itsproportionate share of the other corporation’s income. If we are classified as a PFIC in any year with respect to which a U.S. Holder owns our ordinary shares,we will continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns our ordinary shares unlesswe cease to be a PFIC and the U.S. holder has made a “deemed sale” election under the PFIC rules. Based on certain estimates of our gross income and the estimated fair market value of our gross assets and the nature of our business, we do notbelieve we were classified as a PFIC for the taxable year ending December 31, 2017. However, we must determine our PFIC status annually based on testswhich are factual in nature, and our status in future years will depend on our income, assets and activities in those years. Further, because the value of ourgross assets is likely to be determined in large part by reference to our market capitalization, a decline in the value of our ordinary shares may result in ourbecoming a PFIC . There can be no assurance that we will not be considered a PFIC for any taxable year. If we were a PFIC and you are a U.S. Holder, thenunless you make one of the elections described below, a special tax regime will apply to both (a) any “excess distribution” by us to you (generally, yourratable portion of distributions in any year which are greater than 125% of the average annual distribution received by you in the shorter of the threepreceding years or your holding period for our ordinary shares) and (b) any gain realized on the sale or other disposition of the ordinary shares. Under thisregime, any excess distribution and realized gain will be treated as ordinary income and will be subject to tax as if (a) the excess distribution or gain had beenrealized ratably over your holding period, (b) the amount deemed realized in each year had been subject to tax in each year of that holding period at thehighest marginal rate for such year (other than income allocated to the current period or any taxable period before we became a PFIC, which would be subjectto tax at the U.S. Holder’s regular ordinary income rate for the current year and would not be subject to the interest charge discussed below) and (c) theinterest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. In addition,dividend distributions made to you will not qualify for the lower rates of taxation applicable to long‑term capital gains discussed above under“Distributions.” Certain elections may be available that would result in an alternative treatment (such as mark‑to‑market treatment) of our ordinary shares. 113 If a U.S. Holder makes a valid mark‑to‑market election for the first tax year in which such U.S. Holder holds (or is deemed to hold) ordinary shares ina corporation and for which such corporation is determined to be a PFIC, the U.S. Holder generally will recognize as ordinary income any excess of the fairmarket value of the ordinary shares at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess ofthe adjusted tax basis of the ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of incomepreviously included as a result of the mark‑to‑market election). If a U.S. Holder makes the election, the U.S. Holder’s tax basis in the ordinary shares will beadjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ordinary shares in a year when we are a PFIC will betreated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a resultof the mark‑to‑market election). The mark‑to‑market election is available only if we are a PFIC and our ordinary shares are “regularly traded” on a “qualifiedexchange.” Our ordinary shares will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the ordinary shares, aretraded on a qualified exchange on at least 15 days during each calendar quarter. Nasdaq is a qualified exchange for this purpose and, consequently, if theordinary shares are regularly traded, the mark‑to‑market election will be available to a U.S. Holder. Because a mark‑to‑market election generally would not beavailable with respect to any lower‑tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such holder’sindirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. We do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified as a PFIC. U.S.Holders should consult their tax advisors to determine whether any of these elections would be available and if so, what the consequences of the alternativetreatments would be in their particular circumstances. If we are determined to be a PFIC, the general tax treatment for U.S. Holders described in this section would apply to indirect distributions and gainsdeemed to be realized by U.S. Holders in respect of any of our subsidiaries that also may be determined to be PFICs. If a U.S. Holder owns ordinary shares during any year in which we are a PFIC, the U.S. Holder generally will be required to file an IRS Form 8621(Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) or successor form with respect to the company,generally with the U.S. Holder’s federal income tax return for that year. If the company was a PFIC for a given taxable year, then you should consult your taxadvisor concerning your annual filing requirements. U.S. Holders should consult their tax advisors regarding whether we are a PFIC and the potential application of the PFIC rules. Medicare Tax Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which mayinclude all or a portion of their dividend income and net gains from the disposition of ordinary shares. Each U.S. Holder that is an individual, estate or trust isurged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in our ordinary shares. Backup Withholding Tax and Information Reporting Requirements U.S. backup withholding tax and information reporting requirements may apply to certain payments to certain holders of stock. Informationreporting generally will apply to payments of dividends on, and to proceeds from the sale, exchange or redemption of, our ordinary shares made within theUnited States, or by a United States payor or United States middleman, to a holder of our ordinary shares, other than an exempt recipient (including a payeethat is not a United States person that provides an appropriate certification and certain other persons). Payments made (and sales or other dispositions effectedat an office) outside the U.S. will be subject to information reporting in limited circumstances. A payor will be required to withhold backup withholding taxfrom any payments of dividends on, or the proceeds from the sale or redemption of, ordinary shares within the United States, or by a United States payor orUnited States middleman, to a holder, other than an exempt recipient, if such holder fails to furnish its correct taxpayer identification number or otherwisefails to comply with, or establish an exemption from, such backup withholding tax requirements, or to report dividends required to be shown on the holder’sU.S. federal income tax returns. Any amounts withheld under the backup withholding rules will be allowed as a credit against the beneficial owner’s U.S.federal income tax liability, if any, and any excess amounts withheld under the backup withholding rules may be refunded, provided that the requiredinformation is timely furnished to the IRS. 114 Foreign Asset Reporting Certain U.S. Holders who are individuals and certain entities may be required to report information relating to an interest in our ordinary shares,subject to certain exceptions (including an exception for shares held in accounts maintained by certain financial institutions) by filing IRS Form 8938(Statement of Specified Foreign Financial Assets) with their federal income tax return. U.S. Holders are urged to consult their tax advisors regarding theirinformation reporting obligations, if any, with respect to their ownership and disposition of our ordinary shares. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H. Documents on Display We are currently subject to the informational requirements of the Exchange Act applicable to foreign private issuers and fulfill the obligations ofthese requirements by filing reports with the SEC. As a foreign private issuer, we are exempt from the rules under the Exchange Act relating to the furnishingand content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short‑swing profit recoveryprovisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financialstatements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required tofile with the SEC, within 120 days after the end of each subsequent fiscal year, an annual report on Form 20‑F containing financial statements which will beexamined and reported on, with an opinion expressed, by an independent public accounting firm. We also file with the SEC reports on Form 6‑K containingquarterly unaudited financial information. You may read and copy any document we file with the SEC without charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580,Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 FStreet, N.E., Washington, D.C. 20549. Please call the SEC at 1‑800‑SEC‑0330 for further information on the public reference room. The SEC also maintainsan Internet site that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also availableto the public through this web site at http://www.sec.gov. As permitted under Nasdaq Stock Market Rule 5250(d)(1)(C), we will post our annual reports filedwith the SEC on our website at http://www.mediwound.com. We will not furnish hard copies of such reports to our shareholders unless we are requested to doso in writing. Upon receipt of such a request, we will provide a hard copy of such reports to such requesting shareholder free of charge. The informationcontained on our website is not part of this or any other report filed with or furnished to the SEC. I. Subsidiary Information Not applicable. Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of risks, including foreign currency exchange fluctuations, changes in interest rates and inflation. We regularly assesscurrency, interest rate and inflation risks to minimize any adverse effects on our business as a result of those factors. Foreign Currency Risk The U.S. dollar is our functional and reporting currency. A portion of our expenses are denominated in Israeli shekels, accounting for approximately28%, 28%, and 40% of our expenses in the years ended December 31, 2015, 2016 and 2017, respectively. We also have expenses in other non‑dollarcurrencies, in particular the Euro, and for the next few years, we expect that the substantial majority of our revenue, if any, will be denominated in Euros fromthe sale of NexoBrid in the European Union. A devaluation of the shekel in relation to the U.S. dollar has the effect of reducing the U.S. dollar amount of ourexpenses or payables that are payable in shekels, unless those expenses or payables are linked to the U.S. dollar. Conversely, any increase in the value of theshekel in relation to the U.S. dollar has the effect of increasing the U.S. dollar value of our unlinked shekel expenses, which would have a negative impact onour profit margins. 115 Because exchange rates between the U.S. dollar and the shekel (as well as between the U.S. dollar and other currencies) fluctuate continuously, suchfluctuations have an impact on our results and period‑to‑period comparisons of our results. The effects of foreign currency re‑measurements are reported inour consolidated financial statements of operations. The following table presents information about the changes in the exchange rates of the shekel against the U.S. dollar and changes in the exchangerates of the Euro against the U.S. dollar: Change in ExchangeRate Period Shekel againstthe U.S. dollar(%) Euro againstthe U.S. dollar(%) 2013 7.0 4.5 2014 (12.0) (11.8)2015 (0.3) (10.4)2016 1.5 (3.4)2017 9.8 13.9 A 10% increase (decrease) in the value of the NIS and Euro against the U.S. dollar would have decreased (increased) our net loss by approximately$0.4 million in 2017. As we begin marketing and sales of NexoBrid in Europe and clinical trials of NexoBrid in the United States, we will continue to monitor exposure tocurrency fluctuations. We do not currently engage in currency hedging activities in order to reduce this currency exposure, but we may begin to do so in thefuture. Instruments that may be used to hedge future risks may include foreign currency forward and swap contracts. These instruments may be used toselectively manage risks, but there can be no assurance that we will be fully protected against material foreign currency fluctuations. Other Market Risks We do not believe that we have material exposure to interest rate risk due to the fact that we have no long‑term borrowings. We do not believe that we have any material exposure to inflationary risks. We do not believe that the rate of inflation in Israel has had a materialimpact on our business to date. However, our costs in Israel will increase if inflation in Israel exceeds the devaluation of the shekel against the U.S. dollar or ifthe timing of such devaluation lags behind inflation in Israel. Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable. 116 PART II Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Initial Public Offering The effective date of the registration statement (File No. 333‑193856) for our IPO of ordinary shares, par value NIS 0.01, was March 19, 2014. Theoffering commenced on March 19, 2014 and was closed on March 25, 2014. In our IPO, we issued and sold a total of 5,750,000 ordinary shares at a price pershare of $14.00 with aggregate gross proceeds of approximately $80.5 million. Under the terms of the offering, we incurred aggregate underwriting discountsof approximately $5.6 million and expenses of approximately $3.2 million in connection with the offering, resulting in net proceeds to us of approximately$71.7 million. From the effective date of the registration statement and until December 31, 2017, we have used existing cash and the net proceeds from the offering,in the amount of approximately $22.4 million to expand our marketing infrastructure, $22.2 million on research and development and $19.9 million tomaintain our manufacturing capabilities, for working capital and other general corporate purposes. Under the modified BARDA contract, BARDA has agreedto fund up to $56.0 million of the development costs of NexoBrid and we expect that almost all NexoBrid development programs, including clinical andnon‑clinical development as well as regulatory submission, will be funded by BARDA. Therefore, we intend to use a portion of our proceeds raised duringour IPO initially intended for use in the development of NexoBrid, together with the net proceeds raised in our September 2017 follow‑on offering, to furtheradvance our research and development activities, primarily the clinical development of EscharEx and the remainder, if any, for working capital and othergeneral corporate purposes. See ITEM 4.B. Business Overview—BARDA Contract.” We may also use a portion of the net proceeds to make acquisitions orinvestments in complementary companies or technologies, although we do not have any agreement or understanding with respect to any such acquisition orinvestment at this time. None of the net proceeds of the offering was paid directly or indirectly to any director, officer, general partner of ours or to their associates, personsowning 10% or more of any class of our equity securities, or to any of our affiliates, except as a compensation and general and administrative expenses. Item 15. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls andprocedures (as such term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) as of December 31, 2017. Based on such evaluation, our ChiefExecutive Officer and Chief Financial Officer have concluded that, as of December 31, 2017, our disclosure controls and procedures were effective. Management Annual Report on Internal Control over Financial Reporting Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintainingadequate internal control over financial reporting as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financialreporting as of December 31, 2017. In making this assessment, our management used the criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management has concluded, based on itsassessment, that our internal control over financial reporting was effective as of December 31, 2017. 117 Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a‑15(f) and 15d‑15(f) under the ExchangeAct) that occurred during the period covered by this annual report that have materially affected, or that are reasonably likely to materially affect, our internalcontrol over financial reporting. Attestation Report of the Registered Public Accounting Firm This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control overfinancial reporting because the JOBS Act provides an exemption from such requirement as we qualify as an emerging growth company. Item 16. [Reserved] Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has determined that Sharon Kocahn qualifies as an “audit committee financial expert,” as defined under the U.S. federalsecurities laws and has the requisite financial experience defined by the Nasdaq Marketplace Rules. In addition, Sharon Kochan is independent as such termis defined in Rule 10A‑3(b)(1) under the Exchange Act and under the listing standards of the Nasdaq Global Market. Item 16B. CODE OF ETHICS We have adopted a code of ethics and proper business conduct applicable to our executive officers, directors and all other employees. A copy of thecode is delivered to every employee of MediWound Ltd. and its subsidiaries and is available to our investors and others on our websitehttp://ir.mediwound.com/ or by contacting our investor relations department. Any waivers of this code for executive officers or directors will be disclosedthrough the filing of a Form 6‑K or on our website. We granted no waivers under our code of ethics in 2017. Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES Principal Accountant Fees and Services We paid the following fees for professional services rendered Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, an independentregistered public accounting firm, for the years ended December 31, 2017 and 2016: 2016 2017 Audit Fees $140,000 $290,000 Audit‑Related Fees — — Tax Fees — — Total $140,000 $290,000 “Audit fees” are the aggregate fees paid for the audit of our annual financial statements. This category also includes services that generally theindependent accountant provides, such as consents and assistance with and review of documents filed with the SEC, including the registration statement filedin connection with our September 2017 equity offering. “Audit‑related fees” are the aggregate fees paid for assurance and related services that are reasonably related to the performance of the audit and arenot reported under audit fees. These fees primarily include accounting consultations regarding the accounting treatment of matters that occur in the regularcourse of business, implications of new accounting pronouncements and other accounting issues that occur from time to time. “Tax fees” include fees for professional services rendered by our independent registered public accounting firm for tax compliance, transfer pricingand tax advice on actual or contemplated transactions. The Audit Committee pre‑approves all audit and non‑audit services provided by the independent accountant. 118 Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not applicable. Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. Item 16G. CORPORATE GOVERNANCE As a foreign private issuer, we are permitted to comply with Israeli corporate governance practices instead of the Nasdaq Stock Market requirements,provided that we disclose those Nasdaq Stock Market requirements with which we do not comply and the equivalent Israeli requirement that we followinstead. We currently rely on this “foreign private issuer exemption” with respect to the following requirements: ·Quorum. As permitted under the Israeli Companies Law pursuant to our articles of association, the quorum required for an ordinary meeting ofshareholders will consist of at least two shareholders present in person, by proxy or by other voting instrument in accordance with the IsraeliCompanies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, at least twoshareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq Stock Market rules. ·Nomination of directors. With the exception of external directors and directors elected by our board of directors due to vacancy, our directorsare elected by an annual meeting of our shareholders to hold office until the next annual meeting following one year from his or her election.The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the board of directorsitself, in accordance with the provisions of our articles of association and the Israeli Companies Law. Nominations need not be made by anominating committee of our board of directors consisting solely of independent directors or otherwise, as required under the Nasdaq StockMarket rules. ·Majority of independent directors. Under the Companies Law, we are only required to appoint at least two external directors, within themeaning of the Companies Law, to our board of directors. Currently, four of our directors (of which two are external directors, within themeaning of the Companies Law) qualify as independent directors under the rules of the U.S. federal securities laws and the Nasdaq Stock Marketrules. If at any time we no longer have a controlling shareholder, we will no longer be required to have external directors; provided that wecomply with the majority Board independence requirements and the audit and compensation committee composition requirements of theNasdaq Stock Market. Item 16H. MINE SAFETY DISCLOSURE Not applicable. 119 PART III Item 17. FINANCIAL STATEMENTS Not applicable. Item 18. FINANCIAL STATEMENTS See pages F‑2 through F‑40 of this annual report. Item 19. EXHIBITS 120 Exhibit No. Description1.1 Amended and Restated Articles of Association of the Registrant(1)1.2First Amendment to the Amended and Restated Articles of Association, effective as of June 12, 2014(5)1.3Memorandum of Association of the Registrant(2)4.1Form of Registration Rights Agreement by and among the Registrant and certain shareholders of the Registrant(2)4.2Form of Information Rights Agreement by and between Clal Biotechnology Industries Ltd. and the Registrant(2)4.3Founders and Shareholders Agreement, dated January 2001, by and among Clal Biotechnology Industries Ltd., L.R. R & D Ltd., Professor LiorRosenberg and the Registrant(3)4.4Patent Purchase Agreement, dated November 24, 2010, by and between the Registrant and L.R. R & D Ltd.(3)4.5Form of Indemnification Agreement(2)4.6Supply Agreement, dated January 11, 2001, as amended, by and between the Registrant and Challenge Bioproducts Corporation Ltd.†(3)4.7License Agreement, dated September 22, 2000, as amended, by and between the Registrant and Mark Klein†(3)4.82003 Israeli Share Option Plan(3)4.92014 Equity Incentive Plan(2)4.10Letter Agreement, dated February 18, 2014, by and between the Registrant and Teva Pharmaceutical Industries Ltd.(2)4.11MediWound Ltd.’s Compensation Policy for Executive Officers and Directors(4)4.12BARDA Contract, dated September 29, 2015, by and between the Registrant and the U.S. Biomedical Advanced Research and DevelopmentAuthority†(6)4.13Modification to the BARDA Contract, dated October 7, 2015, by and between the Registrant and the U.S. Biomedical Advanced Research andDevelopment Authority(6)4.14Modification to the BARDA Contract, dated January 29, 2017, by and between the Registrant and the U.S. Biomedical Advanced Researchand Development Authority†(7)4.15Modification to the BARDA Contract, dated July 19, 2017, by and between the Registrant and the U.S. Biomedical Advanced Research andDevelopment Authority4.16License Agreement, dated November 11, 2016 by and between the registrant and L.R. Research and Development Ltd.(7)4.17Sub‑Lease Agreement, dated March 18, 2018, by and between the Registrant and Clal Life Sciences L.P.8.1List of subsidiaries of the Registrant(3)12.1 Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a‑14(a) and 15d‑14(a) as adopted pursuant to §302 of theSarbanes‑Oxley Act of 200212.2 Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a‑14(a) and 15d‑14(a) as adopted pursuant to §302 of theSarbanes‑Oxley Act of 200213.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes‑Oxley Act of 2002, furnishedherewith13.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes‑Oxley Act of 2002, furnishedherewith15.1 Consent of Kost Forer Gabbay and Kasierer, a member of Ernst & Young Global, an independent registered public accounting firm100 The following financial information from the Registrant’s Annual Report on Form 20‑F for the year ended December 31, 2017 formatted inXBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2016 and 2017; (ii) ConsolidatedStatements of Profit or Loss or Other Comprehensive Loss for the years ended December 31, 2015, 2016 and 2017; (iii) ConsolidatedStatements of Changes in Equity (Deficiency) for the years ended December 31, 2015, 2016 and 2017; (iv) Consolidated Statements of CashFlows for the years ended December 31, 2015, 2016 and 2017; and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.Users of this data are advised, in accordance with Rule 406T of Regulation S‑T promulgated by the SEC, that this Interactive Data File isdeemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, is deemed not filed forpurposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under those sections. †Confidential treatment previously requested and granted with respect to certain portions, which portions were omitted and filed separately with theSecurities and Exchange Commission. (1)Previously filed with the SEC on March 14, 2014 pursuant to a registration statement on Form F‑1 (File No. 333‑193856) and incorporated by referenceherein. (2)Previously filed with the SEC on March 3, 2014 pursuant to a registration statement on Form F‑1 (File No. 333‑193856) and incorporated by referenceherein. (3)Previously filed with the SEC on February 10, 2014 pursuant to a registration statement on Form F‑1 (File No. 333‑193856) and incorporated byreference herein. (4)Previously filed with the SEC on August 5, 2014 as Annex A to Exhibit 99.1 to the Registrant’s Form 6‑K and incorporated by reference herein. (5)Previously filed with the SEC on February 12, 2015 pursuant to the Registrant’s Annual Report on Form 20‑F for the year ended December 31, 2014 (FileNo. 001‑36349) and incorporated by reference herein. (6)Previously filed with the SEC on January 25, 2016 pursuant to the Registrant’s Annual Report on Form 20‑F for the year ended December 31, 2015 (FileNo. 001‑36349) and incorporated by reference herein. (7)Previously filed with the SEC on February 21, 2017 pursuant to the Registrant’s Annual Report on Form 20‑F for the year ended December 31, 2016 (FileNo. 001‑36349) and incorporated by reference herein. 121 SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20‑F and that it has duly caused and authorized the undersignedto sign this annual report on its behalf. MediWound Ltd. Date: March 19, 2018By: /s/ Sharon Malka Sharon Malka Chief Financial and Operation Officer 122 MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2017INDEX Page Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance SheetsF-3 Consolidated Statements of Comprehensive Profit or LossF-4 Consolidated Statements of Changes in EquityF-5 Consolidated Statements of Cash FlowsF-6 - F-7 Notes to Consolidated Financial StatementsF-8 - F-40 Kost Forer Gabbay & Kasierer144 Menachem Begin Rd.Tel-Aviv 6492102, IsraelTel: +972-3-6232525Fax: +972-3-5622555ey.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders andBoard of Directors ofMEDIWOUND LTD. AND ITS SUBSIDIARIESOpinion on the Financial Statements We have audited the accompanying consolidated balance sheets of MediWound Ltd. and its subsidiaries (the “Company”) as of December 31, 2016 and2017 and the related consolidated statements of comprehensive profit or loss, changes in equity and cash flows for each of the three years in the period endedDecember 31, 2017 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in allmaterial respects, the consolidated financial position of the Company at December 31, 2016 and 2017, and the consolidated results of its operations and itscash flows for each of the three years in the period ended December 31, 2017, in conformity with International Financial Reporting Standards as issued by theInternational Accounting Standards Board.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 financialstatements 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 ofthe 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 reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere 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 ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financialreporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.KOST FORER GABBAY & KASIERERA Member of Ernst & Young GlobalWe have served as the Company‘s auditor since 2001.Tel-Aviv, IsraelMarch 19, 2018F - 2 MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands December 31, Note 2016 2017 CURRENT ASSETS: Cash and cash equivalents5 28,866 36,069 Short-term bank deposits6 1,163 - Trade receivables 332 369 Inventories7 844 1,886 Other receivables8, 22 2,407 3,196 33,612 41,520 LONG-TERM ASSETS: Long term deposits 103 56 Property, plant and equipment, net9 1,276 1,924 Intangible assets, net10 773 635 2,152 2,615 35,764 44,135 CURRENT LIABILITIES: Trade payables and accrued expenses 3,320 3,251 Other payables11, 22 2,060 2,182 5,380 5,433 LONG‑TERM LIABILITIES: Deferred revenues 1,023 988 Liabilities in respect of IIA grants12,13 6,839 7,380 Contingent consideration for purchase of shares13,16 14,533 14,381 Liability in respect of discontinued operation19 - 6,003 Severance pay liability, net14 219 330 22,614 29,082 SHAREHOLDERS' EQUITY:16 Ordinary shares of NIS 0.01 par value: Authorized: 32,244,508 shares as of December 31, 2016 and 2017; Issued and Outstanding 21,930,449and 27,047,737 shares respectively. 60 75 Share premium 114,979 138,992 Foreign currency translation adjustments (9) (38)Accumulated deficit (107,260) (129,409) 7,770 9,620 35,764 44,135 The accompanying notes are an integral part of the consolidated financial statements.March 19, 2018 Date of approval of thefinancial statements Stephan T. WillsChairman of the Board Gal CohenChief Executive Officer Sharon MalkaChief Financial Officer F - 3MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE PROFIT OR LOSSU.S. dollars in thousands (except of share and per share data) Year endedDecember 31, Note 2015 2016 2017 Revenues 601 1,558 2,496 Cost of revenues20a 2,519 2,158 1,578 Gross profit (loss) (1,918) (600) 918 Operating expenses: Research and development, net of participations20b 6,021 7,068 5,462 Selling and marketing20c 9,284 8,403 5,362 General and administrative20d 4,004 4,084 3,781 Total operating expenses 19,309 19,555 14,605 Operating loss (21,227) (20,155) (13,687) Financial income20e 1,052 2,166 406 Financial expense20e (1,496) (896) (1,252) Loss from continuing operations (21,671) (18,885) (14,533)Loss from discontinued operation19 (417) - (7,616) Net loss (22,088) (18,885) (22,149) Other comprehensive income (loss): Items to be reclassified to profit or loss in subsequent periods: Foreign currency translation adjustments 2 7 (29) Total comprehensive loss (22,086) (18,878) (22,178) Basic and diluted net loss per share:21 Basic and diluted net loss per share from continuing operations (1.00) (0.86) (0.62)Basic and diluted net loss per share from discontinued operations (0.02) - (0.33)Total Basic and diluted net loss per share (1.02) (0.86) (0.95) The accompanying notes are an integral part of the consolidated financial statements.F - 4MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYU.S. dollars in thousands Share capital Sharepremium ForeigncurrencytranslationAdjustments Accumulateddeficit TotalEquity Balance as of January 1, 2015 59 109,117 (18) (66,287) 42,871 Loss for the period - - - (22,088) (22,088)Other comprehensive income - - 2 - 2 Total comprehensive (loss) income - - 2 (22,088) (22,086) Exercise of options 1 25 - - 26 Share-based compensation - 2,659 - - 2,659 Balance as of December 31, 2015 60 111,801 (16) (88,375) 23,470 Loss for the period - - - (18,885) (18,885)Other comprehensive income - - 7 - 7 Total comprehensive (loss) income - - 7 (18,885) (18,878) Exercise of options * 7 - - 7 Share-based compensation - 3,171 - - 3,171 Balance as of December 31, 2016 60 114,979 (9) (107,260) 7,770 Loss for the period - - - (22,149) (22,149)Other comprehensive loss - - (29) - (29) Total comprehensive loss - - (29) (22,149) (22,178) Exercise of options * 7 - - 7 Issuance of ordinary shares of NIS 0.01 par value net ofissuance expenses 15 22,643 - - 22,658 Share-based compensation - 1,363 - - 1,363 Balance as of December 31, 2017 75 138,992 (38) (129,409) 9,620 *) Represents an amount lower than $1. The accompanying notes are an integral part of the consolidated financial statements. F - 5MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Year endedDecember 31, 2015 2016 2017 Cash Flows from Operating Activities: Net loss (22,088) (18,885) (22,149) Adjustments to reconcile net loss to net cash used in continuing operating activities: Adjustments to profit and loss items: Loss from discontinued operation 417 - 7,616 Depreciation and amortization 503 589 567 Share-based compensation 2,659 3,171 1,363 Revaluation of liabilities in respect of IIA grants (474) (1,298) 229 Revaluation of contingent consideration for purchase of shares (764) (1,621) 351 Increase in severance pay liability, net 90 125 111 Net financing income (288) (414) (349)Un-realized foreign currency (gain) loss 69 (94) (185) 2,212 458 9,703 Changes in asset and liability items: Decrease (increase) in trade receivables (181) (107) 28 Decrease (increase) in inventories (273) 873 (1,042)Decrease (increase) in other receivables and long term deposits (556) 33 (1,227)Increase (decrease) in trade payables and accrued expenses 33 2,195 (135)Increase (decrease) in other payables and deferred revenues 1,252 (1,012) (70) 275 1,982 (2,446) Net cash used in continuing operating activities (19,601) (16,445) (14,892)Net cash used in discontinued operating activities - - (1,563) Net cash used in operating activities (19,601) (16,445) (16,455) The accompanying notes are an integral part of the consolidated financial statements. F - 6MEDIWOUND LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Year endedDecember 31, 2015 2016 2017 Cash Flows from Investing Activities: Purchase of property and equipment (376) (671) (1,045)Purchase of intangible assets (30) (30) (30)Interest received 287 407 349 Proceeds from short term bank deposits, net 36,165 2,110 1,163 Net cash provided by investing activities 36,046 1,816 437 Cash Flows from Financing Activities: Proceeds from exercise of options 26 7 7 Proceeds from issuance of shares, net - - 22,658 Proceeds from the IIA grants, net of re-payment 752 900 330 Net cash provided by financing activities 778 907 22,995 Exchange rate differences on cash and cash equivalent balances (143) 86 226 Increase (decrease) in cash and cash equivalents from continuing activities 17,080 (13,636) 8,766 Decrease in cash and cash equivalents from discontinued activities - - (1,563)Balance of cash and cash equivalents at the beginning of the year 25,422 42,502 28,866 Balance of cash and cash equivalents at the end of the year 42,502 28,866 36,069 The accompanying notes are an integral part of the consolidated financial statements. F - 7MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 1:GENERALa.General description of the Company and its operations: MediWound Ltd. (the "Company" or "MediWound"), is a fully integrated biopharmaceutical company focused on developing,manufacturing and commercializing novel products to address unmet needs in the fields of severe burns, as well as chronic and otherhard to heal wounds, connective tissue disorders and other indications. The Company's innovative biopharmaceutical product, NexoBrid, received marketing authorization from the European MedicinesAgency ("EMA") and the Israeli and Argentinean ministries of health for removal of dead or damaged tissue, known as eschar, in adultswith deep partial and full thickness thermal burns. The Company sells NexoBrid in Europe and in Israel through its commercialorganization and in other territories through local distributers.The Company has a contract with the U.S. Biomedical Advanced Research and Development Authority ("BARDA"), which was modifiedon July 2017, for the advancement of the development and manufacturing, as well as the procurement of NexoBrid, as a medicalcountermeasure as part of BARDA preparedness for mass casualty events (see also Note 15e).b.The Company has two wholly owned subsidiaries: MediWound Germany GmbH, acting as Europe (“EU”) marketing authorizationholder and EU sales and marketing arm and MediWound UK Limited, an inactive company. In addition, the Company ownsapproximately 8% of PolyHeal Ltd., a private life sciences company ("PolyHeal").c.The Company's securities are listed for trading on NASDAQ since March 2014. In September, 2017, the Company completed a follow-onpublic offering. A total of 5,037,664 new ordinary shares were issued in consideration to net proceeds of $22,658, after deductingunderwriter’s discounts, commissions and other offering expenses (see also Note 16d). F - 8MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2: SIGNIFICANT ACCOUNTING POLICIESa.Basis of presentation of financial statements:These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by theInternational Accounting Standards Board ("IASB").The Company's consolidated financial statements have been prepared on a cost basis, except for financial instruments which aremeasured at fair value through profit or loss.b.The Company's operating cycle is one year.c.Consolidated financial statements include the financial statements of companies that the Company controls (subsidiaries). Control isachieved when the Company is exposed, or has rights, to variable returns from its investment with the investee and has the ability toaffect those returns through its power over the investee.The financial statements of the Company and its subsidiaries are prepared as of the same dates and periods. The consolidated financialstatements are prepared using uniform accounting policies by all entities in the Group. Significant intercompany balances andtransactions and gains or losses resulting from intercompany transactions are eliminated in full in the consolidated financial statements.d.Functional currency, reporting currency and foreign currency:1.Functional currency and reporting currency:The reporting currency of the financial statements is the U.S. dollar.The Company determines the functional currency based on the currency in which it primarily generates and expends cash. TheCompany determined that its functional currency is the U.S. dollar since most of the Company's expenses are in U.S. dollars andthe economic environment in which the Company operates in and performs its transactions is mostly affected by the U.S dollar. Acertain portion of the Company's costs are denominated in NIS mainly due to payroll and related benefit costs incurred in Israel.To further support the Company's determination, the Company has analyzed the currency in which funds from financingactivities are generated or held and the currency in which receipts from operating activities are usually retained. In this respect,funds from financing activities were principally derived from significant funds raised in U.S. dollars including the public offeringcompleted in 2014, the follow-on offering completed in 2017 and U.S governmental funds.The Company operates and plans its activities in U.S. dollars and accordingly its periodic budgets and internal managementreports are prepared and monitored using the U.S. dollar as the primary currency and provides the basis for the determination ofshare-based compensation.F - 9Raw materials-At cost of purchase using the first-in, first-out method. Finished goods-On the basis of average costs including materials, labor and other direct and indirect manufacturing costs based onpractical capacity.MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)The functional currency of the Company's subsidiary in Germany has been determined to be its local currency - the EURO. Assetsand liabilities of this subsidiary are translated at year end exchange rates and its statement of operations items are translated usingthe actual exchange rates at the dates of which those items are recognized. Such translation adjustments are recorded as a separatecomponent of accumulated other comprehensive income (loss) in shareholders' equity.2.Transactions, assets and liabilities in foreign currency:Transactions denominated in foreign currency are recorded upon initial recognition at the exchange rate on the date of thetransaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at the end ofeach reporting period into the functional currency at the exchange rate at that date. Exchange differences are recognized in profitor loss.e.Cash equivalents:Cash equivalents are considered as highly liquid investments, including unrestricted short‑term bank deposits with an original maturityof three months or less from the date of deposit.f.Short-term bank deposits:Short-term bank deposits have a maturity of more than three months, but less than one year, from the deposit date.g.Inventories:Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinarycourse of business less the estimated costs of completion and the estimated selling costs. The Company periodically evaluates thecondition and age of inventories and makes provisions for slow moving inventories accordingly. Cost of inventories is determined as follows:F - 10MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)h.Participation by governments support:(i) Israeli Innovation Authority grants:Government grants are recognized when there is reasonable assurance that the grants will be received and the Company will complywith the attendant conditions.Research and development grants received from the Israeli Innovation Authority ("IIA"), formerly the Office of the Chief Scientist inIsrael ("OCS"), are recognized upon receipt as a liability if future economic benefits are expected from the project that will result inroyalty-bearing sales. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37, "Provisions,Contingent Liabilities and Contingent Assets" ("IAS 37").A liability for the grant is first measured at fair value using a discount rate that reflects a market interest rate. The difference between theamount of the grant received and the fair value of the liability is accounted for as a government grant and recognized as a deductionfrom research and development expenses. After initial recognition, the liability is measured at amortized cost using the effective interestmethod. Royalty payments are treated as a reduction of the liability.At the end of each reporting period, the Company evaluates whether there is reasonable assurance that the liability recognized, in wholeor in part, will not be repaid based on its best estimate of future sales and, if so, the appropriate amount of the liability is derecognizedagainst a corresponding reduction in research and development expenses. (ii) Funding by BARDA:Non-royalty bearing funds from BARDA for funding research and development projects are recognized at the time the Company isentitled to such grants on the basis of the related costs incurred and recorded as a deduction from research and development expenses.i.Leases:The criteria for classifying leases as finance or operating leases depend on the substance of the agreements and are made at the inceptionof the lease in accordance with the following principles as set out in IAS 17.Operating leases:Leases in which substantially all the risks and rewards of ownership of the leased asset are not transferred to the Company areclassified as operating leases. Lease payments are recognized as an expense in profit or loss on a straight-line basis over the leaseterm.F - 11MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)j.Property, plant and equipment, net:Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulatedimpairment losses and excluding day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that are used inconnection with the plant and equipment.Depreciation is calculated on a straight‑line basis over the useful life of the assets at annual rates as follows: %Office furniture 6 - 15Electronic machinery and laboratory equipment 15 - 20Computers 33Leasehold improvements See below Leasehold improvements are depreciated on a straight‑line basis over the shorter of the lease term (including the renewal option held bythe Company which is expected to be exercised) and the expected life of the improvement.k.Intangible assets, net:Separately acquired intangible assets with finite useful life are measured on initial recognition at cost.Intangible assets are amortized over their useful life using the straight‑line method beginning in the period in which the intangibleassets generates net cash inflows to the Company. The useful life is over the length of the patent or knowledge life. The intangible assetsare reviewed for impairment at each reporting date until they begin generating net cash inflows and subsequently whenever there is anindication that the asset may be impaired. l.Revenue recognitionThe Company currently generates revenues from direct and indirect sales of its innovative biopharmaceutical product, NexoBrid, toburn centers and hospital burn units in Europe and Israel as well as to local distributors in other countries. Revenues are recognized tothe extent that it is probable that the economic benefits will flow to the Company and the revenues can be reliably measured, regardlessof when the payment is being made. Revenues are measured at the fair value of the consideration received or receivable, taking intoaccount contractually defined terms of payment and excluding taxes or duty and net of returns and allowances, trade discounts andvolume rebates.Revenues from the sale of products are recognized when all the significant risks and rewards of ownership of the products have passed tothe buyer and the seller no longer retains continuing managerial involvement. The delivery date of the products is usually the date ofwhich ownership passes.F - 12MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)Revenues from distributors agreements which comprised of multiple elements (including license to access the Company's intellectualproperty and exclusive distribution rights), provide for varying consideration terms, such as upfront payments and milestone payments,are recognized when the criteria for revenue recognition have been met and only to the extent of the consideration that is not contingentupon completion or performance of future services under the contract. The Company concluded that the components do not have "standalone value" to the customer and accordingly they are accounted for as one unit of account. Consequently, revenues from thesecomponents are recognized on the straight line basis over the license period.Deferred revenues include unearned amounts received from customers not yet recognized as revenues.m.Research and development expenses:Research and development expenses are recognized in profit or loss when incurred. An intangible asset arising from a developmentproject or from the development phase of an internal project is recognized if the Company can demonstrate the technical feasibility ofcompleting the intangible asset so that it will be available for use or sale; the Company's intention to complete the intangible asset anduse or sell it; the Company's ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits;the availability of adequate technical, financial and other resources to complete the intangible asset; and the Company's ability tomeasure reliably the expenditure attributable to the intangible asset during its development. Since the Company's research anddevelopment projects are often subject to regulatory approval procedures and other uncertainties, the conditions for the capitalization ofcosts incurred before receipt of approvals are not normally satisfied and, therefore, research and development expenses are recognized inprofit or loss when incurred.n.Impairment of non-financial assets:The Company evaluates the need to record an impairment of the carrying amount of non-financial assets whenever events or changes incircumstances indicate that the carrying amount is not recoverable. If the carrying amount of non‑financial assets exceeds theirrecoverable amount, the assets are reduced to their recoverable amount. The recoverable amount of an asset that does not generateindependent cash flows is determined for the cash‑generating unit to which the asset belongs, and is calculated based on the projectedcash flows that will be generated by the cash generating unit.An impairment loss of an asset, is reversed only if there have been changes in the estimates used to determine the asset's recoverableamount since the last impairment loss was recognized. Reversal of an impairment loss, as above, may not increase the value above thelower of (i) the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss beenrecognized for the asset in prior years, and (ii) its recoverable amount.F - 13MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)o.Financial instruments:1.Financial assets:Financial assets within the scope of IAS 39, are initially recognized at fair value plus directly attributable transaction costs,except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profitor loss.After initial recognition, the accounting treatment of financial assets is based on their classification as follows:Receivable:The Company has receivables that are financial assets with fixed or determinable payments that are not quoted in an activemarket.2.Financial liabilities:Financial liabilities within the scope of IAS 39 are initially measured at fair value.After initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:Financial liabilities measured at amortized cost:Loans and other contingent liabilities are measured at amortized cost using the effective interest method taking into accountdirectly attributable transaction costs.3.Fair value:The fair value of financial instruments that are traded in an active market is determined by reference to market prices at the end ofthe reporting period. For financial instruments where there is no active market, fair value is determined using valuationtechniques. Such techniques include using recent arm's length market transactions; reference to the current market value ofanother instrument which is substantially the same; discounted cash flow or other valuation models.4.Offsetting financial instruments:Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financialposition if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a netbasis, to realise the assets and settle the liabilities simultaneously.F - 14Level 1-quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2-inputs other than quoted prices included within level 1 that are observable either directly or indirectly. Level 3-inputs that are not based on observable market data (valuation techniques which use inputs that are not based onobservable market data).MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)5. Classification of financial instruments by fair value hierarchy: All assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair valuehierarchy based on the lowest level input that is significant to the entire fair value measurement:6.De-recognition of financial instruments:a)Financial assets:A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or theCompany has transferred its contractual rights to receive cash flows from the financial asset or assumes an obligation topay the cash flows in full without material delay to a third party and has transferred substantially all the risks and rewardsof the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferredcontrol of the asset. b)Financial liabilities:A financial liability is derecognized when it is extinguished, that is when the obligation is discharged or cancelled orexpires. A financial liability is extinguished when the debtor (the Company) discharges the liability by paying in cash,other financial assets, goods or services; or is legally released from the liability.7.Contingent consideration for purchase of shares:The contingent consideration liability for purchase of shares is measured at fair value and initially recorded against equity.Subsequent changes in the fair value are recognized in profit or loss.F - 15MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)p.Provisions:A provision in accordance with IAS 37 is recognized when the Company has a present (legal or constructive) obligation as a result of apast event, it is expected to require the use of economic resources to clear the obligation and a reliable estimate can be made of it.q.Short-term employee benefits and severance pay liability, net:The Company has several employee benefit plans:1.Short-term employee benefits:Short-term employee benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions andare recognized as expenses as the services are rendered. A liability in respect of a cash bonus is recognized when the Companyhas a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliableestimate of the amount can be made.2.Post-employment benefits:The Company has liabilities for severance pay for its employees in several of EU jurisdictions and in Israel. Post-employment benefit plans in Israel are normally financed by contributions to insurance companies and classified as definedcontribution plans or as defined benefit plans. The Company has defined contribution plans for Israeli employees pursuant to theSeverance Pay Law into which the Company pays fixed contributions and has no legal or constructive obligation to pay furthercontributions on account of severance pay if the fund does not hold sufficient amounts to pay all employee benefits relating toemployee service in current and prior periods.Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense whencontributed concurrently with performance of the employee's services.r.Share-based compensation:Certain Company employees and directors are entitled to remuneration in the form of equity-settled share-based compensation.Equity-settled transactionsThe cost of equity-settled transactions with employees is measured at the fair value of their equity instruments granted at grant date. Thefair value is determined using the binomial option pricing model.F - 16MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)The cost of equity-settled transactions is recognized in profit or loss, together with a corresponding increase in equity, during the periodwhich the performance or service conditions are to be satisfied, ending on the date on which the relevant employees become fullyentitled to the award.s.Discontinued operation:A discontinued operation is a component of the Company that either has been disposed of or is classified as held for sale. Disposal groupto be abandoned meets the criteria for being a discontinued operation at the date of which it ceases to be used. The operating resultsrelating to the discontinued operation are separately presented in the consolidated statements of comprehensive income.t.Loss per share:Loss per share is calculated by dividing the loss attributable to Company shareholders by the weighted average number of outstandingordinary shares during the period. Potential ordinary shares are only included when their conversion decreases income per share orincreases loss per share from continuing operation.Furthermore, potential ordinary shares converted during the period are included in diluted loss per share only until the conversion dateand from that date in basic loss per share.u.Reclassification:Certain amounts previously reported in the consolidated financial statements have been reclassified to conform to current yearpresentation. Such reclassifications did not affect net loss, shareholders’ equity or cash flows. NOTE 3:-SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THEFINANCIAL STATEMENTSThe preparation of the financial statements requires management to make estimates and assumptions that have an effect on the application ofthe accounting policies and on the reported amounts of assets, liabilities and expenses.Discussed below are the key assumptions made in the financial statements concerning uncertainties at the end of the reporting period and thecritical estimates computed by the Company that may result in a material adjustment to the carrying amounts of assets and liabilities within thenext financial year.•Determining the fair value of share based compensation to employees and directors:The fair value of share based compensation to employees and directors is determined using the binomial option pricing models.F - 17MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 3:-SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THEFINANCIAL STATEMENTS (Cont.)The assumptions used in the models include the expected volatility, early exercise factor, expected dividend and risk-free interest rate.•Liabilities in respect to IIA grants:Government grants received from the IIA are recognized as a liability if future economic benefits are expected from the research anddevelopment activity that will result in royalty‑bearing sales. As the contingent liability is calculated based on future royalty-bearingsales, there is uncertainty regarding the estimated future cash flows and the estimated discount rate used to measure the amortized costof the liability.•Contingent consideration for the purchase of shares:Contingent consideration for the purchase of shares was first measured at fair value. After initial recognition, the liability is measured atamortized cost using the effective interest method. As the contingent consideration is calculated based on future royalty‑bearing sales,there is uncertainty regarding the estimated future cash flows and the estimated discount rate used to measure the fair value of thisliability.•Legal claims: In estimating the likelihood of outcome of legal claims filed against the Company and its investees, the companies rely on the opinionof their legal counsel. These estimates are based on the legal counsel's best professional judgment, taking into account the stage ofproceedings and legal precedents in respect of the different issues. Since the outcome of the claims will be determined in courts, theresults could differ from these estimates. NOTE 4:-DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION a.IFRS 15, "Revenue from Contracts with Customers":IFRS 15 ("the new Standard") was issued by the IASB in May 2014.The new Standard replaces IAS 18, "Revenue", IAS 11, "Construction Contracts", IFRIC 13, "Customer Loyalty Programs", IFRIC 15,"Agreements for the Construction of Real Estate", IFRIC 18, "Transfers of Assets from Customers" and SIC-31, "Revenue - BarterTransactions Involving Advertising Services".F - 18MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 4:-DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION (Cont.) The new Standard introduces a five-step model that will apply to revenue earned from contracts with customers: Step 1: Identify the contract with a customer, including reference to contract combination and accounting for contract modifications.Step 2: Identify the separate performance obligations in the contractStep 3: Determine the transaction price, including reference to variable consideration, financing components that are significant to thecontract, non-cash consideration and any consideration payable to the customer.Step 4: Allocate the transaction price to the separate performance obligations on a relative stand-alone selling price basis usingobservable information, if it is available, or using estimates and assessments.Step 5: Recognize revenue when a performance obligation is satisfied, either at a point in time or over time.The new standard is effective for the Company beginning January 1, 2018.The new Standard allows the option of modified retrospective adoption with certain reliefs according to which the new Standard will beapplied to existing contracts from the initial period of adoption and thereafter with no restatement of comparative data. Under thisoption, the Company will recognize the cumulative effect of the initial adoption of the new Standard as an adjustment to the openingbalance of retained earnings (or another component of equity, as applicable) as of the date of initial application. Alternatively, the newStandard permits full retrospective adoption.The Company will adopt this standard using the modified retrospective method rather than full retrospective method. The Company generates revenues from direct and indirect sales of its products and from license agreements with its distributors.1.Revenue from the sale of goods:In contracts with customers where the sale of goods is expected to be the only performance obligation, the Company expects torecognize revenue at a point in time when the control of the goods is transferred to the customer, normally when the goods aredelivered to the customer. This is similar to the timing of revenue recognition in accordance with current accounting standards.2.Revenue from distribution agreements with Multiple- element:According to the new Standard, entities need to determine whether the licenses for intellectual property is distinct from othergoods and services included in the contract.F - 19MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 4:-DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION (Cont.)An analysis of the Company's contracts with its distributors indicates that in the majority of contracts, the Company grants itsdistributors a right to access its intellectual property as it exists throughout the license period. Accordingly, the Company isexpected to recognize revenue from the granting of licenses over the license period, which is identical to the current accountingtreatment.In addition, in accordance with terms of some license agreements, the Company is entitled for up-front payments which areaccounted for as deferred revenues and recognized in profit and loss over the license period. Currently the Company does notrecognize finance expenses in respect of deferred revenues. According to the new Standard, when long-term advances (exceedingone year) are received for a future service, the Company is required to accrue interest and recognize finance expense on theadvances over the period of the contract.The accumulated effect of implementing the new Standard as of January 1, 2018 will be increase of deferred revenues by $ 249and increase of accumulated deficit by $ 249.b.IFRS 16, "Leases":In January 2016, the IASB issued IFRS 16, "Leases" ("the new Standard"). According to the new Standard, a lease is a contract, or part ofa contract, that conveys the right to use an asset for a period of time in exchange for consideration.According to the new Standard:·Lessees are required to recognize an asset and a corresponding liability in the statement of financial position in respect of allleases (except in certain cases) similar to the accounting treatment of finance leases according to the existing IAS 17, "Leases".·Lessees are required to initially recognize a lease liability for the obligation to make lease payments and a corresponding right-of-use asset. Lessees will also recognize interest and depreciation expense separately.The new Standard is effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted provided that IFRS15, "Revenue from Contracts with Customers", is applied concurrently. The Company does not anticipate early adopting this standard.For leases existing at the date of transition, the new Standard permits lessees to use either a full retrospective approach, or a modifiedretrospective approach, with certain transition relief whereby restatement of comparative data is not required. At this stage, the Company is evaluating the different options for adoption of the new Standard.F - 20 December 31, 2016 2017 USD cash for immediate withdrawal 25,863 26,700 Non-USD cash for immediate withdrawal 3,003 9,369 28,866 36,069 December 31, 2016 2017 USD bank deposits 1,163 - 1,163 - Year endedDecember 31, 2016 2017 Raw materials 296 339 Finished goods 548 1,547 844 1,886 Year endedDecember 31, 2016 2017 Government authorities 61 226 BARDA funds 953 2,175 Prepaid expenses and other 224 129 Former shareholder, net (see Note 15d) 1,169 666 2,407 3,196 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 4:-DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION (Cont.) The company is currently evaluating the impact of implementing this guidance on its consolidated financial statements. In 2018, theCompany will continue to assess the potential effect of IFRS 16 on its consolidated financial statements as well as its adoptionmethodology.NOTE 5:-CASH AND CASH EQUIVALENTS NOTE 6:-SHORT-TERM BANK DEPOSITS The USD deposits bear annually interest of 1.3% for the period of 181 days for 2016. NOTE 7:- INVENTORIES NOTE 8:-OTHER RECEIVABLES F - 21 Officefurniture Electronicmachineryandlaboratoryequipment Computers Leaseholdimprovements Total Cost Balance as of January 1, 2017 227 2,551 185 2,120 5,083 Disposals - - (74) - (74)Additions 9 1,010 26 - 1,045 Foreign currency translation 12 - 2 - 14 Balance as of December 31, 2017 248 3,561 139 2,120 6,068 Accumulated Depreciation Balance as of January 1, 2017 126 1,508 118 2,057 3,809 Disposals - - (74) - (74)Additions 20 294 47 38 399 Foreign currency translation 8 - 2 - 10 Balance as of December 31, 2017 154 1,802 93 2,095 4,144 Depreciated cost as of December 31, 2017 94 1,759 46 25 1,924 Officefurniture Electronicmachineryandlaboratoryequipment Computers Leaseholdimprovements Total Cost Balance as of January 1, 2016 221 1,955 174 2,095 4,445 Disposals - - (27) - (27)Additions 12 596 38 25 671 Foreign currency translation (6) - - - (6) Balance as of December 31, 2016 227 2,551 185 2,120 5,083 Accumulated Depreciation Balance as of January 1, 2016 102 1,205 86 2,012 3,405 Disposals - - (27) - (27)Additions 27 303 59 47 436 Foreign currency translation (7) - - - (7) Balance as of December 31, 2016 122 1,508 118 2,059 3,807 Depreciated cost as of December 31, 2016 105 1,043 67 61 1,276 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 9:-PROPERTY, PLANT AND EQUIPMENT, NET Balance as of December 31, 2017: Balance as of December 31, 2016: F - 22MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 10:- INTANGIBLE ASSETS, NETBalance as of December 31, 2017 License andKnowhow Cost Balance as of January 1, 2017 1,496 Additions 30 Balance as of December 31, 2017 1,526 Accumulated Amortization Balance as of January 1, 2017 723 Additions 168 Balance as of December 31, 2017 891 Amortized cost Balance as of December 31, 2017 635 Balance as of December 31, 2016 License andKnowhow Cost Balance as of January 1, 2016 1,466 Additions 30 Balance as of December 31, 2016 1,496 Accumulated Amortization Balance as of January 1, 2016 570 Additions 153 Balance as of December 31, 2016 723 Amortized cost Balance as of December 31, 2016 773 Intangible assets include exclusive licenses to use patents, know-how and intellectual property for the development, manufacturing andmarketing of products related to burn treatments and other products in the field of wound care. These licenses were purchased from third partiesand from one of the Company's shareholders (see Note 15c).F - 23 Year endedDecember 31, 2016 2017 Employees and payroll accruals 1,566 1,621 Current maturities of IIA grants 49 57 Related parties 295 324 Deferred revenues 122 131 Other 28 49 2,060 2,182 Year endedDecember 31, 2016 2017 Balance as of January 1 7,303 6,888 Grants received 929 401 Royalties (46) (81)Amounts carried to Profit or Loss (1,298) 229 Balance as of Decmber 31 6,888 7,437 Current maturities (49) (57) Long term liabilities in respect of IIA grants 6,839 7,380 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 11:- OTHER PAYABLES NOTE 12:- LIABILITIES IN RESPECT OF IIA GRANTS The Company is committed to pay royalties to the IIA up to the total grants received plus the applicable accrued interest. The total amount ofgrants actually received by the Company from the IIA including accrued LIBOR interest, net of royalties actually paid by the Company as ofDecember 31, 2017 is approximately $ 13,356, while the amortized cost of this liability as of that date is $ 7,437, using the interest method.F - 24MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 13:- FINANCIAL INSTRUMENTS a.Financial risk factors:The Company's activities expose it to various market risks (mainly foreign currency risk and interest rate risk). The Company's Board ofDirectors has provided guidelines for risk management and specific policies for various risk exposures.Foreign currency riskThe Company operates primarily in an international environment and is exposed to foreign exchange risk resulting from the fact that acertain portion of the Company's costs are denominated in NIS and EURO, mainly due to payroll and related benefit costs incurred inIsrael and in Europe, and additionally due to marketing expenses incurred in Europe.b.Fair value:The carrying amount of cash and cash equivalents, short‑term bank deposits, trade and other receivables and trade and other payablesapproximates their fair value due to the short‑term maturities of such instruments.The fair value of liabilities in respect to IIA grants with fixed interest is based on a calculation of the present value of the cash flows atthe interest rate for a loan with similar terms. The Company used a discount rate of 12% based in part of the Company's estimation at thetime of the Company's recognition of the IIA grants which approximates the fair value at the respective balance sheet date.The fair value of the contingent consideration for purchase of shares is based on a calculation of the present value of future royaltypayments using a discount rate that reflects the applicable market rate of interest at the date of the initial recognition. The Companyused a discount rate of 16% based in part on the Company's estimation, at the time of the Company's initial recognition of thecontingent consideration. The amount and timing of the future royalty payments are based on the Company's projected revenues.c.Sensitivity tests relating to changes in market factors:The Company operates in an international environment and is exposed to foreign exchange risk resulting from the exposure to differentcurrencies, mainly NIS and EURO. Foreign exchange risks arise from recognized assets and liabilities denominated in a foreign currencyother than the functional currency.F - 25 December 31, 2015 2016 2017 Sensitivity test to changes in NIS and EURO exchange rates Gain (loss) from change: 5% increase in exchange rate $361 $11 $346 5% decrease in exchange rate $(361) $(11) $(346)MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 13:- FINANCIAL INSTRUMENTS (Cont.)Sensitivity tests and principal work assumptions:The selected changes in the relevant risk variables were determined based on management's estimate as to reasonable possible changesin these risk variables.The Company has performed sensitivity tests of principal market risk factors that may affect its reported operating results or financialposition.The sensitivity tests present the profit or loss for the relevant risk variables chosen as of each reporting date. NOTE 14:- SEVERANCE PAY LIABILTY, NETThe Company has liabilities for severance pay for its employees in Israel and in several EU jurisdictions. The Company's liability for employeebenefits is based on local laws, valid labor agreements, the employee's salary and the applicable terms of employment, which together generatea right to severance compensation. Post‑employment employee benefits are partially financed by deposits with defined contribution plans, asdetailed below.The Israeli Severance Pay Law, 1963 ("Severance Pay Law"), specifies that Israeli employees are entitled to severance payment, following thetermination of their employment. Under the Severance Pay Law, the severance payment is calculated as one month salary for each year ofemployment, or a portion thereof. Under Section 14 of the Severance Pay Law ("Section 14"), employees are entitled to have monthly deposits,at a rate of 8.33% of their monthly salary, made on their behalf to their insurance funds. Payments in accordance with Section 14 release theCompany from the liability for any future severance payments in respect of those employees.The majority of the Company's liability for severance pay is covered by Section 14. Acordingly, the Company does not recognize any liabilityfor severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in the Company's balance sheet. Thesecontributions for compensation represent defined contribution plans. The Company recognizes liability for severance pay due to its employeesin EU in accordance with local laws and its Israeli employees which are not under Section 14.F - 26MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 15:- CONTINGENT LIABILITIES AND COMMITMENTSa.In 2000, the Company signed an exclusive license agreement (as amended in 2007) with a third party with regard to its patents andintellectual property. Pursuant to the agreement, the Company received an exclusive license to use the third party's patents andintellectual property, for the purpose of developing, manufacturing, marketing, and commercializing products for treatment of burns andother wounds.In consideration for this exclusive license, the Company paid an aggregate amount of $ 950 following the achievement of certaindevelopment milestones as set forth in the agreement. In addition, the Company undertook to pay royalties of 1.5% to 2.5% from futurerevenues from sales of products which are based on this patent for a period ranging between 10 to 15 years from the first commercialdelivery in a major country, and thereafter the Company will have a fully paid-up royalty-free license for these patents. In addition,royalties will be paid at the rate of 10% - 20% from sub-licensing of such patents. Moreover, the Company agreed to pay a one-timelump-sum amount of $ 1,500 when the aggregate revenues based on these patents reach $ 100,000. The amount of royalty payments forthe years 2015, 2016 and 2017 amounted to $11, $57 and $48, respectively.b.Under the Research and Development Law, (the "R&D Law") the Company undertook to pay royalties of 3% on the revenues derivedfrom sales of products or services developed in whole or in part using IIA grants. The maximum aggregate royalties paid generallycannot exceed 100% of the grants received by the Company, plus annual interest generally equal to the 12-month LIBOR applicable todollar deposits, as published on the first business day of each calendar year. The maximum royalty amount payable by the Company asof December 31, 2017 is approximately $ 13,356, which represents the total amount of grants actually received by the Company fromthe IIA including accrued interest, net of royalties actually paid by the Company (see also Note 12).c.On November 24, 2010, the Company signed an agreement with one of its shareholders, to purchase a patent for the production and saleof related products for the treatment of burns. In consideration for the transfer and assignment of all rights and title relating to the patent,the Company paid a one-time payment in the amount of $ 88 and undertook to pay annual fixed payments in the amount of $ 30 as longas the patent is valid in the US and/or in any EU member country. The patent expires in May 2018, and the Company's accumulatedcontingent liability with respect to this agreement as of December 31, 2017 is $ 13.d. Contingent consideration for purchase of shares: Beginning in 2007, the Company entered into a number of agreements with Teva Pharmaceutical Industries Limited (“Teva”) related tocollaboration in the development, manufacturing and commercialization of solutions for the burn and chronic wound care markets. Inconsideration for these agreements, Teva made investments in the Company's ordinary shares and agreed to fund certain research anddevelopment expenses and manufacturing costs and perform all marketing activities for both NexoBrid, under the 2007 TevaAgreement, and the PolyHeal Product, under the 2010 PolyHeal Agreements (see Note 19a). As of December 31, 2012, all of theseagreements were terminated.F - 27MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 15:- CONTINGENT LIABILITIES AND COMMITMENTS (Cont.) On September 2, 2013, in accordance with the terms of the Teva Shareholders’ Rights Agreement, the Company exercised its rights torepurchase all of its shares held by Teva, and purchased 755,492 ordinary shares, in consideration for an obligation to pay Teva futureroyalty payments of 20% of the Company’s revenues from the sale or license of NexoBrid up to a total amount of $30,600 and from thesale or license of the PolyHeal Product up to a total amount of $10,800. The obligation to pay Teva future royalty payments no longerincludes amounts from the sale or license of the PolyHeal Product since the license to the PolyHeal Product has expired.The total amortized cost of the future royalty obligation to Teva were initially account at their estimated fair value at the exercise dateon September 2, 2013, using a discounted cash flow model based on sales projections. Subsequent changes in this liability are recordedin profit or loss within financial income of financial expenses. Accordingly, the liability was remeasured to $ 14,533 and $14,381 as ofDecember 31, 2016 and 2017, respectivaly, as a result of a revaluation in the amount of $ 1,621 and $ (351), respectively, Pwhich wasrecorded within financial income and financial expenses, respectively. As of December 31, 2017, the Company did not pay royalties toTeva and an accrued royalty payments resulting from actual sales are classified as former shareholder net (see also Note 8).e.On September 29, 2015, the Company was awarded a U.S. Biomedical Advanced Research and Development Authority ("BARDA")contract for development and procurement of NexoBrid for the U.S. The contract is for the advancement of the development andmanufacturing, as well as the procurement of NexoBrid, as a medical countermeasure as part of BARDA preparedness for mass casualtyevents. On July 19, 2017 BARDA had upsized the contract and exercised an option to fund further research and development activitiesrelating to NexoBrid. The modified contract includes $56,000 of funding to support development activities to complete the U.S. Foodand Drug Administration (FDA) approval process for NexoBrid for use in thermal burn injuries, as well as $16,000 for procurement ofNexoBrid, which is contingent upon FDA Emergency Use Authorization (EUA) and/or FDA marketing authorization for NexoBrid. Inaddition, the contract includes options for further funding of up to $10,000 for expanding NexoBrid’s indications and of up to $50,000for additional procurement of NexoBrid. As of December 31, 2017 the Company recorded $14,931 in funding from BARDA under the contract.f.In December 2010, the Company, Teva and PolyHeal, entered into a series of agreements to collaborate in the development,manufacturing and commercialization of PolyHeal's wound care product, or the PolyHeal Product (see also Note 19).On September 15, 2014, a Statement of Claim was filed against the Company by some shareholders of Polyheal. The plaintiffs allegethat the Company is obligated to pay them a total amount of $1,475 in exchange for their respective portion of PolyHeal's shares,following the commencement of a feasibility study for the next generation of the PolyHeal Product in November 15, 2012, whichconstituted a milestone under a buyout option agreement between the Company, PolyHeal and its shareholders.F - 28MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 15:- CONTINGENT LIABILITIES AND COMMITMENTS (Cont.)On November 12, 2017, the Tel Aviv District Court issued its ruling accepting the plaintiffs’ claim and ruled that the Company isobligated to purchase PolyHeal’s shares for approximately $6,750 plus applicable interest, which represents the purchase price for thetotal number of shares that the 2010 PolyHeal Agreements contemplate would be acquired by the Company from all the shareholders ofPolyHeal. The Court ordered that the Company is obligated to purchase shares of PolyHeal from the plaintiffs, on the basis of theiractual share holdings in PolyHeal as of January 15, 2013, for approximately $1,500, within 15 days from the date of the Court's ruling.Accordingly, a full provision for the shares purchase price plus the accrued interest, totaled $7,500 was recorded within the loss fromdiscontinued operation in respect of this claim, of which approximately $1,497 was paid to plaintiffs in consideration for PolyHeal'sshares. In addition, the Company born legal expenses totaled $116.On December 27, 2017, the Company filed an appeal with the Israeli supreme court, in which it: (i) rejected the arguments raised againstit in the Statement of Claim; (ii) emphasized that its obligation under the 2010 PolyHeal Agreement to purchase the 7.5% of PolyHeal’sshares is subject to the consumption of the deferred closing, as defined in the buyout agreement, including the receipt of the funds fromTeva on a “back to back” basis; and (iii) stated that since no such payment has been made by Teva, the Company is not subject to anyobligation to purchase PolyHeal shares and/or make any payments to PolyHeal’s shareholders. A hearing will be held in January 2019.g.Operating Lease Agreements:1.The Company's offices and its production facility in Israel are located in a building that the Company leases from its ParentCompany, in accordance with a sub-lease agreement. The Company subleases approximately 1,860 square meters of laboratory,office and clean room space at a monthly rent fee of NIS 71,000 (approximately $18). This sub-lease agreement expires inOctober 2022.The Company's subsidiary offices are located in Germany. The monthly rent fee is currently € 2,800 (approximately $ 3) and thelease agreement expires on April 30, 2019.2.The Company and its subsidiary have operating lease agreements for 18 vehicles for a period of three years. As of December 31,2017, the Company deposited $ 46 in respect of the vehicles operating leases.3.Minimum future lease fees for both agreements as of December 31, 2017 are as follows: 2018 522 2019 450 2020 296 2021 246 2022 205 1,719 F - 29 Year ended December 31, 2016 2017 Authorized number of shares 32,244,508 32,244,508 Issued and outstanding number of shares 21,930,449 27,047,737 Year endedDecember 31, 2015 2016 2017 Cost of revenues 372 504 188 Research and development 511 752 488 Selling and marketing 669 765 204 General and administrative 1,107 1,150 483 Total share-based compensation 2,659 3,171 1,363 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 16:- EQUITY a.Share capital: b.Rights attached to shares:An ordinary share confers upon its holder(s) a right to vote at the general meeting, a right to participate in distribution of dividends,and a right to participate in the distribution of surplus assets upon liquidation of the Company.c.In March 2014, the Company completed its IPO, and its securities are listed for trading on NASDAQ.d.On September 21, 2017, the Company completed a follow-on public offering. A total of 4,400,000 new ordinary shares were issued inconsideration to offering price of $5.00 per share. On September 29, 2017, the underwriters partially exercised their ‘green shoe’ optionand purchased 637,664 additional ordinary shares. The net proceeds, including the underwriters' option, were $22,658, after deductingunderwriter’s discounts, commissions and other offering expenses.NOTE 17:- SHARE‑BASED COMPENSATIONa.Expense recognized in the financial statements:The expenses that was recognized for services received from employees and directors is as follows: b.Share-based payment plan for employees and directors:The Company has reserved for issuance stock options a total of 3,229,386 ordinary shares.F - 30 2015 2016 2017 Number ofoptions WeightedAverageExerciseprice Number ofoptions WeightedAverageExerciseprice Number ofoptions WeightedAverageExerciseprice Outstanding at beginning of year 1,902,324 7.98 2,313,224 9.35 2,181,075 9.62 Granted 739,500 9.27 47,500 8.56 40,000 6.72 Exercised (300,000) 0.09 (80,149) 0.09 (79,624) 0.09 Forfeited (28,600) 12.69 (99,500) 10.80 (206,716) 8.93 Outstanding at end of year 2,313,224 9.35 2,181,075 9.62 1,934,735 10.02 Exercisable at end of year 1,535,055 9.39 1,401,866 9.35 1,562,235 10.25 Options outstanding as ofDecember 31, 2017 Range of exercise prices ($ ) Number ofoptions WeightedAverageRemainingcontractuallife Weightedaverageexerciseprice 2.63 208,332 0.86 2.63 7.26 ‑ 9.82 903,703 6.49 9.06 12.89 ‑ 13.76 822,700 5.92 12.94 Total 1,934,735 5.64 10.02 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 17:- SHARE‑BASED COMPENSATION (Cont.)As of December 31, 2017, 1,294,651 ordinary shares of the Company were still available for future grant. Any options, which areforfeited or not exercised before expiration, become available for future grants.Options granted under the Company's 2003 Israeli Share Option Plan ("Plan") are exercisable in accordance with the terms of the Plan,within 10 years from the date of grant, against payment of an exercise price. The options generally vest over a period of three or fouryears.In March 2014, the Company adopted and obtained shareholder approval for its 2014 Equity Incentive Plan (the “2014 Plan”). Optionsgranted under the Company's 2014 Plan are exercisable in accordance with the terms of the Plan, within 10 years from the date of grant,against payment of an exercise price or cashless exercise. The options generally vest over a period of three or four years.c.Share options activity:The following table lists the number of share options, the weighted average exercise prices of share options and changes that were madein the option plan to employees and directors:The following table summarizes information about share options outstanding as of December 31, 2017: F - 31 December 31, 2015 2016 2017 Dividend yield (%) 0 0 0 Expected volatility of the share prices (%) 71 72 63 Risk‑free interest rate (%) 0.25-2.24 0.28-2.0 1.22-2.15 Early exercise factor (%) 100-150 100-150 150 Weighted average share prices (Dollar) 8.98 8.56 7.80 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 17:- SHARE‑BASED COMPENSATION (Cont.) The fair value of the options granted to employees and directors at the grant date for the years ends December 31, 2015, 2016 and 2017was $4,336, $193 and $172, respectively. 1.On December 23, 2015, the Company's Board of Directors approved the grant of 70,000 options to purchase ordinary shares underthe Plan for an exercise price of $ 9.58 per share to the CEO of the Company which was approved by the shareholder's generalmeeting on January 28, 2016.2.On June 9, 2016, the shareholders' general meeting of the Company approved to extend the exercise period of certain optionspreviously granted to the CEO. The Fair Value of the extension of the Options, as of the modification date, was estimated atapproximately $39.3.On June 22, 2017, the Company's Board of Directors approved the grant of 40,000 options to purchase ordinary shares under thePlan, for an exercise price of $ 6.72 per share to certain new Board members of the Company. The fair value of the options granted,as of the grant date, was estimated at approximately $172.d.The fair value of the Company's share options granted to employees and directors for the years ended December 31, 2015, 2016 and2017 was estimated using the binomial option pricing models using the following assumptions:The expected share price volatility is based on the historical equity volatility of the share prices of comparable companies that arepublicly traded, as there is no sufficient historical trading data for the Company. NOTE 18:- TAXES ON INCOME a.The Company operates in two main tax jurisdictions: Israel and Germany. As such, the Company is subject to the applicable tax rates inthe jurisdictions in which it conducts its business.b.Corporate tax rates in Israel:·The Israeli corporate income tax rate was 24% in 2017, 25% in 2016 and 26.5% in 2015. F - 32MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 18:- TAXES ON INCOME (Cont.)In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying theEconomic Policy for the 2017 and 2018 Budget Years), which reduces the corporate income tax rate to 24% (instead of 25%)effective from January 1, 2017 and to 23% effective from January 1, 2018.·Tax benefits under the Israel Law for the Encouragement of Capital Investments, 1959 (the "Investment Law"):Under the Investment Law, the Company has been granted "Beneficiary Enterprise" status which provides certain benefits,including tax exemptions and reduced tax rates. Income not eligible for Beneficiary Enterprise benefits is taxed at a regular rate.During the benefit period, the Company will be tax exempt in the first two years of the benefit period and subject to tax at thereduced rate of 10%- 25% for an additional period of five to eight years (depending on the percentage of foreign investments in theCompany) of the benefit period. The benefit entitlement period starts from the first year that the Beneficiary Enterprise first earnedtaxable income, and is limited to 12 years from the year in which the Company requested to have tax benefits apply. In the event ofdistribution of dividends from the said tax exempt income, the amount distributed will be subject to corporate tax at the reducedrate ordinarily applicable to the Beneficiary Enterprise's income.Tax exempt income generated under the Company's "Beneficiary Enterprise" program will be subject to taxes upon dividenddistribution or complete liquidation. The entitlement to the above benefits is conditional upon the Company's fulfilling theconditions stipulated by the Investment Law and regulations published thereunder. Should the Company fail to meet suchrequirements in the future, income attributable to its Beneficiary Enterprise programs could be subject to the statutory Israelicorporate tax rate and the Company could be required to refund a portion of the tax benefits already received, with respect to suchprograms.c.Corporate tax rate in Germany:The statutory corporate tax rate in Germany was 30.53% in 2017, 29.72% in 2016 and 30% in 2015.d.Final tax assessments:The Company has finalized its tax assessments through the 2012 tax year.The company's subsidery has not received a final tax assessment since its incorporation.e.Net operating carryforward losses for tax purposes and other temporary differences:As of December 31, 2017, the Company had carryforward losses and other temporary differences mainly from R&D expenses togetheramounting to approximately $115,000. F - 33MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 18:- TAXES ON INCOME (Cont.)f.Deferred taxes:The Company did not recognize deferred tax assets for carryforward losses and other temporary differences because their utilization inthe foreseeable future is not probable.g.Current taxes on income:The Company did not record any current taxes for the years ended December 31, 2015, 2016 and 2017 as a result of its carryforwardlosses.h.Theoretical tax:The reconciliation between the tax expense, assuming that all the income and expenses, gains and losses in the statement of incomewere taxed at the statutory tax rate and the taxes on income recorded in profit or loss, does not provide significant information andtherefore was not presented (the main reconciliation item is due to operating losses and other temporary differences for which deferredtax assets were not recognized). NOTE 19:- DISCONTINUED OPERATIONa.In December 2010, the Company, Teva and PolyHeal, entered into a series of agreements to collaborate in the development,manufacturing and commercialization of PolyHeal's wound care product, or the PolyHeal Product (“2010 PolyHeal Agreement”). Underthe 2010 PolyHeal Agreement, PolyHeal granted the Company an exclusive global license to manufacture, develop and commercializeall the Polyheal Products in consideration for royalty payments. Concurrently, the Company granted Teva an exclusive global sublicense to commercialize the Polyheal Products in consideration for certain royalties and milestone payments. In addition, Tevaundertook to finance the Company's future development of the Polyheal Product and all of its manufacturing costs. Under the 2010PolyHeal Agreement, Teva initially invested $ 6,750 in the Company, and undertook to invest an additional $ 6,750 in the Companysubject to the achievement of a development milestone. Concurrent with Teva's investment in the Company, the Company purchasedshares of PolyHeal for total consideration of $ 6,750. Additionally, the Company undertook to purchase additional shares of PolyHealfor the same amount, subject to the achievement of the same abovementioned development milestone.b.The Company has accounted this transaction as an acquisition of a group of assets since the assets acquired did not constitute a businessas defined in IFRS 3. The Company allocated the consideration paid for the group of assets acquired based on their fair value to twoidentifiable assets: the license for the Polyheal Products in the amount of $ 6,333 and royalty rights arising from the Company'sownership of shares of PolyHeal in the amount of $ 417.F - 34MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 19:- DISCONTINUED OPERATION (Cont.)c.Following the termination of the Company's collaborations with Teva under the 2010 PolyHeal, the Company's exclusive license for thePolyHeal Product expired in September 2013. As a result of the expiration of the PolyHeal license, the Company accounted for theoperation related to PolyHeal as a discontinued operation in accordance with IFRS accounting standard 5, “Non-current Assets Held forSale and Discontinued Operations" and the Company has fully impaired the license for the PolyHeal Product. d.The Company has been acknowledged during 2015 about certain changes in circumstances indicating that the carrying amount of itsroyalty rights arising from the Company's ownership of shares of Polyheal would not be recoverable. Accordingly, a full impairment ofthese royalty rights amounting to $417 is included within the loss from discontinued operation for the year ended December 31, 2015.On November 15, 2012, the Company informed Teva of the commencement of a feasibility study for the next generation of the PolyHealProduct, which constituted a milestone under the 2010 PolyHeal Agreement. In accordance with the terms of the agreement, Uponachievement of this milestone, Teva was to invest an additional $ 6,750 in exchange of the Company's ordinary shares and the Companywas to purchase, following and pending the consummation of this investment, for an identical amount, ordinary shares of PolyHeal fromits existing shareholders. The Company has not received the milestone investment from Teva.On September 15, 2014, a Statement of Claim was filed against the Company by some shareholders of Polyheal and on November 12,2017, the Tel Aviv District Court issued its ruling. On December 27, 2017 the Company filed an appeal and a hearing will be held onJanuary 2019 (see also Note 15f).During December 2017, the Company paid approximately $1,497 in consideration for PolyHeal's shares. Since the Company believesthat the carrying amount of its royalty rights arising from the Company's ownership of shares of Polyheal would not be recoverable, afull impairment of these royalty rights is included within the loss from discontinued operation for the year ended December 31, 2017. Inaddition, the Company born legal expenses totaled $116.As of December 31, 2017, a provision totaled $6,003 which represents the purchase price for the residual number of shares that the 2010PolyHeal Agreements contemplate would be acquired by the Company from the shareholders of PolyHeal plus accrued interest.F - 35 Year endedDecember 31, 2015 2016 2017 Salary and benefits (including share-based compensation) 1,961 2,112 2,073 Subcontractors 67 66 121 Depreciation and amortization 417 475 457 Cost of materials 486 410 535 Other manufacturing expenses 657 892 989 Decrease (increase) in inventory of finished products (309) 780 (999)Allotment of manufacturing costs to R&D (760) (2,577) (1,598) 2,519 2,158 1,578 Year endedDecember 31, 2015 2016 2017 Salary and benefits (including share-based compensation) 2,610 3,171 3,840 Subcontractors 4,464 8,517 8,780 Depreciation and amortization 5 28 42 Cost of materials 81 351 223 Allotment of manufacturing costs 760 2,577 1,598 Other research and development expenses 219 135 142 Research and development, gross 8,139 14,779 14,625 Participations: BARDA funds (800) (5,566) (8,565)Revaluation of liabilities in respect of IIA grants (1,318) (2,145) (598) 6,021 7,068 5,462 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 20:- SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF COMPREHENSIVE PROFIT OR LOST a. Cost of revenues: b.Research and development expenses, net of participations:F - 36 Year endedDecember 31, 2015 2016 2017 Salary and benefits (including share based compensation) 5,631 5,438 3,062 Marketing and medical support 2,835 2,444 1,628 Depreciation and amortization 22 18 12 Shipping and delivery 180 111 236 Registration and marketing license fees 616 392 424 9,284 8,403 5,362 Year endedDecember 31, 2015 2016 2017 Salary and benefits (including share‑based compensation) 2,670 2,361 2,032 Professional fees 1,054 1,241 1,224 Depreciation and amortization 59 66 56 Other 221 416 469 4,004 4,084 3,781 Year endedDecember 31, 2015 2016 2017 Financial income: Interest income 288 414 349 Revaluation of contingent consideration for the purchase of shares 764 1,621 - Exchange differences, net - 131 57 1,052 2,166 406 Financial expense: Interest in respect of IIA grants 844 847 827 Revaluation of contingent consideration for the purchase of shares - - 351 Exchange differences, net 614 - - Other 38 49 74 1,496 896 1,252 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 20:- SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF COMPREHENSIVE INCOME (Cont.) c.Selling and marketing expenses:d.General and administrative expenses: e.Financial income and expense:F - 37 Year ended December 31, 2015 2016 2017 Weightedaveragenumber ofshares Loss Weightedaveragenumber ofshares Loss Weightedaveragenumber ofshares Loss Basic and diluted loss 21,718,401 (21,671) 21,862,169 (18,885) 23,341,040 (14,533) Year endedDecember 31, 2015 2016 2017 Weightedaveragenumber ofshares Loss Weightedaveragenumber ofshares Loss Weightedaveragenumber ofshares Loss Basic and diluted loss 21,718,401 (417) - - 23,341,040 (7,616) Year endedDecember 31, 2015 2016 2017 Basic and Diluted loss per share: Net loss from continuing operations (1.00) (0.86) (0.62) Loss from discontinued operation (0.02) - (0.33) Net loss per share (1.02) (0.86) (0.95)MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 21:- NET LOSS PER SHAREa.Details of the number of shares and loss used in the computation of loss per share from continuing operations: b.Details of the number of shares and loss used in the computation of loss per share from discontinued operation: c. Net loss per share from continuing and discontinued operations: NOTE 22:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES AND KEY OFFICERSa.Related parties consist of:•Clal Biotechnologies Industries Ltd.-the Parent Company. •PolyHeal-in which the Company holds approximately 8% (see Note 19). •Directors of the Company.F - 38 ProfessionalFee (1) Rentexpenses Parent company: 2015 52 730 2016 27 804 2017 35 817 Other related parties: 2015 127 - 2016 159 - 2017 225 - MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data)NOTE 22:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES AND KEY OFFICERS (Cont.) b.Balances of related parties: Payables Parent Company (1): As of December 31, 2016 218 As of December 31, 2017 238 Other related parties: As of December 31, 2016 77 As of December 31, 2017 86 (1)The Company leases office space and a production facility from the Parent Company in accordance with a sublease agreement(see Note 15 (g)). c.Transactions with related parties: (1)Professional fees do not include short-term employee benefits and share-based compensation to one of the Company'sshareholders, who is a key officer, in the amounts of $691, $537 and $516 for the years 2015, 2016 and 2017, respectively, aswell as payment for the purchasing of a patent in amount of $30, $30 and $30 for the years 2015, 2016 and 2017, respectively(see note 15c).F - 39 Year endedDecember 31, 2015 2016 2017 Short-term employee benefits 2,639 2,108 2,324 Share-based compensation 1,702 1,445 731 4,341 3,553 3,055 Number of officers 7 7 6 MEDIWOUND LTD. AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSU.S. dollars in thousands (except of share and per share data) NOTE 22:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES AND KEY OFFICERS (Cont.)d.Compensation of officers of the Company:The following amounts disclosed in the table are recognized as an expense during the reporting period related to officers:In December 2007, the Company's board of directors approved one‑time bonus payments to the Chief Executive Officer and ChiefMedical Officer in the amounts of $ 120 each, to be paid upon achieving marketing approval in the United States. F - 40Exhibit 4.15 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES 142. AMENDMENT/MODIFICATION NO.00043. EFFECTIVE DATE07/09/20174. REQUISITION/PURCHASE REQ. NO.OS2013695. PROJECT NO. (If applicable)6. ISSUED BY CODE ASPR-BARDA7. ADMINISTERED BY (If other than Item 6)CODE ASPR-BARDA01 ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201 ASPR-BARDA330 Independence Ave, SW, Rm G644Washington DC 202018. NAME AND ADDRESS OF CONTRACTOR (No., street, county, Stateand ZIP Code)(x)9A. AMENDMENT OF SOLICITATION NO. MEDIWOUND LTD 1477616 MEDIWOUND LTD 42 HAYARKON42 HAYARKON 9B. DATED (SEE ITEM 11)YAVNE 00812 X10A. MODIFICATION OF CONTRACT/ORDER NO.HHSO100201500035C 10B. DATED (SEE ITEM 13)CODE 1477616FACILITY CODE 09/29/201511. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS☐The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers ☐ is extended. ☐ is not extended.Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended , by one of the followingmethods: (a) By completing Items 8 and 15, and returning ________ copies of the amendment; (b) By acknowledging receipt of this amendment on eachcopy of the offer submitted; or (c) By separate letter or telegram which indudes a reference to the solicitation and amendment numbers. FAILURE OFYOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATESPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER If by virtue of this amendment you desire to change an offer already submitted. such changemay be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to theopening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (Ifrequired)See ScheduleNet Increase:$31,665,598.0013. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBEDIN ITEM 14. CHECK ONEA. THE CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE INTHE CONTRACT ORDER NO. IN ITEM 10A. B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such aschanges in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).XC. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 1.602-1 and Mutual Agreement of All Parties, FAR Changes Clauses Sections 52.243-02 D. OTHER (Specify type of modification and authority) E. IMPORTANT:Contractor☐is not.☒is required to sign this document and return 2 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter wherefeasible.)Tax ID Number: C0-0000387DUNS Number: 532040334PURPOSE of this modification is to: a) Add supplemental funds to CLIN 0001 changing the value from $23,955, 661 to $30, 176, 634 b) Change the amount of optional CLIN 0004A from $11,925,619 to $25,444,625 and exercise said optional CLIN 0004A. The changes will increase the amount obligated under the contract by $31,665,598 Continued ... Except as provided herein, all terms and conditions of the document referenced in Item 9 A or 10A, as heretofore changed, remains unchanged and in fullforce and effect15A. NAME AND TITLE OF SIGNER (Type or print) GAL COHEN-CEO, SHARON MALKA - CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) SALIM K. ROBERTS15B. CONTRACTOR/OFFEROR15C. DATESIGNED July 16, 201716B. UNITED STATES OF AMERICA16C. DATE SIGNED 17JUL2017 (Signature of person authorized to sign)(Signature of Contracting Officer)NSN7540-01-152-8070Previous edition unusableSTANDARD FORM 30 (REV, 10-83) Prescribed by GSAFAR (48 CFR) 53.243CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201500035C/0004PAGE OF 24NAME OF OFFEROR OR CONTRACTORMEDIWOUND LTD 1477 616ITEM NO.(A) SUPPLIES/SERVICES(B) QUANTITY(C)UNIT(D)UNITPRICE(E)AMOUNT(F) Funds Obligated Prior to this Modification$40,430,469 Funds Obligated with mod #04$31,665,598 Total Funds Obligated to Date$72,096,067 Expiration date:July 31,2023 (Please see Continuation Sheet) Except as provided herein, all terms and conditions of thecontract remainsunchanged Delivery Location Code: HHS/OS/ASPR HHS/OS/ASPR 200 C St SW WASHINGTON DC 20201 US FOB: Destination Period of Performance: 09/29/2015 to 07/31/2023 Change Item 1 to read as follows (amount shown is the obligated amount): 1ASPR-15-08828 -- CLIN 0001 Advanced development 6,220,973.00 studies for NexoBrid Obligated Amount: $6,220,973.00 Delivery: 10/05/2015 Amount: $23,955,661.00 Accounting Info: 2015.1990002.26201 Appr. Yr.: 2015 CAN: 1990002 Object Class : 26201 Funded: $0.00 Delivery: 07/10/2017 Amount: $6,220,973.00 Accounting Info: 2017.1990007.25106 Appr. Yr.: 2017 CAN: 1990007 Object Class : 25106 Funded: $6,220,973.00 Change Item 4 to read as follows (amount shown is the obligated amount): 4CLIN--0004A Pediatric Study 25,444,625.00 Obligated Amount: $25,444,625.00 Delivery: 07/10/2017 Amount: $16,903,548.48 Accounting Info: 2017.1990007.25106 Appr. Yr.: 2017 CAN: 1990007 Object Class : 25106 Funded: $16,903,548.48 Delivery: 07/10/2017 Amount: $8,541,076.52 Accounting Info: Continued... NSN 7540-01-152-8067 OPTIONAL FORM 336 (4-86) Sponsored by GSA FAR (48 CFR) 53.110 CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201500035C/0004PAGE OF 34NAME OF OFFEROR OR CONTRACTORMEDIWOUND LTD 1477 616ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNITPRICE(E)AMOUNT (F) 2017.1990008.25106 Appr. Yr.: 2017 CAN: 1990008 Object Class : 25106 Funded: $8,541,076.52 NSN 7540-01-152-8067 OPTIONAL FORM 336 (4-86) Sponsored by GSA FAR (48 CFR) 53.110 CLINPeriod of PerformanceSupplies/ServicesTotal Est. CostFixed Fee(7%)Total Cost Plus FixedFeeCLIN 000109/28/2015- 06/30/2021Licensure, approval, andclearance of productthrough the FDA$28,486,743$1,689,891$30,176,634 (Funded) CLIN 0004(A)08/01/2017- 07/31/23Pediatric Study (This isan option that may ormay not be exercisedduring the base periodfor expansion of thelabel indication withguidance from the FDA)$23,989,225$1,455,400$25,444,625 (Funded)Contract Number HHSO100201500035C Modification No: 04 page 4 of 4 (Continuation Sheet)Continuation Sheet Contract No: HHSO100201500035C Modification No: 04 The purpose of this Modification is to: A.ADD SUPPLEMENTAL FUNDS TO BASE CLIN 0001 B.EXERCISE OPTIONAL CLIN 0004(A) The contract is revised as follows to: 1.Amend CLIN 0001 and provide additional funding in the amount of $6,220,974 to bring the total to $30,176,6342.Exercise optional CLIN 0004(A) and provide funding in the amount of $25,444,625 for the CLIN 0004(A).3.Update Sections F.1 requirements to extend the period of performance for CLIN 00004(A) to July 31, 2023.4.Update Section B.3 in accordance with Contractor’s proposal dated May 16, 2017 by replacing the CLIN 0001 and CLIN 0004(A) tables with the tablebelow : Total value of Contract before MOD 04 is $40,430,469 Total value of Contract after MOD 04 is $72,096,067 All other terms and conditions of the contract HHSO201500035C remain unchanged. [End of Modification No. 04 and the remainder of this page intentionally left blank] CLINPeriod ofPerformanceSupplies/ServicesTotal Est. CostFixed Fee(7%)Total Cost PlusFixed FeeCLIN 000109/28/2015-06/30/2021Licensure, approval, andclearance of productthrough the FDA$28,486,743$1,689,891$30,176,634 (Funded) CLIN 0004(A)08/01/2017-07/31/23 Pediatric Study$23,989,225$1,455,400$25,444,625 (Funded)Contract Number HHSO100201500035CPage 4 of 4Modification No: 04 (Continuation Sheet) Continuation Sheet Contract No: HHSO100201500035CModification No: 04 The purpose of this Modification is to: A.ADD SUPPLEMENTAL FUNDS TO BASE CLIN 0001 B.EXERCISE OPTIONAL CLIN 0004(A) The contract is revised as follows to:1.Amend CLIN 0001 and provide additional funding in the amount of $6,220,974 to bring the total to $30,176,6342.Exercise optional CLIN 0004(A) and provide funding in the amount of $25,444,625 for the CLIN 0004(A).3.Update Sections F.1 requirements to extend the period of performance for CLIN 00004(A) to July 31, 2023.4.Update Section B.3 in accordance with Contractor’s proposal dated May16, 2017 by replacing the CLIN 0001and CLIN 0004(A) tables with the tablebelow : Total value of Contract before MOD 04 is $40,430,469 Total value of Contract after MOD 04 is $72,096,067All other terms and conditions of the contract HHSO201500035C remain unchanged. [End of Modification No. 04 and the remainder of this page intentionally left blank] Exhibit 4.17 Unprotected Sublease Agreement Made and executed in Tel Aviv on the 18 day of March, 2018Between:Clal Life Sciences L.P. (Registered Partnership no. 55-020837-5Of 42 HaYarkon St., Yavne(Hereinafter: "the Lessor") The first party; And between:MediWound Ltd. (Public Company no. 512894940)Of 42 HaYarkon St., Yavne(Hereinafter: "the Lessee") The second party;Therefore, it is Declared, Stipulated and Agreed between the Parties as Follows: 1.Definitions:"The Owner" – Yezum-Tech Businesses & Properties Ltd. (formerly - TAAMICO FOOD INDUSTRIES (1990) Ltd.)"The Property" – a lot in an area of approximately 2,985 sq.m. known as Lot No. 2028 in accordance with detailed plan YV/223 and that is located inparcel 3 in block 4939 in the Yavne Industrial Zone and the building constructed thereon as stated in the architectural plan hereby enclosed asAppendix A and as Appendix A1. It is clarified that the said Appendix A reflects the condition of the building "as-is" at the time of signing thePrimary Lease Agreement (including additions and modifications thereof during the Term of Lease in accordance with the first Lease Agreement) andAppendix A1 reflects the condition of the building "as-is" at the time of signing this Agreement (including modifications and additions performedtherein during the Term of Lease in accordance with the Primary Lease Agreement). It is clarified that Appendix A and Appendix A1 shall notdetermine which of the said additions and modifications will be left in the Leased Premises upon expiration of the Term of Lease."First Lease Agreement" – a lease agreement dated November 9, 2000 with respect to the Property and that was made between the Owner and ClalBiotechnology Industries Ltd. that assigned the rights in accordance with the said agreement to the Lessor on November 19, 2002."Primary Lease Agreement" – a lease agreement dated September 16, 2008 with respect to the Property that was made between the Owner (as theLessor) and the Lessor (as a Lessee)."Previous Sublease Agreement" – a sublease agreement dated July 27, 2004 that was made between the Lessor and the Lessee in connection with partof the Property including additions and amendments thereof, to the extent that there were any."The Leased Premises" – the Property, excluding the areas and parking spaces that are leased at the time of signing this Agreement to CureTech Ltd.(hereinafter: "CureTech") and that are marked in the blueprint hereby enclosed as Appendix B as well as 10 parking spaces which are sub-leased toCureTech (the area marked in the blueprint shall be referred hereinafter: "CureTech Leased Premises").2.The transaction2.1.The Lessor hereby undertakes to lease to the Lessee the Leased Premises and the Lessee hereby undertakes to lease the Leased Premises fromthe Lessor in accordance with the provisions set forth in this Agreement.2.2.It is agreed that this Agreement shall supersede the Previous Sublease Agreement. Upon signing this Agreement, the Previous SubleaseAgreement shall expire and the provisions set forth in this Agreement shall solely apply to the parties in respect of the period as of the dateof signing this Agreement henceforth. It is clarified that the said shall not derogate from the undertakings and/or the declarations of theparties in accordance with the Previous Sublease Agreement with respect to the period that preceded the signing of this Agreement and theseshall continue to be in full force and effect. Without derogating from the aforesaid, and for the avoidance of doubt, it is clarified that theservices that were provided to the Lessee by virtue of the Previous Sublease Agreement are hereby null and void as of the date of signingthis Agreement. 23.Declarations of the Lessor3.1.The Lessor hereby declares as follows:3.1.1.It holds the right to lease the Leased Premises in sublease in accordance with the provisions set forth in this Agreement and itundertakes to furnish its written approval evidencing that all certificates that are necessary for the purpose of leasing the LeasedPremises to the Lessee and its engagement in this Agreement were obtained, to the extent required, and no later than 90 days as ofthe date of signing this Agreement.3.1.2.It wishes to lease the Leased Premises to the Lessee in accordance with the provisions set forth in this Unprotected LeaseAgreement.3.1.3.It undertakes to continue and fulfill all its undertakings in accordance with the Primary Lease Agreement fully and timely andsubject to the fulfillment of the undertakings of the Lessee in accordance with this Agreement.4.Declarations of the Lessee4.1.The Lessee hereby declares as follows:4.1.1.It leases the Leased Premises for the purpose of conducting a business in the field of the life sciences and drug development(hereinafter: "Purpose of Lease").4.1.2.It is hereby clarified that at the time of signing this Agreement the Lessee already occupies in the Leased Premises by virtue of thePrevious Sublease Agreement and therefore it is well aware of the condition of the Leased Premises and it hereby waives anyclaim regarding non-conformance in connection with the Leased Premises of which it is aware and/or of which it was supposed tobe aware as a lessee that occupies the Leased Premises subject to the provisions set forth in Section 2.2 above.4.1.3.It did not undertake towards the Owner and/or the Lessor to perform any modifications and additions in the Leased Premises andall modifications and additions that the Lessee performed were performed out of its own free will and by virtue of its occupationand it was not obligated towards the Owner and/or the Lessor in any manner to perform the said modifications and additions (it isclarified that this pertains both to modifications that were already performed and future modifications).34.1.4.It wishes to lease the Leased Premises from the Lessor in accordance with the provisions set forth in this Unprotected LeaseAgreement.5.Term of Lease5.1.The Lessor hereby undertakes to lease the Leased Premises to the Lessee and the Lessee hereby undertakes to lease the Leased Premises fromthe Lessor for the period as of January 1, 2018 and until October 30, 2022 (hereinafter: "Term of Lease") and in accordance with theprovisions set forth in this Agreement.5.2.The Lessee shall be entitled to request from the Lessor to realize the Option Term granted to the Lessor in accordance with the Primary LeaseAgreement as of November 1, 2022 and until October 30, 2025 (hereinafter: "Option Term") by delivery of written notice to the Lessor atleast 13 months prior to expiration of the Term of Lease regarding its wish to extend the Term of Lease in accordance with this Agreementfor a period as of November 1, 2022 and until October 30, 2025 and in which the Lessee shall undertake irrevocably and unconditionally tolease the Leased Premises for the entire Option Term (hereinafter: "Exercise Notice"). The Lessor shall not be entitled to realize the OptionTerm granted to the Lessor in accordance with the Primary Lease Agreement however in the event the Lessor decides to realize the OptionTerm, at its sole discretion, following the delivery of the Exercise Notice, this Agreement in connection with the Leased Premises shall beextended for the Option Term. To the extent that the Lessor wishes to realize the Option Term prior to the last date of delivery of theExercise Notice as aforesaid, the Lessee shall be entitled to decide whether or not to extend the Term of Lease by the Option Term, bydelivery of the Exercise Notice up to 13 months prior to expiration of the Term of Lease. In the event the Option was realized as aforesaid,the Lessee shall extend the effect of the bank guarantee as stated in Section 15 hereunder and in accordance with the Option Term.45.3.In the event this Agreement is extended by the Option Term, the lease contemplated in this Agreement shall expire upon expiration of theOption Term and the Term of Lease shall be deemed to have been made in advance until expiration of the Option Term, and the entireprovisions set forth in this Agreement shall continue to apply to the Option Term, mutatis mutandis (however no additional option shall begranted to the Lessee).5.4.The duration of the Term of Lease and the Option Term (to the extent realized) are material for the purpose of this Agreement. The Lesseeshall not be entitled to shorten the said terms without obtaining the prior and written consent of the Lessor. The Lessee shall be obligated topay the full amount of the Rent, taxes and additional payments applicable to it in accordance with this Agreement even if it abandons theLeased Premises and/or vacates the Leased Premises prior to expiration of the Term of Lease or the Option Term, if realized.Notwithstanding the said, it is agreed that in the event the Lessor actually discontinues paying the Rent to the Owner in respect of theLeased Premises due to the fact that the Leased Premises was not usable and/or that the Leased Premises included defects that harmed thereasonable use of the Leased Premises, for any reason for which the Lessee is not responsible, and based on the written consent of the Owner(that is unrelated to the settling of accounts between the parties or to any other arrangement between the Lessor and the Owner), in suchcircumstances the Lessee shall be exempt from payment of the Rent accordingly in respect of the period in which the Lessor did not makepayment as aforesaid. Nevertheless, it is agreed that the Lessor shall not be affected by the granting of such an exemption as aforesaid to theLessee and in the event the Owner withdraws from its consent and/or demands any payments in respect of such a period as aforesaid, the saidexemption granted to the Lessee shall be null and void and the Lessee shall be obligated to pay in full the payments the Lessor was requiredto return to the Owner as stated above. In addition, it is agreed that notwithstanding the aforesaid, the Lessee shall not be obligated to makethe said payments in the event this Agreement was terminated as a result of the termination of the Primary Lease Agreement following itsbreach by the Lessor and/or anyone acting on its behalf.5.5.For the avoidance of doubt, it is clarified that the provisions set forth in Section 22 of the Hire and Loan Law 5731-1971 shall not apply tothe lease contemplated in this Agreement.55.6.Notwithstanding the said in this Agreement, in any event in which the Primary Lease Agreement is terminated, for any reason, the Lessorshall deliver written notice to the Lessee about the same and this Agreement shall be terminated on the same date and the Lessee shall raiseno claims and/or suits against the Lessor (unless and to the extent that the termination of the Primary Lease Agreement was demanded by theOwner as a result of breach of the Primary Lease Agreement by the Lessor only and not as a result of breach caused by the Lessee or anyoneacting on its behalf, and in such circumstances the Lessee may seek any relief against the Lessor in accordance with the provisions set forthin this Agreement and/or in accordance with the provisions set forth in any law, and the Lessor shall be responsible for all losses, damagesand direct expenses caused to the Lessee in connection therewith, and the Lessee shall vacate the Leased Premises on the date the Lessorwas required to vacate the Leased Premises by the Owner.6.Rent and payment thereof6.1.Rent for the period as of January 1, 2018 and until October 30, 2019 shall be in the amount of NIS 71,000 for each month of lease.6.2.Rent for the period as of November 1, 2019 and until October 30, 2022 shall be in the amount of NIS 73,000 for each month of lease.6.3.Rent for the Option Term (to the extent realized) (i.e., for the period as of November 1, 2022 and until October 30, 2025) shall be in theamount of NIS 77,000 in respect of each month of lease.6.4.Rent as stated in Sections 6.1 to 6.3 above shall be linked as of the date of signing this Agreement to the consumer price index in suchmanner that the amount of the Rent on the date of each payment shall increase according to the rate of increase of the Known Index (withinits meaning hereunder) compared to the Basic Index (within its meaning hereunder). For the avoidance of doubt, the Basic Index is as statedin Section 6.5 hereunder and the Rent shall be linked as of the date of the Basic Index and not from the date of commencement of the leasecontemplated in this Agreement.6.5."Basic Index" – shall be the index of November 2017 that was published on December 15, 2017.6"Known Index" – is the index known at the time of making each payment however in any event the Known Index shall not fall below theKnown Minimal Index (within its meaning)."Known Minimal Index" – is the index that was known on each of the following dates: January 1, 2018, November 1, 2019 and November1, 2022. It is clarified that in any event the new Known Minimal Index that is updated each time shall not fall below the Known MinimalIndex that preceded it (for the purpose of this matter see the example in Section 6.6 of the Primary Lease Agreement).6.6.Statutory VAT according to its rate shall be added to the Rent (in addition to linkage differentials) and to each other payment to the Lessorin accordance with this Agreement, on any date of payment of the Rent. VAT shall be paid together with each payment of the Rent. TheLessor shall issue to the Lessee an invoice in respect of each payment and at the time of signing this Agreement and at the request of theLessee, the Lessor shall deliver to the Lessee in the beginning of each year of lease a certificate of keeping of account books and exemptionfrom withholding of tax at source (otherwise, the Lessee shall be obligated to withhold tax at source from the Rent according to its statutoryrate ).6.7.The Rent, in addition to linkage differentials and VAT as stated above, shall be paid for each month in advance, on the 1st of each month inwhich Rent is paid. Payment for the Rent for the first three months of lease shall be paid at the time of signing this Agreement. To the extentthat the Lessee has a balance in respect of payments that were made by virtue of the Previous Sublease Agreement, the parties shall engagein a settling of accounts as part of the first payment as aforesaid.6.8.The Lessee shall pay the Rent by wire transfer to the Lessor's bank account in Bank Hapoalim, branch 063, account no. 610612.6.9.The Lessee shall have no right of setoff from the Rent with respect to any claim or demand of any kind towards the Lessor and Rent shall bepaid fully and timely without reservations subject to the provisions set forth in Section 5.4 above.6.10.For the avoidance of doubt, it is hereby clarified that the Lessee shall pay the full amount of the Rent for the entire Term of Lease, whetheror not the Lessee uses the Leased Premises, and subject to the provisions set forth in Section 5.4 above.77.Delivery of the Leased Premises and modifications7.1.At the time of signing this Agreement possession in the Leased Premises shall be delivered the Lessee in their condition "as-is" at the time ofsigning hereof. It is hereby clarified that at the time of signing this Agreement the Lessee already occupies the Leased Premises by virtue ofthe Previous Sublease Agreement and therefore it is well aware of the condition of the Leased Premises and it hereby waives any claimregarding non-conformance in connection with the Leased Premises of which it is aware and/or of which it was supposed to be aware as alessee that occupies the Leased Premises and subject to the provisions set forth in Section 2.2 above.7.2.The Lessee shall not be entitled to perform any modifications in the office area that existed at the time of signing the Primary LeaseAgreement without obtaining the prior and written consent of the Owner and the Lessor (it is clarified that minor modifications such as therelocation of electrical outlets or telephone sockets shall not be deemed as modifications that require the consent of the Owner and theLessor). It is agreed that to the extent that this is contingent solely on the Lessor, the Lessor shall withhold such consent for reasonableconsiderations only that will be provided in writing.No structural modifications in the building shall be allowed in the other areas of the Leased Premises other than the office area as aforesaid,without obtaining the prior and written consent of the Owner and subject to its sole discretion, and without obtaining the written consent ofthe Lessor that shall not be unreasonably withheld, to the extent that this is contingent on the Lessor. However, regarding modificationsother than structural modifications and that do not require the consent of the Owner and the Lessor, a notice shall be delivered to the Ownerand the Lessor together with drawings explaining the substance of the modification that was performed within a reasonable time as ofperformance of the said modification. It is hereby clarified that in any event no modifications shall be allowed in the Leased Premises without obtaining the consent of the Ownerthat shall mean the removal of modifications and additions that were performed in the Leased Premises by the Owner and/or the Lessor inaccordance with the Primary Lease Agreement or the First Lease Agreement and that shall remain in the Leased Premises upon expiration ofthe Term of Lease in accordance with the provisions set forth in the said agreements and in the absence of any other instruction of theOwner.8"Structural modifications" – shall mean any modification that requires a construction permit and/or a change in the area of the LeasedPremises and/or modifications in the construction of the building and/or modifications in the central systems and/or modifications thatrequire the involvement of a structure engineer and/or modifications in the shell and/or the frame of the building.In the event the Lessee wishes to perform modifications and additions in the Leased Premises that require the consent of the Owner as statedin this Section above, at the request of the Lessee, the Lessor shall deliver a request to the Owner to obtain the necessary consent and shallreasonably assist the Lessee to obtain the Owner's consent in connection therewith, on the condition that the Lessor shall not incur any costor responsibility in connection therewith.7.3.The Lessee undertakes to keep as-made plans of the building reflecting at any time the condition of the Property following modificationsperformed therein and allow the Lessor and/or the Owner to inspect the said plans at any reasonable time and upon their demand.7.4.If and to the extent that the Lessee obtains approval to perform modifications in the Leased Premises as stated in Section 7.2 above, theLessee shall be entitled to perform modifications in the Leased Premises (hereinafter: "Adjustment Works") provided that the AdjustmentWorks will be approved in advance and in writing by the Lessor and the Owner, as the case may be. For the purpose of obtaining the saidapproval the Lessee shall deliver for the inspection of the Lessor and the Owner and for the purpose of obtaining their approval, and prior tocommencement of the Adjustment Works, technical specifications, and construction plans. The Lessor, to the extent that this is solelycontingent on the Lessor, shall deliver its response to the said plans (or amended plans, in the event it demands amendments in the plans) in15 business days as of the date the said plans were delivered to the Lessor. The Owner and/or the Lessor, as the case may be, shall be entitledto consult with respect to the requested modifications with an engineering supervision company that supervised the construction of thebuilding on behalf of the Owner, or any other similar company or consultants as required and the Lessee shall incur all costs associatedtherewith, provided that the said costs are customary with respect to consulting works as aforesaid and shall be approved by the Lessee inadvance. The approval of any works by the Lessor and/or the Owner and/or waiver in connection with such a right as aforesaid shall notimpose on any thereof any responsibility in connection with the works and the Lessee shall be solely responsible for the works as aforesaid.97.5.It is clarified that the avoidance of the Lessor to protest against breaches committed by the Lessee of this Section 7 during the Term of Leaseshall not be deemed as waiver of its rights in any respect.8.Operation of the Leased Premises in accordance with the Purpose of Lease, licenses and permits8.1.The Lessee shall use and operate the Leased Premises at its expense and under its responsibility in accordance with the Purpose of Lease asstated above and shall not be entitled to use the Leased Premises for any other purpose however solely upon obtaining the prior and writtenconsent of the Lessor, and to the extent that this is contingent solely on the Lessor, and such consent shall not be unreasonably withheld. Inthe event the Lessee wishes to use the Leased Premises for any purpose other than the Purpose of Lease in accordance with this Sectionabove, at the request of the Lessee the Lessor shall deliver a request to the Owner to obtain the necessary consent and shall reasonably assistthe Lessee to obtain the Owner's consent in connection therewith, on the condition that the Lessor shall not incur any costs or shall beresponsible in connection therewith.8.2.During the entire Term of Lease the Lessee shall be solely responsible for obtaining all permits and/or licenses that are required and/or thatwill be required at any time and in accordance with the provisions set forth in any law for the purpose of opening its business in the LeasedPremises in accordance with the Purpose of Lease, including extension thereof and for keeping the said permits and licenses in full force andeffect. In the event the business conducted by the Lessee in the Leased Premises requires a business license and/or any other permit, theLessee is responsible and undertakes to fulfill all the necessary conditions for the purpose of obtaining all the permits as aforesaid andobtain all permits that are required at its expense. For the avoidance of doubt, it is clarified that failure to obtain a permit or a license asaforesaid shall not exempt the Lessee from its undertakings in accordance with this Agreement. The Lessee shall indemnify the Lessorand/or the Owner promptly with respect to any fine and/or any other damage caused to the Lessor and/or the Owner in the event the Lesseefails to fulfill its undertakings in accordance with this Section.109.Taxes and other payments9.1.As of the Lease Commencement Date the Lessee shall make full and timely payment for the purpose of all taxes, municipal taxes, fees andlevies imposed by law on the Property and/or the possessor or the user of the Property or the operator or the manager of the business therein(including, and without derogating from the generality of the aforesaid business tax, signage tax, fees, permits and licenses for the purposeof conducting and managing the business), during the entire Term of Lease. The same shall also apply to water, electricity, telephone, gas,sewage, municipal taxes ("Arnona") bills or any other expense related to the maintenance and/or the use and/or operation of the Property. Itis clarified that the Lessee shall be responsible for its registration as the possessor/account holder in respect of all the said bills andpayments as stated above, in respect of the entire Property (including areas other than the Leased Premises), and make the said payments ontime and shall be entitled (and shall be responsible) to compel the other lessees in the Property to make such payments as aforesaid. TheLessor shall not be responsible/shall not incur any responsibility in connection with the said payments. Notwithstanding the said, it isagreed that in the event CureTech ceases to lease the CureTech Leased Premises or any part thereof, and no other lessee(s) steps in and takesover CureTech in the area that was vacated as aforesaid or the lessee(s) that steps in and take over the area that was vacated as aforesaid willnot agree to undertake towards the Lessee to incur the said costs, in such circumstances the Lessor shall incur the said cost for the areas thatare not leased to CureTech as aforesaid or in respect of the areas that are possessed by the lessee(s) that did not agree to undertake and incursuch costs as aforesaid. For the avoidance of doubt, in any event the Lessor shall not incur the said costs in connection with the areas thatare possessed by the Lessee or anyone acting on its behalf.9.2.Without derogating from the foregoing, taxes that naturally apply to the owner of a property as opposed to lessees (such as betterment levy)shall not apply to the Lessee, except for such taxes as aforesaid that apply as a result of actions performed by the Lessee.1110.Liability and insurance10.1.The Lessee shall be held liable for any damage of any kind caused in the Leased Premises during the Term of Lease and that derive from thepossession of the Lessee of the Leased Premises and/or that derive as a result of an act or omission of the Lessee and/or anyone acting on itsbehalf, including, and without derogating from the generality of the aforesaid, any bodily injury or damage to property caused to the LeasedPremises and equipment therein or to any person that stays in the Leased Premises at any time. The Lessee hereby releases the Ownerabsolutely and unconditionally from any liability in connection with the said damage and undertakes to indemnify the Owner andcompensate the Owner for any sum in respect of any damage caused to any thereof and in respect of any sum the Owner is compelled to payto any third-party, in connection with any damage and expense and/or loss and/or fine imposed as aforesaid. The Lessee undertakes toindemnify the Lessor in respect of any sum it is compelled to pay to the Owner in accordance with the provisions set forth in Section 10.1 ofthe Primary Lease Agreement and that is under the responsibility of the Lessee in accordance with this since 10.1. In addition, and withoutderogating from the aforesaid, the provisions set forth in Section 11 of the Previous Sublease Agreement shall apply to the parties inconnection with liability and indemnity, to the extent that the indemnity is not greater than the sum claimed under Section 10.1 of thePrimary Lease Agreement as stated above.10.2.Without derogating from its liability in accordance with Section 10.1 above and from its liability in accordance with the other provisionsset forth in this Agreement and in accordance with the provisions set forth in any law, the Lessee undertakes to purchase at its expense andkeep the insurance specified hereunder in effect during the entire Term of Lease and according to the scope of coverage as stated by the saidinsurances with a legally licensed and reputable insurance company in Israel:10.2.1.Dwelling insurance for the Property in full value (and that shall be updated upwards to the extent that the value of the buildingincreases) and insurance in replacement value of any modification and/or addition to the Property that were performed and/or thatwill be performed by the Lessor and/or the Lessee and/or anyone acting on its behalf and/or CureTech and/or any other tenant inthe Property, against damage or loss for the customary risks in "extended fire" insurance including fire, smoke, lighting,explosion, earthquake, storm and tempest, damage caused by fluids and splitting of pipes, any accidental impact, strikes, riots,malicious damage and break-in.12In the event of damage to the Property in an amount greater than USD 1.5M, the insurance benefits shall be paid directly to theOwner. In addition, in the event of damage to the Property smaller than USD 1.5M the Lessee undertakes that the insurancebenefits shall be used solely for the purpose of replacing the Property and restoring the Property to its condition prior to theoccurrence of the event.10.2.2.Third-party liability insurance – this policy shall provide coverage for the liability of the Lessee, the Lessee and any other tenantin the Property towards any third-party including its guests, invitees, customers, the Owner, the Lessor and anyone acting on theirbehalf and in their name, in a liability limit that shall not fall below an amount in new Israeli shekels equal to USD 5,000,000 perevent and for an annual insurance term.10.2.3.Employers' liability insurance providing insurance coverage for the liability of the Lessee, CureTech and/or any other tenant inthe Property in accordance with the provisions set forth in any law towards anyone employed by the said and on their behalf andin a liability limit that shall not fall below an amount in new Israeli shekels equal to USD 5,000,000 per event and for an annualinsurance term.10.2.4.Loss of Rent insurance for the full Property as specified in Appendix C.10.2.5.Contents insurance for the Property and any other equipment and/or property located therein and/or that serves the Propertyand/or that is owned and/or under the responsibility of the Lessee and/or any other tenant in the Property, including equipment,facilities, contents, furniture and any modification, improvement and addition that were brought to the Property and/or that wereperformed in the Property by the Lessee or for the Lessee in full value and in full replacement value against the following risks:fire, smoke, lighting, explosion, earthquake, storm and tempest, flood, damage caused by fluids and splitting of pipes, impactcaused by a vehicle, impact caused by an aircraft, strikes, riots, malicious damage, glass breakage, break-in and burglary. 13It is clarified that the arrangement of the insurances as stated above also for CureTech and/or for any other tenant in the Property shall bemade subject to the cooperation and the delivery of documents by these parties, as may be required, for the purpose of taking out the saidinsurances. It is clarified that the Lessee shall be responsible for taking out the said insurances as stated above for all the tenants in the Property inrespect of the entire area of the Property, including areas other than the Leased Premises, and shall be entitled (and responsible) to chargepayment from the other tenants in the Property in respect of the costs of the insurances as aforesaid. The Lessor shall not be responsible/shallnot incur any cost in connection with the said insurances. Notwithstanding the said, it is agreed that in the event CureTech ceases to leaseCureTech Leased Premises or a part thereof, and no other lessee(s) leases in its place in the area that was vacated as aforesaid and/or that thelessee(s) that steps in and takes over its place in the area that was vacated as aforesaid does not agree to incur the costs of the insurances asaforesaid towards the Lessee, in such circumstances the Lessor shall incur the costs of the said insurances in respect of the areas that are notleased to CureTech as aforesaid or in respect of the areas that are held by the lessee(s) that did not agree to incur the insurance costs asaforesaid. For the avoidance of doubt, in any event the Lessor shall not incur the costs as aforesaid with respect to the areas that arepossessed by the Lessee or anyone acting on its behalf. 10.3.The Lessee undertakes to observe fully the terms set forth in the guarantee and the protection requirements that are required by the insurer inthe policies and furnish to the Lessor and the Owner a certificate issued by a safety supervisor confirming their actual existence.10.4.The insurances policies shall be issued in accordance with the last version of "Bit" insurance policies.10.5.The Lessor, the Owner and Mr. Daniel Boke, a shareholder in the Owner, shall be added as additional insureds to the said insurance policies.The Lessee undertakes to cause that the said insurance policies shall include a "cross-liability clause" and shall undertake not to terminatethe policies or change their terms adversely without delivery of written notice to the Lessor and the Owner at least 30 days in advance. 1410.6.Each payment in respect of deductible amount that is required in connection with the said policies shall apply to and shall be incurred bythe Lessee, except for payment in respect of an earthquake.10.7.The Lessee undertakes, for the entire Term of Lease, to maintain the said insurances, observe all the terms set forth in the policies and maketimely payment of all premiums.10.8.The Lessee undertakes to indemnify the Owner for any damage caused to the Owner as a result of breach of the provisions set forth in thisSection or the breach of the provisions set forth in the said insurance policies by the Lessee. The Lessee undertakes to indemnify the Lessorfor any sum the Lessor is obligated to pay to the Owner in accordance with the provisions set forth in Section 10.8 of the Primary LeaseAgreement as a result of breach of this Section 10.8 by the Lessee. The provisions set forth in Section 3.5 of the Previous SubleaseAgreement shall apply respectively to the breach of the terms set forth in the said insurance policies by the Lessee, to the extent that theindemnity is not for an amount demanded under Section 10.8 of the Primary Lease Agreement as stated above.10.9.The Lessee shall furnish to the Lessor and the Owner, prior to the commencement of this Agreement, a Certificate of Insurance in the formhereby enclosed as Appendix C of this Agreement and shall furnish the said Certificate of Insurance on the date of renewal of each policy asrequired. Without derogating from the foregoing, the Lessee shall furnish to the Lessor and the Owner, whenever necessary, the copies of theinsurance policies in accordance with this Section. After the occurrence of the insured event and after the damage is repaired, the Lesseeshall be obligated to make good the sum insured to its previous sum and pay the insurance premiums at the earliest opportunity.10.10.The Lessee shall endeavor to the best of its ability (within the limits of the present costs of the policy) to remove the provisions regardingauthorities from the requirements set forth in the policy in such manner that failure to comply with the said provisions shall not deny therights.10.11.The Lessee shall not object to extend the policy in the future in the event the insurance premiums in respect of the said additions shall bepaid by the Lessor or the Owner.1510.12.The Lessee shall not be entitled to reduce the insurance premiums in respect of an earthquake against increase of the deductible amount.10.13.The Lessee hereby exempts the Lessor and/or the Owner from any damage of any kind caused to the Lessee and/or anyone acting on itsbehalf and that is covered under the insurances that the Lessee undertook to take out as stated above (or that would have been covered butfor the policyholder's contribution set out in the policy) whether or not the Lessee took out the policies. Such waiver as aforesaid shall notapply in favor of a person who causes damage with malicious intent.11.Undertaking of the Lessee in connection with the use of the Leased Premises and management of the Property11.1.The Lessee undertakes to observe strictly and uphold all the legal provisions in connection with the operation and management of thebusiness in the Leased Premises, including obtaining the business licenses and fulfilling all their conditions in accordance with theprovisions set forth in any law. The Lessee undertakes that its activities in the Leased Premises shall comply with and shall be subject to allthe legal provisions applicable to its activity in every respect.11.2.The Lessee undertakes to keep the Leased Premises and grounds thereof clean, in good and operable condition and maintain the LeasedPremises in good condition and in working order and report to the Lessor and the Owner about any breakdown in the Leased Premises. TheLessee undertakes to perform at its expense and repair promptly any damage or breakdown caused and/or that are formed in the LeasedPremises or any part thereof during the Term of Lease, unless these were caused as a result of a negligent act or omission and/or a maliciousact of the Lessor, and in such circumstances as aforesaid the Lessor shall be responsible for repairing the damage (except for breakdowns thatare reasonable wear subject the limitation set out hereunder). In the event the Lessee fails to repair the breakdowns and the damages as statedabove the Lessor and/or the Owner shall be entitled, however not obligated, to repair any damage by itself and/or by anyone acting on itsbehalf after delivery of a 14 days' prior notice to the Lessee, at the expense of the Lessee and/or the Owner and for that purpose to enter theLeased Premises at any time it deems fit. The Lessee shall pay to the Lessor and/or the Owner, as the case may be, any expense that wasexpended for the purpose of performing the said repair in 14 days after receiving written notice in connection therewith. For the avoidanceof doubt, the Lessor shall not be held liable and/or shall not incur any cost in connection with repairs/maintenance in the Leased Premises orthe Property, except for damage that was caused as a result of a negligent act or omission and/or a malicious act of the Lessor.16Without derogating from the aforesaid, it is agreed that with respect to breakdowns that were caused in the Leased Premises as a result ofreasonable wear and that were not caused, inter alia, as a result of modifications that were performed by the Lessor and/or the Lessee in theLeased Premises and/or unreasonable use, and whose repair costs are greater than NIS 2,000, the Lessee may request from the Owner toparticipate in their repair costs. The Lessee shall present to the Owner a quote delivered by a professional for the purpose of performing therepair and the Owner may choose whether to perform the repair by itself or whether the Lessee will perform the work according to the pricesspecified in the quote. In the event the Lessee performs the repair, the Lessee shall be entitled to request from the Owner that the Owner shallincur the costs of the repair against presentation of invoice evidencing the costs of the repair. At the request of the Lessee, the Lessor shalldeliver a request from the Owner to receive reimbursement for the costs of the said repair and shall reasonably assist to the Lessee to receivethe reimbursement from the Owner provided that the Lessor shall not incur any cost and/or shall not be responsible in connection therewith.To the extent that the reimbursement of the costs that were actually incurred by the Lessee is transferred by the Owner to the Lessor, theLessor shall transfer the said costs to the Lessee in 14 days as of the date of its receipt.Notwithstanding the aforesaid, it is hereby agreed that in any event the option of the Lessee to deliver a request to the Owner to participatein the costs of repairing defects as stated in this Section (whether performed by the Owner or by the Lessee) is limited up to the amount ofNIS 8,000 each year. In other words, if, for example, damage in the amount of NIS 10,000 was caused in the first year, the Lessee shall beentitled to deliver a request to the Owner to participate in the amount of NIS 8,000 only in that year (i.e., the said participation amount isrelevant to each year separately and does not accumulate). A "year" for the purpose of setting the said limitation, shall be set at thediscretion of the Owner and in accordance with the Term of Lease and by virtue of the Primary Lease Agreement.1711.3.The Lessee undertakes to allow the Owner and/or the Lessor and/or their representatives to enter the Leased Premises at any reasonable time,after advance coordination with the Lessee, in order to assure that the Lessee fulfills all its undertakings in accordance with this Agreement.In addition, the Owner and/or the Lessor shall be entitled to enter the Leased Premises during the Term of Lease for the purpose of showingthe Leased Premises to potential buyers or in the last six months of the Term of Lease for the purpose of showing the Leased Premises topotential lessees.11.4.The Lessee confirms that it is aware that smoking in the areas inside the building is prohibited.11.5.The Lessee undertakes not to place signage in the exterior part of the Property without obtaining the consent of the Lessor and the Owner.Notwithstanding the said, the Lessee shall be entitled to place signage bearing its name and the logo of the Lessor at the entrance to theLeased Premises and in other places in the building where the names and signs of other lessees are placed.11.6.The Lessee shall not schedule an inspection in the Property by any competent authority without advance coordination with the Lessor.11.7.Agreement management services11.7.1.In addition to the provisions set forth in this Agreement, it is agreed that the Lessee shall serve as the Lessor's representative inanything related to the fulfillment of the undertakings of the Lessor in accordance with the Sublease Agreement made betweenthe Lessor and CureTech Ltd. dated March March 18, 2018 (hereinafter: "CureTech Agreement") at the expense of the Lesseeand under its responsibility, and the Lessee shall not be entitled to any payment or reimbursement from the Lessor ("AgreementManagement Services").11.7.2.Without derogating from the generality of the aforesaid, the Lessee shall be responsible for the following as part of the AgreementManagement Services:(a)Provide reasonable supervision over the fulfillment of the undertakings of CureTech in accordance with the CureTechAgreement (except for payments and/or securities that are delivered directly to the Lessor by CureTech). For the avoidanceof doubt, the Lessee shall be responsible for reporting to the Lessor in connection with the said and shall not beresponsible for breaches and/or nonfulfillment of the CureTech Agreement.18(b)Provide reasonable response to CureTech and/or the Lessor and/or the Owner and/or to any third-party in connection withthe undertakings of the Lessor in accordance with the CureTech Agreement;(c)In accordance with the instructions of the Lessor, contact the Lessor and/or the Owner for the purpose of receiving theirinstructions and/or approvals in matters that require instructions and/or approvals in accordance with the CureTechAgreement;(d)Deliver to CureTech the instructions of the Lessor and/or the Owner in connection with the use and possession of theProperty, to the extent that there are any from time to time;(e)Allow CureTech reasonable access and use of the cafeteria, conference rooms, storage areas, toilets, staircases, shelter,corridors and the elevator in the Property as stated in the blueprint hereby enclosed as Appendix E of this Agreement(including in the event these areas are located or constitute part of the Leased Premises);(f)Deliver to the Lessor a periodic report and/or a report upon demand in connection with the Agreement ManagementServices on the subject, in the manner and in the scope as demanded by the Lessor from time to time and according to itsinstructions.11.7.3.The Lessor shall inform CureTech and/or any other lessee that engages with the Lessor in agreements in lieu of or in addition toCureTech in respect of all or any part of CureTech Leased Premises regarding the Agreement Management Services provided bythe Lessee and shall instruct them to contact the Lessee and cooperate with the Lessee in anything related to the performance ofthe Agreement Management Services, and shall incorporate the said provisions in the agreements with the said lessees.1911.7.4.To the extent that the Lessee fails to fulfill its undertakings in connection with the performance of the Management Services asaforesaid the Lessor shall be entitled to take action in connection with the Agreement Management Services and/or a part thereofwhether by itself or simultaneously with the Lessee and the Lessor shall be entitled to terminate the Agreement ManagementServices and/or any part thereof permanently and/or temporarily at its sole discretion.11.7.5.In any event it is agreed that the Lessee shall not be entitled to impose any responsibility and/or cost on the Lessor in respect ofthe Agreement Management Services without obtaining the prior and written consent of the Lessor.11.7.6.In addition, and without derogating from the aforesaid, the Lessee confirms and agrees that it is necessary to provide propermanagement and maintenance services in the Property and/or the areas and/or the systems and/or the common facilities in theProperty ("Management and Maintenance Services") and the Lessor shall not be responsible for the provision of Managementand Maintenance Services, and that the Lessee shall be responsible for (a) the provision of the Management and MaintenanceServices at its expense with respect to its use of the Leased Premises; (b) the provision of Management and Maintenance Servicesto CureTech in return for payment as agreed between the Lessee and CureTech.11.7.7.It is agreed that the provisions set forth in this Section 11.7 (except for 11.7.8) shall apply respectively also to any other lessee orlessees that engage with the Lessor in agreements in lieu of or in addition to CureTech in respect of all or part of the CureTechLeased Premises ("Another Lessee," "Other Lessees") in such manner that the Lessee shall be obligated to provide the AgreementManagement Services and/or the Management and Maintenance Services with respect to the Other Lessees and/or with respect tothe areas possessed by the said lessees and/or with respect to the agreement that will be signed between the said Lessees and theLessor, in accordance with the provisions set forth in this Section 11.7 (except for 11.7.8), mutatis mutandis. For the avoidance ofdoubt, the Management and Maintenance Services shall be provided to the Other Lessees or any part thereof, at their request, asagreed between the Lessee and the said Lessees.2011.7.8.Without derogating from the aforesaid, the Lessee confirms that concurrent with the signing of this Agreement it engaged in anagreement with CureTech for the purpose of providing the Management and Maintenance Services in return for payment("CureTech Management Agreement"). It is agreed that a material breach of the CureTech Management Agreement by theLessee that did not result from the breach of the CureTech Management Agreement by CureTech and that was not cured in 30days as of the date of receiving the prior and written notice of the Lessor in connection therewith shall also constitute a breach ofthis Agreement towards the Lessor. It is agreed that any change in the services that are provided in the CureTech ManagementAgreement shall require the written consent of the Lessor, which consent shall not be unreasonably withheld. To the extent thatthe Lessor does not consent to increase the number of services in the CureTech Management Agreement, the Lessee shall beentitled to provide to CureTech the additional service for additional consideration as stated in a separate agreement withCureTech that shall not be considered as part of the CureTech Management Agreement. The Lessee and CureTech shall beentitled to change the consideration for the different services beyond the sums specified in the CureTech ManagementAgreement, provided that the change is reasonable. The CureTech Management Agreement as amended from time to time and inits most updated version (including in the event the CureTech Management Agreement was terminated or expired) shall bereferred hereinafter: "the Last CureTech Management Agreement").11.7.9.It is agreed that the Lessee shall agree to engage with any Other Lessee, at its request, in a Management and Maintenance ServicesAgreement in the form of the Last CureTech Management Agreement (within its meaning above) subject to reasonableamendments as required in light of the financial strength of the Other Lessee with respect to the securities and/or the declarationsand/or the representations required from the said lessee. For the avoidance of doubt, the Lessee shall be entitled to change theservices basket and/or the consideration as stated in the Last CureTech Management Agreement in the contract made with theOther Lessee however solely after obtaining the consent of the Other Lessee (and in the event of reduction of the services basket –also after obtaining the Lessor's consent – which shall not be unreasonably withheld).2111.8.The Lessee shall be solely responsible and at its expense for handling any construction violation, if and to the extent committed by theLessee in the Leased Premises, during the Term of Lease contemplated in this Agreement.11.9.It is agreed that the parties will engage in a separate agreement for the purpose of regulating their relationship with respect to the equipmentand part of the improvements located in the Property.12.Vacating the Leased Premises12.1.Upon expiration of the Term of Lease and/or the Option Term (to the extent that there is any) or in the event this Agreement was lawfullyterminated and/or expired, the Lessee shall vacate the Leased Premises and shall return possession therein to the Lessor when the LeasedPremises are free from any person and article belonging to the Lessee and/or anyone acting on its behalf and when the Leased Premises arein working order and in their condition on the lease commencement date in accordance with the Primary Lease Agreement and except forreasonable wear due to the ordinary use of the Leased Premises (and subject to the provisions set forth in Sections 7.2 and 7.3 of the PrimaryLease Agreement regarding the adjustments that were performed in the Leased Premises by the Lessor and the right of the Owner to demandthat the said adjustments shall not be removed). For the avoidance of doubt, it is clarified that the provisions set forth in the First LeaseAgreement regarding modifications and additions performed in the Leased Premises shall apply until the commencement date of the lease inaccordance with the Primary Lease Agreement. For the avoidance of doubt, the Lessor shall not be held liable in any manner in connectionwith the condition of the Leased Premises upon expiration of the Agreement. 2212.2.The parties agree that upon expiration of the Term of Lease and/or the Option Term (to the extent that there is any) or in the event thisAgreement was lawfully terminated and/or expired for any reason, and unless otherwise required in writing by the Owner, all the additionsand facilities that are attached to the Leased Premises and that by their nature constitute part of the building and cannot be reasonablyremoved from the building shall remain in the Leased Premises for no additional consideration including, and without derogating from thegenerality of the aforesaid, the following: elevators, building cladding, fire suppression and fire detection utilities (except for systems thatare extraneous to the building, electronic fire suppression control panels, fire extinguishers and portable hoses), air-conditioning system(except for chillers, split air-conditioning units, air treatment units, chiller units), sinks (kitchens and toilet rooms), toilet bowls, centralelectricity utility, water and plumbing utilities and fences and exterior doors (it is clarified that this is not a final list and that under nocircumstances the said items are the only items that will be left in the Leased Premises). It is further clarified that all construction additionsthat were performed in the Leased Premises during the Term of Lease contemplated in this Agreement and/or during the Term of Lease inaccordance with the Primary Lease Agreement shall remain in the Leased Premises and shall constitute an integral part thereof and shallremain in their condition "as-is" except for reasonable wear as a result of the ordinary use of the Leased Premises, unless the Ownerdemanded otherwise in writing, at least 90 days prior to expiration of the Term of Lease. It is clarified that the Owner shall be entitled todemand to leave only part of the additions and the facilities.In the event this Agreement is terminated prior to the expiration of the Term of Lease and/or prior to the expiration of the Option Term (tothe extent that there is any), and prior to the termination of the Primary Lease Agreement, the provisions regarding the evacuation of theLeased Premises in accordance with Sections 12.1 and 12.2 above shall apply, when the Lessor shall have sole discretion whether to keep orremove of any modifications and/or a part thereof, in accordance with the provisions set forth in Sections 12.1 and 12.2 above, and to theextent that it is necessary to leave modifications in the Leased Premises as aforesaid, the said modifications shall be transferred to theownership of the Leased Premises for no consideration.12.3.Subject to the provisions set forth in Section 12.2 above, the Lessee shall remove from the Leased Premises all the portable equipment andfacilities that naturally do not include part of the building and can be reasonably removed from the building, except for the equipment andfacilities that belong to the Lessor and/or anyone acting on its behalf, at its expense and under its responsibility, and prior to expiration ofthe Term of Lease, and on the condition that any damage that is caused to the Leased Premises as a result of the dismantling shall berepaired by the Lessee and at its expense prior to expiration of the Term of Lease. In the event the Lessee requested not to remove theequipment and the facilities as aforesaid and the Lessor agreed to the said request, the said equipment and facilities shall become theproperty of the Lessor without payment of consideration to the Lessee.2312.4.In 30 days as of expiration of the Term of Lease the Lessee shall deliver to the Lessor all approvals from all the relevant authoritiesincluding the municipality, Israel Electric Corp., Ministry of Environmental Protection (to the extent required by law), evidencing that theLessee paid all payments due from the Lessee and fulfilled all its undertakings.12.5.The Lessee shall pay to the Lessor for each day in which the Lessee delays in vacating the Leased Premises and returning possession thereinto the Lessor in accordance with the provisions set forth in Sections 12.1 and 12.2 above, pre-estimated liquidated damages in an amountthat shall be equal to two times the Rent due to the Lessor for the last day of lease of the Term of Lease contemplated in this Agreementhowever as a minimum and in an amount that shall not be greater than the amount that the Lessor was required to pay to the Owner by virtueof the Primary Lease Agreement and without derogating from any other right or relief the Lessor may seek in accordance with the provisionsset forth in this Agreement and/or in accordance with the provisions set forth in any law.12.6.Without derogating from any right and/or relief the Lessor may seek in accordance with this Agreement, in the event the Lessee fails tovacate the Leased Premises on the dates as stated in this Agreement, the Lessor shall be entitled to enter the Leased Premises and removefrom the Leased Premises the entire property of the Lessee, in accordance with the provisions set forth in any law. 13.Transfer of rights13.1.The Lessor shall be entitled to sell and transfer its rights in the Leased Premises or any part thereof and/or its rights in accordance with thisAgreement and/or any part thereof and/or charge the said rights without obtaining the prior consent of the Lessee and on the condition thatthe rights of the Lessee in accordance with this Lease Agreement shall not be impaired thereby.2413.2.Notwithstanding the said in Section 13.1 above, it is agreed that in any event in which the Lessor wishes to transfer its entire rights andobligations in the Primary Lease Agreement to a third-party (hereinafter in this Section: "Transfer of the Rights and Obligations of theLessor in the Property") the following provisions shall take effect:13.2.1.The Lessor shall deliver written notice to the Lessee and shall notify the Lessee regarding its wish to perform the Transfer of theRights and Obligations of the Lessor in the Property to a third-party as aforesaid (hereinafter: "Lessor's Notice").13.2.2.The Lessee shall be entitled to deliver written notice to the Lessor, in 14 days as of the date of receiving the Lessor's Notice,stating that it wishes to accept the rights and obligations of the Lessor in the Property as aforesaid (hereinafter: "Lessee's Notice").13.2.3.In the event the Lessee delivered the Lessee's Notice during the said period as stated above, the parties and the Owner shallengage in good faith negotiations regarding the terms for the Transfer of the Rights and Obligations of the Lessor in the Property,whether the Lessee steps in and take over the Lessor in the Primary Lease Agreement and whether the Lessee signs anotheragreement with the Owner, upon its demand. It is clarified that in the event the Owner demands that the Lessee will step in andtake over the Lessor in the Primary Lease Agreement, the parties and the Owner shall not engage in negotiations in connectionwith the signing of another agreement with the Owner.2513.2.4.In the event the Lessee did not deliver the Lessee's Notice to the Lessor in 14 days as aforesaid, or in the event no bindingagreement was signed between the parties for the purpose of transferring the rights and obligations of the Lessor in the Property tothe Lessee as aforesaid in 45 days as of the date of the Lessee's Notice ("Effective Date") the Lessor shall be entitled to transfer itsrights and obligations in the Property to a third-party at its sole discretion, however on the condition that the rights of the Lesseein accordance with this Agreement shall not be impaired thereby. In the event no agreement was signed between the Lessor and athird-party regarding the Transfer of the Rights and Obligations of the Lessor in the Property in 4 months as of the Effective Dateas aforesaid, in any event in which the Lessor wishes to perform another Transfer of the Rights and Obligations of the Lessor inthe Property to any third-party as aforesaid the Lessor shall be obligated to repeat the delivery of the Lessor's Notice to the Lesseein the manner specified above and so on and so forth. Notwithstanding the said, it is agreed that to the extent that the Lessorengages in negotiations with a third-party in 4 months as of the Effective Date as aforesaid, the period of the said 4 months shallbe extended by an additional period of 45 days, and only after the said period the Lessor shall be obligated to deliver again theLessor's Notice to the Lessee in the manner specified above.13.2.5.Notwithstanding the said, for the avoidance of doubt it is clarified that the transfer of the Primary Lease Agreement to any third-party is subject to the consent of the Owner at its sole discretion, and to the extent that the Owner refuses and/or announces in anyother manner that it does not agree to the transfer of the Primary Lease Agreement to the Lessee, the Lessor shall be entitled tocontact third-parties in connection with the transfer of the Primary Lease Agreement without delivering the Lessor's Notice to theLessee and/or without waiting to receive the Lessee's response (in the event the Lessor's Notice was delivered) and/or withoutwaiting for expiration of the said period of 45 days as stated above (in the event the Lessor's Notice was delivered), and on thecondition that the rights of the Lessee in accordance with this Agreement shall not be impaired thereby.The actions of the Lessor in accordance with this Section 13.2 shall be performed in good faith.13.3.It is clarified that the said in Section 13.2 above (including subsections thereof) shall not apply in the event of transfer of the rights of theLessor in the Property to another company and/or corporation controlled by Clal Biotechnology Industries Ltd.For the purpose of this Section "control" shall mean the holding of a minimum of 25% of the issued and paid-up share capital of thecorporation, and in the event of a partnership or another corporation that does not have shares, shall mean holding of 25% of the right in thepartnership or the corporation as aforesaid.2613.4.The Lessee undertakes not to transfer in any manner this Agreement and/or any part thereof and not to lease, transfer or deliver to anotherpossession in the Leased Premises or any part thereof and not allow use thereof with and/or without a license, whether or not forconsideration, to anyone other than the Lessee without obtaining the prior and written consent of the Lessor and the Owner.Notwithstanding the said, the Lessee shall be entitled to bring a substitute lessee that will be willing to engage with the Lessor in this LeaseAgreement in connection with the Leased Premises and until expiration of the Term of Lease or, in the event the Option Term was realized,until expiration of the Option Term. The termination of this Agreement and the engagement with a substitute lessee, including the terms oftermination and engagement as aforesaid shall be subject to the prior and written consent of the Lessor (which consent shall not beunreasonably withheld) and the prior and written consent of the Owner at its sole discretion. In any event, the Lessee shall be solely liable inconnection with its undertakings in accordance with this Agreement until the date a binding agreement is signed with the substitute lessee,and after the substitute lessees provides securities and insurances to the Lessor and arranges the payment method and starts makingpayments to the Lessor (the fulfillment of the said condition shall release the Lessee from its undertakings in accordance with thisAgreement in connection with the period as of the said date henceforth and the Lessee shall receive the securities it provided).14.Inapplicability of tenancy protection laws14.1.It is declared expressly that this lease is made under the express condition that the tenancy protection laws shall not apply thereto. TheLessee declares that it did not pay and will not pay any key money to the Lessor or any other consideration other than the Rent, and that theLessee or anyone acting on its behalf shall not be considered as protected tenants in the Leased Premises in accordance with the law.2714.2.The Leased Premises is an area in a new building in accordance with the provisions set forth in Section 14(a) of the Tenant Protection Lawand on the date the Tenant Protection Law (Miscellaneous Provisions) 5728-1968 took effect there was no lessee that was entitled to holdthe Leased Premises.14.3.Without derogating from the foregoing, it is hereby stated that the provisions set forth in the Tenant Protection Law [Consolidated Version]5732-1972 including all amendments thereof shall not apply to the lease of the Leased Premises by the Lessee in accordance with thisAgreement.14.4.It is hereby clarified and agreed expressly that the Lessee shall not be obligated to perform any modification and/or addition and/orinvestment of any kind in the Leased Premises and to the extent that the Lessee decided to act in the said manner it made this decision outof its own free will and without receiving any demand to act in the said manner by the Lessor and/or was not compelled to act in the saidmanner by the Lessee.14.5.The Lessee declares that all investments it will make in the Leased Premises, including equipment and facilities therein, shall be made for itsown purposes and the Lessee shall be precluded from arguing that the said investments constitute key money or any substitute for keymoney or payment in accordance with Section 82 of the Law or any payment that grants it any rights in the Leased Premises and shall beprecluded from demanding from the Lessor participation or reimbursement, in whole or in part, in respect of the said investments.15.SecuritiesIn order to assure the fulfillment of all the undertakings of the Lessee in accordance with this Agreement, upon commencement of the Term of Leasethe Lessee shall deposit with the Lessor an autonomous bank guarantee, unconditional, payable intermittently, index-linked, for an amount of 4months of lease in addition to VAT. The Lessor shall be entitled to use the guarantee for the purpose of collecting any outstanding debt from theLessee in accordance with this Agreement provided that the Lessor delivers a 7 days' prior notice to the Lessee regarding its intention to enforce theguarantee. The guarantee shall be in effect until 90 days after expiration of the Term of Lease. The Lessor undertakes to update the guarantee amountevery three years in respect of the increase of the Rent in such manner that the value of the guarantee shall reflect the updated Rent (the next date ofupdate shall apply on the date in which the Lessor shall make the demand in accordance with its obligation by virtue of the Primary Lease Agreement).In the event the Lessor used the guarantee for the purpose of recovering its damages, the Lessee undertakes to furnish a new guarantee in respect of theamount that was realized in 7 days thereafter, in such manner that the Lessor shall have at all times the guarantee for the full amount. For the avoidanceof doubt, it is clarified that to the extent that the amount of the damages caused to the Lessor is greater than the guarantee amount, the Lessor shall beentitled to receive and claim all the damages beyond the guarantee amount. The bank guarantee shall be in the form enclosed as Appendix F of thisAgreement and may be assigned to the Owner at the discretion of the Lessor, and subject to the undertaking of the Owner to comply with theprovisions set forth in this Section 15.1. 28 Without derogating from the aforesaid, to the extent that Clal Biotechnology Industries Ltd. ceases to be the controlling shareholder in the Lessee("control" for the purpose of this matter – within its meaning in the Companies Law 5759-1999), the Lessor shall be entitled to demand to increase thebank guarantee up to an amount of 6 months of lease in addition to VAT.16.Reliefs and remedies16.1.Breach of any of the provisions set forth in this Agreement shall entitle the injured party to all the reliefs and remedies set forth for thatpurpose in the Contracts Law (Remedies for Breach of Contract), 5731-1970 without derogating from any other relief set forth in thisAgreement.16.2.The Lessor shall be entitled, in addition to any other relief by law, to terminate this Agreement and the rights of lease contemplated hereby,and the Lessee shall be obligated to vacate the Leased Premises forthwith and return possession therein to the Lessor in accordance with theprovisions set forth in Section 12.1 above, in the event the Lessee breached any of the provisions set forth in Sections 5, 6, 7, 8, 10, 13, 14and 15 of this Agreement including subsections thereof.16.3.Default in making any payment shall entitle the Lessor, in addition to any other relief, to receive from the Lessee interest in arrearsaccording to the customary interest rate at the time for overdrafts in current loan accounts in Bank Leumi le-Israel Ltd in addition to 1% permonth, calculated with respect to the amount in default for the period of default. It is clarified that a delay of up to 7 days in making apayment for three times in each year of lease shall not be deemed as breach of this Agreement and no interest in arrears shall be paid inrespect whereof as aforesaid.2917.Miscellaneous17.1.Without derogating from the aforesaid in this Agreement, the Lessee undertakes not to cause in any manner the breach of the Primary LeaseAgreement by the Lessor.17.2.Obtaining the consent of the Lessor in this Agreement shall mean also obtaining the consent of the Owner, to the extent that the saidconsent is required in accordance with the Primary Lease Agreement. For the avoidance of doubt, it is clarified that the Lessee shall have norights in connection with the Leased Premises and/or the lease contemplated in this Agreement however shall have only the rights that werestated expressly solely in this Agreement.17.3.Notwithstanding anything to the contrary herein, it is agreed that: (a) this Agreement shall not give rise to any rights to the Lessee vis-à-visthe Owner; and (b) the Lessor shall not be held liable in any manner for fulfilling the undertakings of the Owner even if the saidundertakings were stated explicitly or implicitly in this Agreement. In the event the Lessor has a right vis-à-vis the Owner in accordancewith the Primary Lease Agreement and that Lessee wishes to enforce the said right, the Lessee shall act at its expense and under itsresponsibility for the purpose of enforcing the said right vis-à-vis the Owner, and to the extent that the Lessee is unable to enforce the saidright, the Lessor shall reasonably cooperate with the Lessee, upon receiving the Lessee's request, for the purpose of enforcing the said righton the condition that the Lessor shall not be held liable and/or shall not incur any cost as a result and/or in connection therewith. It isclarified that to the extent that the Owner does not agree to conduct negotiations directly with the Lessee the Lessor shall be obligated totake reasonable action directly vis-à-vis the Owner together with the Lessee for the purpose of enforcing its rights vis-à-vis the Owner, andon the condition that the Lessor shall not be held liable and/or shall not incur any cost as a result of and/or in connection therewith.17.4.In the event any of the parties made payment to the other party after delivery of a 10 days' prior and written notice, with respect to any sumthe other party is obligated to pay by virtue of the provisions set forth in any law or by virtue of the provisions set forth in this Agreement,the defaulting party shall be obligated to return to the paying party the sum paid in addition to interest as stated in Section 15.3 above.3017.5.Any modification or amendment of this Agreement or any provision thereof or any waiver of a right in accordance with this Agreement shallbe null and void unless executed in writing and signed by the parties. In addition, any delay and/or avoidance from enforcing a right withrespect to any of the reliefs the parties may seek in accordance with the provisions set forth in this Agreement and/or in accordance with theprovisions set forth in any law shall not be deemed as waiver of the said right and/or relief by any of the parties and shall not constitute anyprecedent in connection therewith.17.6.The Lessee undertakes that as of the date of signing this Agreement and during the Term of Lease it shall not request an exemption fromtaxes from the municipality in respect of a "vacant property" even in the event the Lessee will be entitled to request such exemption.17.7.The parties hereby agree expressly that the courts of Tel Aviv - Yafo shall have sole and exclusive jurisdiction in anything relating to andarising out of this Agreement.17.8.The addresses of the parties for the purpose of this Agreement are as stated in the preamble hereof (and with respect to the Lessee, its addressduring the Term of Lease shall be the address of the Leased Premises) or any other address in Israel as notified by one party to the other bydelivery of a letter in registered mail. A notice delivered in registered mail according to the said addresses shall be deemed to have reachedits recipient in four (4) days from the date it was delivered in registered mail, and in the event the notice was and if delivered in person – atthe time of its delivery. In Witness Whereof The Parties Hereto Have Hereunto Set Their Hands And Seal On The Day, Month And Year First Hereinabove Written:/s/ Ofer Gonen /s/ Assaf Segal /s/ Sharon Malka /s/Yaron MeyerThe Lessor The Lessee I confirm that the signatures above are the signatures of theMessrs. Ofer Gonen and Assaf Segal, and that these signaturesshall lawfully bind the Lessor I confirm that the signatures above are the signatures of theMessrs. Sharon Malka and Yaron Meyer, and that thesesignatures shall lawfully bind the Lessee /s/ Shiran Manor, Adv. /s/ Shiran Manor, Adv. 31 Appendix A  Appendix A1   Appendix B  Appendix C ToYezum-Tech and/or shareholders thereof (hereinafter: "the Owners")And/or Clal Life Sciences L.P. and/or shareholders thereof (hereinafter: "the Lessor")And/or CureTech Ltd. (private company, Company No. _____________) and/or shareholders thereof (hereinafter: "CureTech") Re: Certificateof Insurance for the building in 42 HaYarkon St. in Yavne ("the Property") We hereby confirm that as of April 1, 2017 – March 31, 2018, we took out the following insurances in the name of Clal Life Science Company No. 55-020837-5 (hereinafter: "the Lessee"): 1.Dwelling insurance for the Property in replacement value of any modification and/or addition in the Property that were performed and/or that will beperformed by the Lessor and/or the Lessee and/or anyone acting on its behalf and/or CureTech and/or any other lessee in the Property against loss ordamage due to the covered risks in extended fire insurance, including fire, smoke, lighting, explosion, earthquake, storm and tempest, flood, damagecaused by fluids and splitting of pipes, any impact by accident, strikes, riots, malicious damage and break-in, on a first damage basis. The extension ofinsurance for debris removal shall be on the amount of one million New Israeli Shekels. The insurance shall include an express provision stipulatingthat the insurer waives any right of subrogation towards the Owners and/or the Lessor and anyone acting on their behalf and in their name, and itsrights of subrogation towards subsidiaries and/or partners of the Owners and/or the Lessor and/or the other lessees in the building whose insuranceincludes a corresponding clause regarding waiver of the right of subrogation towards the Lessee in respect of any damage caused by the Lessee,provided the aforesaid regarding waiver of the right of subrogation shall not apply in favor of a person who causes damage with malicious intent. 2.Third-party liability insurance providing coverage for the statutory liability of the Lessee and CureTech in a liability limit that shall not fall belowNIS 20,000,000 (twenty million shekels) per event and cumulatively for an annual insurance term. The insurance shall not be subject to any limitationregarding liability arising out of fire, explosion, panic, hoisting, loading and unloading apparatuses, defective sanitary fixtures, contractors andsubcontractors, poisoning, anything harmful in foods and beverages, strikes and lockouts and claims of subrogation by the National InsuranceInstitute, vibrations, weakening of support, property being worked upon and surrounding property. The insurance shall be extended to providecoverage for the liability of the Owners and/or the Lessor and/or the Management Company in respect of their liability for an act or omission of theLessee, CureTech and any other lessee subject to a cross-liability clause according to which the insurance shall be deemed to have been arrangedseparately for each of the members of the insured.  3.Employers' liability insurance for the liability of the Lessee and CureTech towards its workers in a liability limit in the amount of NIS 20,000,000(twenty million New Israeli Shekels) per worker, per event and in total for an annual insurance term. The said insurance shall not include any limitationregarding works in height and in depth, hours of work, contractors, subcontractors and their workers, if the insures will be considered as theiremployers, baits and poisons and youth employment by law. The said insurance shall be extended to indemnify the Owners and/or the Lessor and/orthe Management Company in the event they are considered to be the employer of any of the workers of the Lessee, CureTech and/or any other lesseein the Property in the event it is stated that they are held under vicarious liability with respect to the liability of the Lessee, CureTech and/or any otherlessee in the Property towards their workers for an indemnity period of 12 months. The said insurance shall include an express provision stipulatingthat the insurer waives any right of subrogation towards the Owner and/or the Lessor, the Management Company and anyone acting on their behalfand in their name and its right to subrogation towards subsidiaries and/or partners of the Owners and/or the Lessor and/or the other lessees in thebuilding whose insurances include a corresponding clause regarding waiver of the right of subrogation towards the Lessee in respect of any damagecaused by the Lessee provided that the said regarding waiver of the right of subrogation shall not apply in favor of a person who causes damage withmalicious intent. 4.General A.The policies shall not include a limitation regarding electromagnetic radiation. B.The cover provided in all policies in respect of the said insurances shall not fall below the cover provided by "Bit" 2013 insurance policies andshall constitute primary insurance and in the event of damage the benefits/indemnity shall be paid independent from other policies that weretaken out by the Owners and/or the Lessor and/or in favor of any thereof for the activity of the insured in the property.  C.In the event of damage to the Leased Premises greater than $1,500,000, all insurance benefits in respect of the insurances of the Leased Premisesshall be paid directly to the Owners. D.All policies shall include an express provision stipulating that any termination or the policies or change of their terms shall be subject todelivery of a 30 days' prior notice from the Insurers to the Owners in registered mail, and no later than the end of the insurance period. And in witness hereof we are herebyundersigned: /s/ Atias Sigal/s/ Menora Mivtahim Insurance Ltd.14.3.18Name of SignatoryInsurer Signature and StampDate of Signature Appendix E  Appendix F Bank Guarantee ToClal Life Sciences L.P.Registered Partnership no. 55-020837-5Of _________________ St.Date: _________________ Dear Sir/Madam, Re: Bank Guarantee no. _____________ 1.We hereby undertake towards you to pay any sum up to a total amount of NIS ____________ (____________________ new Israeli shekels)(hereinafter: "Guarantee Amount") that you will demand from _____________ Company No. ____________ (hereinafter: "the Debtor") inconnection with the Agreement dated ______________ (hereinafter: "the Agreement"). 2.The Guarantee Amount shall be linked to the consumer price index published from time to time by the Central Bureau of Statistics in accordance withthe following terms of linkage: "Basic Index" for the purpose of this Guarantee shall be the index published on ____________ for the month of _______________. "New Index" for the purpose of this Guarantee shall be the index published recently and prior to receiving your demand in accordance with thisGuarantee. Linkage differentials for the purpose of this Guarantee shall be calculated as follows: if it transpires that New Index increased compared to Basic Index,the linkage differentials shall be the sum equal to the product of the difference between the New Index and the Basic Index multiplied by the amountof the demand, divided by the Basic Index. In the event the New Index is lower than the Basic Index we will pay you the amount specified in yourdemand up to the Guarantee Amount, without any linkage differentials. 3.Upon receiving your first written demand and no later than seven days as of the date we receive your demand to our address as stated above, we willpay you any sum specified in the demand provided that the said sum is not greater than the Guarantee in addition to the linkage differentials asaforesaid and without demanding from you any proof or demand that you substantiate your demand and you shall not be obligated demand thepayment first from the Debtor. 4.This Guarantee shall be in effect until the _________ day in the month of _________ in the year __________ (including) only and after this date theGuarantee shall be null and void. Any demand made in accordance with this Guarantee shall be delivered to us in writing and no later than the said date. 5.This Guarantee is nontransferable and non-assignable. Sincerely __________ Bank Ltd. EXHIBIT 12.1 CERTIFICATIONI, Gal Cohen, certify that: 1. I have reviewed this Annual Report on Form 20-F of MediWound Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany 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 company, including its consolidated subsidiaries, is made known to us by others withinthose 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered bythe annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financialreporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internalcontrol over financial reporting. Date: March 19, 2018/s/Gal CohenGal CohenPresident and Chief Executive Officer EXHIBIT 12.2CERTIFICATIONI, Sharon Malka, certify that: 1. I have reviewed this Annual Report on Form 20-F of MediWound Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany 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 company, including its consolidated subsidiaries, is made known to us by others withinthose 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered bythe annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financialreporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internalcontrol over financial reporting. Date: March 19, 2018/s/ Sharon MalkaSharon MalkaChief Financial and Operations Officer EXHIBIT 13.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of MediWound Ltd. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2017 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Gal Cohen, do certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gal CohenGal CohenPresident and Chief Executive OfficerDate: March 19, 2018 EXHIBIT 13.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of MediWound Ltd. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2017 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Sharon Malka, do certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Sharon MalkaSharon MalkaChief Financial and Operations OfficerDate: March 19, 2018 EXHIBIT 15.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in MediWound Ltd.’s Registration Statements on Form F-3 (No. 333-209106) and Form S-8(Nos. 333-195517 and 333-210375) of our report dated March 19, 2018, with respect to the consolidated financial statements of MediWound Ltd. includedin the Annual Report on Form 20-F of MediWound Ltd. for the year ended December 31, 2017.Tel Aviv, IsraelMarch 19, 2018 /s/ KOST, FORER, GABBAY & KASIERERKOST, FORER, GABBAY & KASIERERA Member of Ernst & Young Global 

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