F-1/A 1 a2221700zf-1a.htm F-1/A

Use these links to rapidly review the document
TABLE OF CONTENTS
TABLE OF CONTENTS 2

Table of Contents

As filed with the Securities and Exchange Commission on November 3, 2014.

Registration No. 333-198754


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment
No. 1
to
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



NeuroDerm Ltd.
(Exact Name of Registrant as Specified in its Charter)



State of Israel
(State or Other Jurisdiction of
Incorporation or Organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification No.)

NeuroDerm Ltd.
Ruhrberg Science Building
3 Pekeris St.
Rehovot 7670212, Israel
+972 (8) 946-2729

(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
+1 (302) 738-6680
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Colin J. Diamond, Esq.
Joshua G. Kiernan, Esq.
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Tel: +1 (212) 819-8200
Fax: +1 (212) 354-8113

 

David S. Glatt, Adv.
Ronen Bezalel, Adv.
Jonathan M. Nathan, Adv.
Meitar Liquornik Geva Leshem Tal
16 Abba Hillel Rd.
Ramat Gan 5250608, Israel
Tel: +972 (3) 610-3100
Fax: +972 (3) 610-3111

 

Nir Weissberger, Adv.
Eitan, Mehulal & Sadot
10 Abba Eban Blvd.
P.O. Box 2081
Herzlia 4612002, Israel
Tel: +972 (9) 972-6000
Fax: +972 (9) 972-6001

 

Eric W. Blanchard, Esq.
Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018
Tel: +1 (212) 841-1000
Fax: +1 (646) 441-9111

 

Chaim Friedland, Adv.
Ari Fried, Adv.
Gornitzky & Co.
Zion House, 45 Rothschild Blvd.
Tel Aviv 6578403, Israel
Tel: +972 (3) 710-9191
Fax: +972 (3) 560-6555

Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o



CALCULATION OF REGISTRATION FEE

       
 
Title of Each Class of Securities
to be Registered

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee

 

Ordinary shares, par value NIS 0.01

  $82,800,000   $10,441(3)

 

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)
Includes shares granted pursuant to the underwriters' option to purchase additional shares.

(3)
$8,372 previously paid.



The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 3, 2014

PRELIMINARY PROSPECTUS

4,500,000 Shares

LOGO

NeuroDerm Ltd.

Ordinary Shares

We are offering 4,500,000 ordinary shares. This is our initial public offering and no public market currently exists for our ordinary shares. We expect the initial public offering price to be between $13.00 and $16.00 per share.

We have applied to have our ordinary shares listed on the NASDAQ Global Market under the symbol "NDRM." We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.

Investing in our ordinary shares involves a high degree of risk. Please read "Risk Factors" beginning on page 16 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


 
  PER SHARE   TOTAL  

Public Offering Price

  $     $    

Underwriting Discounts and Commissions(1)

             

Proceeds to NeuroDerm Ltd. before expenses. 

             

(1)
See "Underwriting" for a description of compensation payable to the underwriters.

Certain of our existing shareholders, including affiliates of certain of our directors, have indicated an interest in purchasing (or having their affiliates purchase) approximately $14.0 million of our ordinary shares in this offering. Because indications of interest are not binding agreements or commitments to purchase, these persons may decide to buy, or the underwriters may decide to sell to them, a greater or lesser amount of shares or no shares at all. The underwriters will receive the same underwriting discount on any shares purchased by these persons as they will on the other shares sold to the public in this offering.

Delivery of the ordinary shares is expected to be made on or about                             , 2014. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 675,000 ordinary shares. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $               , and the total proceeds to us, before expenses, will be $                .

Jefferies   Cowen and Company

Oppenheimer & Co.

 

Roth Capital Partners

   

Prospectus dated                             , 2014


Table of Contents


TABLE OF CONTENTS


 
  Page  

Prospectus Summary

    1  

Risk Factors

    16  

Special Note Regarding Forward-Looking Statements

    48  

Functional Currency and Exchange Rate Information

    49  

Use of Proceeds

    50  

Dividend Policy

    51  

Capitalization

    52  

Dilution

    55  

Selected Financial and Other Data

    57  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    60  

Business

    75  

Management

    115  

Principal Shareholders

    136  

Certain Relationships and Related Party Transactions

    138  

Description of Share Capital

    141  

Shares Eligible for Future Sale

    147  

Taxation and Government Programs

    149  

Underwriting

    158  

Notice to Investors

    163  

Expenses of the Offering

    167  

Legal Matters

    168  

Experts

    168  

Enforceability of Civil Liabilities

    168  

Where You Can Find Additional Information

    169  

Index to Financial Statements

    F-1  

Neither we nor the underwriters have authorized anyone to provide information different from that contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters take any responsibility for, and can provide no assurance as to the reliability of, any information other than the information in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our ordinary shares means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy these ordinary shares in any circumstances under which such offer or solicitation is unlawful.


Table of Contents

 


PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including "Risk Factors" and our financial statements and notes to those financial statements, before making an investment decision. In this prospectus, the terms "NeuroDerm," "we," "us," "our" and "the company" refer to NeuroDerm Ltd.

Company Overview

We are a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives. Product candidates in our pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally. Additionally, because our product candidates are based on reformulations of leading, approved drugs, we believe that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval.

For moderate to severe Parkinson's disease, our product candidates are aimed at overcoming the most significant limitations of current levodopa-carbidopa, or LD/CD, therapy. For over 30 years, oral administration of LD/CD has been the standard of care for Parkinson's disease. However, despite its widespread acceptance, oral LD/CD has significant limitations, primarily short duration in the blood, or half-life, as well as low absorption and availability in the body. As a result, plasma levodopa concentrations fluctuate sharply, contributing to patients' motor complications. At the advanced stages of the disease, patients do not respond to oral administration of LD/CD, motor complications are exacerbated and patients are left with limited treatment options that are highly invasive and/or burdensome. We have developed liquid formulations, such as our product candidates ND0612H and ND0612L, that for the first time enable 24-hour, continuous subcutaneous administration of LD/CD to overcome these limitations, maintain steady levodopa levels and offer patients a better quality of life without the need for surgery.

There are three main stages to Parkinson's disease: mild, moderate and severe, each associated with increasing levels of motor complications and requiring different treatments. We are developing a pipeline of product candidates for the growing population of moderate and severe Parkinson's disease patients that address the deficiencies of current treatments. These product candidates are designed to administer continuous, controlled doses of LD/CD or apomorphine, utilizing customized versions of off-the-shelf, belt pump devices. We are also developing a product candidate for patients suffering from cognition disorders associated with CNS diseases. These diseases include Attention Deficit Disorder/Attention Deficit Hyperactivity Disorder, or ADD/ADHD, Parkinson's disease, Alzheimer's disease and schizophrenia. Our cognition product candidate is based on a combination of reformulated approved drugs allowing for continuous administration via transdermal patches.

In our recently completed Phase II trial, we examined plasma levodopa concentrations of individual Parkinson's disease patients treated with optimized, current standard of care and either ND0612L or a placebo as an add-on for 14 days. Additionally, in order to determine the effect of ND0612L without the standard of care, we conducted an additional week of treatment of ND0612L alone or with entacapone. The chart below shows that an average steady plasma levodopa concentration of 550ng/ml was maintained when ND0612L was administered alone, and an approximately 800ng/ml plasma levodopa concentration was maintained when ND0612L was administered together with twice-daily oral entacapone.

 

1


Table of Contents

GRAPHIC

Moreover, when ND0612L was compared to the standard of care in the first period of our Phase II trial, treatment with ND0612L demonstrated major clinical benefits over the placebo in all objective, in-clinic, pre-specified, exploratory efficacy end points, including off-time reduction. A mean reduction of two hours versus placebo was observed in the ND0612L treated group. Moreover, the reduction in "off" time was not accompanied by an increase in troublesome dyskinesia.


GRAPHIC
 
GRAPHIC

Our expectations below regarding the timing of our clinical trials for our product candidates are preliminary estimates since we have not yet commenced pivotal trials. The following chart provides a summary of our development pipeline:

Product
Candidate

  Active Drug
Compound

  Administration
  Indication
  Clinical Status
 
ND0612H   LD/CD   Subcutaneous   Severe Parkinson's Disease  

Ongoing Phase IIa Trial*

Planned Phase II Trial in 2015

Planned Bioequivalence Trials in 2015

Planned Phase III Trial in 2015

ND0612L

 

LD/CD

 

Subcutaneous

 

Moderate Parkinson's Disease

 

Completed Phase II Trial in 2014

Planned Pivotal 1 Phase III Trial in 2015

Planned Pivotal 2 Phase III Trial in 2015

ND0680

 

LD/CD

 

Intra-Duodenal

 

Severe Parkinson's Disease**

 

Planned Bioequivalence Trial in 2015

ND0701

 

Apomorphine

 

Subcutaneous

 

Severe Parkinson's Disease***

 

Planned Bioequivalence Trial in 2015

ND0801

 

Nicotine and Opipramol

 

Transdermal

 

Cognition disorders associated with CNS diseases

 

Ongoing Proof-of-Concept Trial


*
Our ongoing Phase IIa clinical trial evaluates both ND0612H and ND0612L.
**
For patients who require exceptionally high doses of LD/CD.
***
Primarily for patients who do not respond well to LD/CD.

 

2


Table of Contents

On April 29, 2014, we submitted an IND application in the United States for our Phase IIa trial of ND0612H and ND0612L that was to be conducted in Israel and in the United States. We received a letter from the FDA on June 13, 2014 placing a clinical hold on this trial until we provide an extractables and leachables study as well as additional information related to the EU-approved devices used with our product candidates. We subsequently conducted this clinical trial only in Israel, have already presented the results for the first eight patients and anticipate presenting final results in the last quarter of 2014. We intend to submit an amendment to our IND before the end of 2014, after the anticipated completion of this study, to address the FDA's letter. Our next U.S. trials are planned to commence in the second half of 2015; therefore, the FDA's letter has not had, and we anticipate it will not have, an impact on our timelines. Separately, we also expect to seek approval to initiate clinical trials in Europe for ND0680 and ND0701 in the second half of 2015.

Parkinson's Disease and Current Treatment Limitations

Parkinson's disease is a progressive neurodegenerative illness characterized by reduced dopamine levels in the brain, resulting in a debilitating decrease in the patient's motor and non-motor functions. Its symptoms, such as trembling in the extremities and face, slowness of movement and impaired balance and coordination, worsen over time and gravely impact the patient's quality of life. As the disease progresses, these symptoms become more severe and complications of treatment become more pronounced, resulting in debilitating periods of decreased motor and non-motor functions, also referred to as "off" time. In addition, patients experience involuntary movements, or dyskinesia, which are typically associated with excessive levodopa doses. The "off" time and dyskinesia affect the majority of Parkinson's disease patients and interfere with day-to-day functions, causing patients to become severely disabled. Two to five years from disease diagnosis, patients can go from "on" to "off" in a rapid and sometimes erratic manner and experience an average of six hours of "off" time at various and unpredictable times throughout the day. In the most severe stage of the disease, patients may become bedridden or require a wheelchair, as oral therapy becomes mostly ineffective.

The European Parkinson's Disease Association, or EPDA, estimates that 6.3 million people worldwide suffer from Parkinson's disease. The Michael J. Fox Foundation, or MJFF, estimates that at least one million people who suffer from Parkinson's disease live in the United States, representing an estimated one in one hundred people over age 60. According to the International Parkinson and Movement Disorder Society, the prevalence of diagnosed patients with the disease will likely double from 2010 to 2040 due to increased life expectancy. Additionally, it estimates that Parkinson's disease patients in the United States spent over $14 billion on medical expenses in 2010. According to GlobalData Ltd., the global Parkinson's disease drug market was approximately $3.3 billion in 2010.

Oral administration of LD/CD is regarded as the "gold standard" treatment for patients suffering from Parkinson's disease. Levodopa crosses into the brain and converts into dopamine to complement the reduced brain-dopamine levels. Virtually all patients diagnosed with Parkinson's disease will require levodopa at some point over the course of their treatment for the disease, and 70% to 80% of patients receive the drug at any given point in time. However, levodopa is limited by its short half-life. Approximately three to four hours after a single dose, almost none of the drug remains in the plasma. In addition, levodopa suffers from low absorption when administered orally, with only about 30% of the levodopa entering the blood stream. Due to the short half-life, patients are required to take multiple LD/CD doses daily. This results in sharp fluctuations in levodopa levels which in turn causes concomitant sharp fluctuations in brain-dopamine levels shortly after oral levodopa ingestion. The fluctuations in brain-dopamine levels due to the oral administration of levodopa result in the erratic "off" and "on" periods

 

3


Table of Contents

shown in the figure below. This figure also demonstrates the narrowing of the therapeutic window over time, i.e., higher doses are needed to turn a patient "on" but may also cause dyskinesia.

GRAPHIC

There are three main stages of Parkinson's disease: mild, moderate and severe. According to MEDACorp, Inc., patients suffering from moderate to severe Parkinson's disease constituted approximately 60% of all Parkinson's disease patients in 2011.

Mild Parkinson's disease.    Early-stage patients who suffer from mild Parkinson's disease may experience shaking in the hands or fingers, slowness in movement and stiffness in the muscles. In this stage of Parkinson's disease, the brain still produces some base level of dopamine. Such patients are generally treated with one or more of these forms of treatment: oral drugs (delivered in the form of pills) such as monoamine oxidase inhibitors, or MAO inhibitors, which help block the breakdown of dopamine in the brain; dopamine agonists (most of which are oral drugs), which activate dopamine receptors; or relatively low-dose LD/CD complementation therapy.

Moderate Parkinson's disease.    Within two to five years from the diagnosis of Parkinson's disease, the disease progresses to the moderate stage when, despite optimized LD/CD therapy, patients develop motor complications, i.e., more frequent daily "off" time causing limited mobility. Patients with moderate Parkinson's disease are dependent on, and typically treated with, high doses of LD/CD. At this stage of the disease, performing normal physical tasks becomes more difficult for such patients due to increased "off" time and dyskinesia. In addition, patients at this stage begin to suffer from morning "off" periods, known as morning akinesia.

Severe Parkinson's disease.    As the Parkinson's disease progresses to the severe stage, patients' therapeutic window narrows. Patients in this stage experience extended "off" time and, as a result of frequent doses of LD/CD, frequent and severe dyskinesia, causing a small subset of these patients to become bedridden or require a wheelchair. Over time, patients who have ceased to respond to oral LD/CD therapy must either live with such conditions or undergo invasive surgical procedures to try to control or minimize motor complications.

The primary existing treatments for patients who suffer from severe Parkinson's disease require surgical intervention. These include deep brain stimulation, or DBS, which involves inserting electrodes into the brain, and LD/CD intestinal gel, or LCIG, which requires gastrointestinal surgery for the insertion of a tube into the upper part of the small intestine, or duodenum. We estimate that approximately 700,000 patients who suffer from severe Parkinson's disease globally do not receive such advanced Parkinson's disease treatments. According to Transparency Market Research, the 2012 global DBS device market size for

 

4


Table of Contents

Parkinson's disease, excluding surgical costs, was approximately $500 million. While studies have shown that DBS is effective in treating many problems associated with Parkinson's disease, it involves extreme risks, including coma, seizures, speech loss, cognitive deficits, infection and bleeding in the brain. The complexity and related risks of this invasive procedure preclude physicians from referring older patients, and nearly 52% of Parkinson's disease patients who receive referrals to undergo this procedure are turned down. According to a 2012 study by the Association of American Medical Colleges, there are approximately 14,000 neurologists and geriatricians in the United States and, based on an article titled "Neurology Residency Training in Europe—the Current Situation" in the April 2011 issue of the European Journal of Neurology along with publicly available data from the British Geriatrics Society, we estimate that there are approximately 35,000 neurologists and geriatricians in Europe, in each case, that we believe may treat patients who suffer from moderate Parkinson's disease. We further believe, based on information from leading physicians, that there are an estimated 1,500 physicians in each of the United States and Europe that may treat patients who suffer from severe Parkinson's disease.

Similarly, Duodopa, currently only available outside of the United States, with sales of $178 million for the year ended December 31, 2013, is a high dose LCIG product designed for continuous 16-hour administration. Patients receiving this form of treatment face potential complications, such as connector leakage, dislocation or movement of the intestinal tube, wound infection or peritonitis. In addition, patients must continuously carry a large, bulky shoulder-worn pump attached to their duodenum during the day and usually remove the pump at night, which affects quality of sleep and results in morning akinesia.

Our Solutions for Parkinson's Disease

We believe we are the first company to develop liquid formulations of LD/CD, enabling continuous subcutaneous administration to more effectively treat Parkinson's disease. Our formulations based on existing drugs enable the administration of drugs, which are currently either delivered orally and have low bioavailability, or through routes requiring surgical intervention, to be administered continuously and subcutaneously. Our Parkinson's disease product candidates are designed to provide a steady state therapeutic level of levodopa or apomorphine via continuous 24-hour administration. We expect these product candidates to reduce the debilitating "off" time that Parkinson's disease patients typically experience and to improve patients' quality of life by significantly ameliorating motor and non-motor complications, while also giving patients who suffer from severe Parkinson's disease an alternative to surgery.

Our Parkinson's disease product candidates are drug-device combination products, with distinct devices and varying LD/CD or apomorphine concentrations and dosages that are tailored to treat certain populations of Parkinson's disease patients. To further the clinical development of our product candidates, the MJFF awarded us $1.0 million grants in each of 2010 and 2013.

Our Parkinson's disease product candidates are set forth below. Our expectations described below regarding the timing of marketing approval for each of these candidates are preliminary estimates since each is in an early stage of clinical development.

Our Lead Product Candidates

    ND0612H is designed to be an alternative to surgical intervention by offering continuous 24-hour subcutaneous administration of an adjustable dose LD/CD formulation for the treatment of patients who suffer from severe Parkinson's disease. ND0612H is being developed for patients who suffer from severe Parkinson's disease and for whom neither oral administration of LD/CD nor a lower dose of ND0612 (ND0612L) can provide sufficient levodopa to treat their symptoms. These patients face treatment options that include continuous, subcutaneous apomorphine administration, which is associated with numerous adverse effects, or treatments that require highly invasive surgical interventions, such as DBS or LCIG. We are designing ND0612H, administered via the CRONO Twin ND belt-pump (described below), to become a first-line treatment alternative for such patients. Depending

 

5


Table of Contents

    on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in Europe and the United States for ND0612H by the first half and second half of 2018, respectively.

    ND0612L is designed to significantly reduce "off" time and dyskinesia compared to the current standard of care by offering continuous 24-hour subcutaneous administration of a fixed dose of LD/CD. ND0612L is being developed primarily for the treatment of patients who suffer from moderate Parkinson's disease. ND0612L is designed to administer approximately 40% of the maximum daily levodopa dosage delivered by ND0612H. We are currently administering ND0612L in clinical trials utilizing the CRONO ND belt-pump (described below). Depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in the United States and Europe for ND0612L by the second half of 2018. We are also working with our third-party medical device manufacturers on a smaller, next-generation patch-pump device for use with ND0612L in the future.

ND0680: Our Intra-Duodenal Parkinson's Solution

    ND0680 is designed to offer an improved, next-generation, more convenient alternative to the currently available LCIG product, for the small subset of severe Parkinson's disease patients who require exceptionally high LD/CD doses, which cannot be achieved with oral LD/CD or ND0612H. ND0680 contains a highly concentrated formulation of LD/CD and is expected to be administered with the CRONO ND belt pump via the duodenum. We first expect to target patients who have already undergone surgery for LCIG treatment, such as Duodopa, and who seek a similar but less burdensome product. Later, we expect to target patients who have yet to undergo surgery. We expect to seek approval to initiate clinical trials in Europe for ND0680 in the second half of 2015, and depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in Europe for ND0680 in the second half of 2017.

ND0701: Our Apomorphine Parkinson's Solution

    ND0701 is an apomorphine-based product candidate designed to offer a next-generation alternative to the continuously administered apomorphine product currently approved and sold outside the United States in order to significantly improve local tolerability and allow a much lower daily administration volume. ND0701, for patients who suffer from severe Parkinson's disease, may be used mostly by patients who do not respond well to LD/CD. ND0701 is administered via a CRONO ND belt pump. We expect to seek approval to initiate clinical trials in Europe for ND0701 in the second half of 2015, and depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in Europe for ND0701 in the second half of 2017.

Delivery Devices

    The CRONO ND belt pump is the medical device currently used to administer ND0612L, ND0680 and ND0701. It is a simple-to-operate, fixed-dose belt pump that operates 24 hours a day and can be preprogrammed to the desired delivery profile of LD/CD. ND0612H is administered subcutaneously via the CRONO Twin ND, a similarly simple-to-operate, adjustable belt pump that delivers ND0612H's higher dose of LD/CD through two insertion points. Both the CRONO ND and CRONO Twin ND belt pumps are manufactured by a cGMP-certified, third-party medical device manufacturer. The CRONO ND belt pump has been "CE" marked in accordance with EU law and will be submitted for regulatory approval in the United States as the device component of the ND0612L drug-device combination product. Similarly, the CRONO Twin ND belt pump's design has been "CE" marked in accordance with EU law and will undergo a drug-device combination approval process in the United States. See "Business — Government Regulation."

 

6


Table of Contents

Our Cognition Product Candidate

We are also developing a product candidate, ND0801, to treat cognition disorders associated with CNS diseases, such as ADD/ADHD, Alzheimer's disease and schizophrenia. ND0801's reformulation is designed to be a safe and non-addictive nicotine-based treatment administered via a transdermal patch.

Our Competitive Strengths

      Expertise in proprietary reformulation of existing drugs for clinically superior benefits.  We primarily focus on developing proprietary liquid reformulations of orally administered drugs for CNS diseases that enable us to subcutaneously administer the drugs to achieve higher clinical efficacy. For Parkinson's disease, we leveraged our expertise to create what we believe are the only viable liquid formulations of LD/CD that can be continuously administered to patients in order to overcome oral LD/CD fluctuations that lead to "off" time, dyskinesia and other side-effects.

      Lower development risks and costs for our pipeline products.  Because we focus on developing product candidates based on formulations based on existing drugs, we believe that our development and regulatory risks will decrease and allow us to develop our products in a cost-effective manner compared to novel drug development, either through the 505(b)(2) abbreviated regulatory approval pathway or comparable pathways.

      Comprehensive product pipeline for the treatment of Parkinson's disease.  We currently have product candidates aimed at treating patients suffering from moderate to severe Parkinson's disease. In 2011, approximately 60% of the Parkinson's disease patient population suffered from moderate to severe Parkinson's disease, representing a significant market where we believe we are well positioned to become the new best-in-class standard of care.

      Strong intellectual property position.  We have a robust intellectual property portfolio that includes four patent families covering our novel LD/CD formulations. We have currently been granted eight patents, including patents in Australia, Japan, Mexico, New Zealand, South Africa and the United States, and have over 45 pending patent applications worldwide. Our existing patents will expire between 2030 and 2031 for our LD/CD product candidates and between 2028 and 2031 for our nicotine-based product candidate.

Our Growth Strategy

Our goal is to discover, develop and commercialize best-in-class standard of care treatments based on reformulations of existing drugs for CNS diseases. Key elements of our strategy are to:

      Develop our Parkinson's disease product candidates as the best-in-class treatment options in their category.  We are currently pursuing regulatory approval of our four Parkinson's disease product candidates: ND0612H, ND0612L, ND0680 and ND0701. We intend to continue developing our liquid LD/CD-based and apomorphine-based treatments to become the new best-in-class standard of care for a large majority of patients suffering from Parkinson's disease.

      Leverage our expertise in proprietary reformulation of existing drugs and delivery technologies to treat other CNS diseases that are limited by the oral administration of drugs.  We plan to develop product candidates for other CNS diseases by applying our expertise in reformulating existing drugs, which will allow us to alter the means of administration and to overcome the limitations associated with oral administration. For example, we are currently developing ND0801, to treat cognitive disorders associated with CNS diseases, such as ADD/ADHD.

      Selectively seek and evaluate potential partnership opportunities.  We will continue to seek and evaluate partnership opportunities that would allow us to obtain financial support and to capitalize on the expertise and resources of our potential partners. Where we deem appropriate, we plan to retain certain rights to participate in the development of drug candidates and commercialization of potential drugs arising from our programs.

 

7


Table of Contents

      Expand our product candidates and research in order to seek a method of reducing the progression of Parkinson's disease.  In the future, we may expand our therapies to treat patients suffering from mild Parkinson's disease, enabling us to treat the entire Parkinson's disease patient population while potentially reducing the progression of the disease. If we are successful in commercializing our product candidates, we may conduct large, more expensive clinical trials in order to study the effect of our products on reducing the progression of Parkinson's disease.

Risk Factors

Investing in our ordinary shares involves risks. You should carefully consider the risks described in "Risk Factors" beginning on page 16 before making a decision to invest in our ordinary shares. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our ordinary shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:

      We have a history of net losses and we expect to continue to incur substantial and increasing net losses for the foreseeable future.

      Even if our product candidates obtain regulatory approval, our product candidates may cause undesirable side effects or have other properties, which may limit market acceptance.

      If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

      If our competitors are able to obtain orphan drug exclusivity for their products that are the same drug as our product candidates, or can be classified as a similar medicinal product within the meaning of EU law, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.

      We may be unsuccessful in utilizing abbreviated regulatory pathways for marketing approval of our product candidates in the United States and Europe.

      If we experience delays in our clinical trials, our costs may increase and our business may be harmed.

      Positive results in previous preclinical or clinical trials of our product candidates may not be replicated in future clinical trials of our product candidates, which could result in development delays or a failure to obtain marketing approval.

      Development and commercialization of our product candidates in the United States and elsewhere requires successful completion of the regulatory approval process, and may suffer delays or fail.

      We may be unsuccessful in commercializing our products due to unfavorable pricing regulations, third-party coverage and reimbursement policies or healthcare reform initiatives.

      The commercial success of our product candidates will depend upon their degree of market acceptance.

      We face competition from the existing standard of care and potential changes in medical practice and technology and the possibility that our competitors may develop products, treatments or procedures that are similar, more advanced, safer or more effective than ours.

      We rely on third-party manufacturers to supply drug substances as well as medical devices necessary for administration of our product candidates and we do not have long-term contracts with such manufacturers or suppliers.

      Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or incorporated into our technology and products. Since our product candidates are formulations based on existing drugs, our ability to file patents claiming specific molecules or active ingredients is limited, and our main patents and patent applications cover specific compositions and methods of use, which may be easier to design around. Additionally, a third party

 

8


Table of Contents

      has a prior trademark registration for the term "neuroderm" classified in the same class of goods as our product candidates, and we cannot guarantee that the USPTO will withdraw the citation of such prior trademark.

      We believe that we will be classified as a passive foreign investment company, or PFIC, for the taxable year ending December 31, 2014. You may be subject to adverse U.S. federal income tax consequences if we are classified as a PFIC and you are a U.S. Holder, as defined below. Such adverse U.S. federal income tax consequences may be mitigated if you make certain elections with the IRS. See "Taxation and Government Programs — U.S. Federal Income Taxation — Passive Foreign Investment Company Considerations."

Corporate Information

We were formed as a company in the State of Israel on March 18, 2003. Our principal executive offices are located at Ruhrberg Science Building, 3 Pekeris St., Rehovot 7670212, Israel, and our telephone number is +972 (8) 946-2729. Our website address is www.neuroderm.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. We have included our website address in this prospectus 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.

Throughout this prospectus, we refer to various trademarks, service marks and trade names that we use in our business. The "NeuroDerm" design logo is the property of NeuroDerm Ltd. Other trademarks and service marks appearing in this prospectus are the property of their respective holders.

 

9


Table of Contents

 


THE OFFERING

Ordinary shares offered

  4,500,000 ordinary shares

Ordinary shares to be outstanding after this offering

 

16,404,960 ordinary shares

Underwriters' option

 

We have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to 675,000 additional ordinary shares.

Use of proceeds

 

We currently estimate that we will use the net proceeds as follows:

 

to fund the development of our product candidate ND0612H;

 

to fund the development of our product candidate ND0612L;

 

to advance the development of our other product candidates and general research activities; and

 

the balance for working capital and for general corporate purposes.

 

See "Use of Proceeds" for additional information.

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.

Proposed NASDAQ Global Market symbol

 

We have applied to have our ordinary shares listed on the NASDAQ Global Market under the symbol "NDRM."

The number of ordinary shares to be outstanding after the offering is based on 392,320 ordinary shares outstanding as of September 30, 2014. Unless otherwise indicated or context otherwise requires, in this prospectus the number of ordinary shares to be outstanding after this offering includes:

      4,500,000 ordinary shares to be issued and sold by us in this offering;

      the issuance of 1,697,120 ordinary shares upon the conversion of $11.0 million in convertible loans, which will occur immediately prior to the closing of this offering, at a weighted average conversion price of $6.75 per share;

      the issuance of 714,880 ordinary shares upon the exercise of outstanding warrants held by certain of our shareholders assuming an all cash exercise, which will occur immediately prior to the closing of this offering;

      the issuance of 9,100,640 ordinary shares upon the conversion of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares into ordinary shares, which will occur immediately prior to the closing of this offering;

but excludes:

      1,748,240 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of $1.71 per share; and

      2,800 ordinary shares issuable upon the exercise of warrants at an exercise price of $6.28 per share.

 

10


Table of Contents

Unless otherwise indicated, this prospectus:

      assumes an initial public offering price of $14.50 per ordinary share, the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus;

      assumes no exercise of the underwriters' option to purchase up to an additional 675,000 ordinary shares; and

      reflects an aggregate 80-for-1 share split effected on October 10, 2014 by means of (i) a 10-for-1 share split, followed by (ii) a share dividend of 7 ordinary shares for each ordinary share then outstanding.

A $1.00 increase in the assumed initial public offering price of $14.50 per ordinary share would increase (decrease) the number of our shares outstanding after this offering due to a change in the number of shares issued in connection with the (i) conversion of our convertible notes and (ii) all cash exercise of our warrants as shown in the table below:


Assumed Offering Price   Increase (Decrease) In the
Number of Shares Outstanding
 

$12.50

    311,600  

  13.50

    144,400  

  14.50

     

  15.50

    (125,520 )

  16.50

    (236,400 )

In addition, if our warrant holders exercise all of their warrants on a cashless basis instead of the all cash basis assumed herein, the number of our shares outstanding would decrease by 248,880 ordinary shares and our pro forma as adjusted cash and cash equivalents would decrease by $3.6 million.

Certain of our existing shareholders, including affiliates of certain of our directors, have indicated an interest in purchasing (or having their affiliates purchase) approximately $14.0 million of our ordinary shares in this offering. Because indications of interest are not binding agreements or commitments to purchase, these persons may decide to buy, or the underwriters may decide to sell to them, a greater or lesser amount of shares or no shares at all. The underwriters will receive the same underwriting discount on any shares purchased by these persons as they will on the other shares sold to the public in this offering.

 

11


Table of Contents

 


SUMMARY FINANCIAL AND OTHER DATA

The following tables set forth our summary financial data. You should read the following summary financial data in conjunction with, and it is qualified in its entirety by reference to, our historical financial information and other information provided in this prospectus, including "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes appearing elsewhere in this prospectus.

The summary statements of operations data for the years ended December 31, 2012 and 2013 are derived from our audited financial statements appearing elsewhere in this prospectus. The historical results set forth below are not necessarily indicative of the results to be expected in future periods. The summary statement of operations data for the six months ended June 30, 2013 and June 30, 2014 and the summary balance sheet data as of June 30, 2014 are derived from our unaudited condensed interim financial statements presented elsewhere in this prospectus. In the opinion of management, these unaudited condensed interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our financial position and operating results for these periods. Results for interim periods are not necessarily indicative of results that may be expected for the entire year. Our financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, IASB.

Our functional currency is the New Israeli Shekel, or NIS; however, our presentation currency is the U.S. dollar. As a result, our financial statements are translated into the presentation currency as follows: equity accounts are translated using historical exchange rates (as reported by the Bank of Israel). All other statements of financial position accounts are translated using the year-end exchange rate (as reported by the Bank of Israel). Statement of comprehensive loss amounts are translated using the exchange rates prevailing at the dates of the transactions. The resulting translation differences relating to the conversion from the functional currency to the presentation currency are reported in other comprehensive loss.

Foreign currency transactions in currencies different from the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recorded to the statement of comprehensive loss among finance income or expenses.

As of December 31, 2013, the representative exchange rate last published by the Bank of Israel was $1.00 = NIS 3.471. As of June 30, 2014, the representative exchange rate last published by the Bank of Israel was $1.00 = NIS 3.438.

 

12


Table of Contents


 
  YEAR ENDED
DECEMBER 31,
  SIX MONTHS
ENDED
JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands, except share and
per share data)

 

Statements of operations data:

                         

Operating expenses:

                         

Research and development

  $ 2,396   $ 3,426   $ 1,644   $ 3,675  

Participation in research and development

    (41 )   (808 )   (175 )   (339 )
                   

Research and development, net(1)

  $ 2,355   $ 2,618   $ 1,469   $ 3,336  

General and administrative(1)

    449     628     325     1,703  
                   

Operating loss

  $ 2,804   $ 3,246   $ 1,794   $ 5,039  

Financial income

    550     3     (3 )   *  

Financial expenses

    2,316     83,650     16,340     602  
                   

Financial expenses, net

    1,766     83,647     16,337     602  
                   

Net loss

  $ 4,570   $ 86,893   $ 18,131   $ 5,641  
                   
                   

Foreign currency translation differences

    280     2,021     2,156     64  
                   

Total comprehensive loss

  $ 4,850   $ 88,914   $ 20,287   $ 5,705  
                   
                   

Basic and diluted net loss per ordinary share(2)

  $ 12   $ 221   $ 46   $ 14  
                   
                   

Weighted average number of ordinary shares used in computing net loss per ordinary share(2)

    392,320     392,320     392,320     392,320  
                   
                   

Basic and diluted pro forma net loss per ordinary share(3)

        $ 9         $ *  
                       
                       

Weighted average number of shares used in computing pro forma basic and diluted net loss per ordinary share(3)

          9,492,960           9,492,960  
                       
                       

*
Represents an amount less than $1.
(1)
Includes equity-based compensation expenses as follows:

 
  YEAR ENDED
DECEMBER 31,
  SIX MONTHS
ENDED
JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands)
 

Research and development expenses, net

  $ 11   $ 102   $ 69   $ 23  

General and administrative expenses

    26     82     63     11  
                   

Total equity-based compensation expenses

  $ 37   $ 184   $ 132   $ 34  
                   
(2)
Basic and diluted loss per ordinary share is computed based on the basic and diluted weighted average number of ordinary shares outstanding during each period. For additional information, see Note 16 to our financial statements included elsewhere in this prospectus.

 

13


Table of Contents

(3)
Pro forma net loss per share and pro forma weighted average shares outstanding assume the conversion of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares into 9,100,640 ordinary shares, which will occur immediately prior to the closing of this offering, but do not include the issuance of shares in connection with this offering, the conversion of the convertible notes or the exercise of outstanding warrants. For additional information on the conversion of the preferred shares, see Note 9 to our financial statements included elsewhere in this prospectus.

The table below presents our summary balance sheet as of June 30, 2014:

    on an actual basis;

    on a subsequent event pro forma basis for the issuance of $5.6 million principal amount of convertible notes, reflecting its fair value, pursuant to an agreement entered into in August 2014;

    on a pro forma basis to give effect immediately prior to the closing of this offering to (a) the conversion of $11.0 million in convertible loans into ordinary shares (which includes the conversion of the 2013 and 2014 convertible loans); (b) the receipt of $3.6 million pursuant to the all cash exercise of warrants held by certain of our shareholders, the related issuance of 714,880 ordinary shares as a result thereof and the payment by us of approximately $2.5 million on account of tax payments in connection with the exercise of our outstanding warrants; (c) the conversion basis of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares into ordinary shares; (d) the payment by us of $1.0 million in cash due to certain investors upon the conversion of the convertible notes issued by us in August 2014; and (e) the recognition of the unrecognized Day 1 Loss related to the conversion of the 2013 Notes, outstanding warrants and 2014 Notes upon conversion, which we estimate on a preliminary basis will amount to between $23.7 million and $25.7 million and, accordingly, is reflected in the pro forma column at $24.7 million. Information regarding the actual unrecognized Day 1 loss will be reported in our results for the year ended December 31, 2014 based on the completion of this offering in 2014. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Components of Statement of Operations—Financial income/Financial expenses."

    on a pro forma as adjusted basis to give further effect to (a) the issuance and sale of ordinary shares by us in this offering at an assumed initial public offering price of $14.50 per ordinary share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, (b) share-based compensation expense of $2.7 million for the period between the date of grant in March 2014 through June 30, 2014 that was not recorded in the financial statements for the six months ended June 30, 2014 as the options only begin to vest from the date of grant upon completion of the offering, and (c) the payment of a bonus of approximately $0.4 million in the aggregate to certain of our employees (which may include our executive officers) for their contribution to completing this offering.

 
  AS OF JUNE 30, 2014  
 
  ACTUAL(1)   SUBSEQUENT
EVENT
PRO FORMA
BASIS
  PRO FORMA   PRO FORMA
AS ADJUSTED(3)
 

Balance sheet data:

                         

Cash and cash equivalents

  $ 1,632   $ 7,273   $ 7,376   $ 66,259  

Working capital(2)

    (1,745 )   3,896     3,999     62,882  

Total assets

    2,054     7,695     7,798     66,681  

Total non-current liabilities

    7,785     13,426          

Total shareholders' deficit

    (9,317 )   (9,317 )   4,212     63,095  

(1)
Reflects the payment of $1.0 million of expenses related to this offering through June 30, 2014.

(2)
Working capital is defined as total current assets minus total current liabilities.

 

14


Table of Contents

(3)
Each $1.00 increase (decrease) in the assumed initial public offering price of $14.50 per ordinary share would increase (decrease) the as adjusted amount of each of cash and cash equivalents, working capital, total assets and total shareholders' equity (deficit) by approximately $4.2 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of ordinary shares we are offering. An increase (decrease) of 100,000 in the number of ordinary shares we are offering would increase (decrease) the as adjusted amount of cash and cash equivalents, working capital, total assets and total shareholders' equity (deficit) by approximately $1.3 million, based on the assumed initial public offering price per ordinary share, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

 

15


Table of Contents


RISK FACTORS

This offering and an investment in our ordinary shares involve a high degree of risk. You should consider carefully the risks described below and all other information contained in this prospectus before you decide to buy our ordinary shares. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our ordinary shares would likely decline and you might lose all or part of your investment.

Risks Related to Our Financial Position

We have a history of net losses and we expect to continue to incur substantial and increasing net losses for the foreseeable future.

We are a clinical-stage pharmaceutical company with a limited operating history. We recently completed our Phase II clinical study for ND0612L, have an ongoing Phase IIa clinical trial for ND0612H and ND0612L and are planning clinical studies for our other product candidates, ND0680, ND0701 and ND0801. Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risks that any or all potential product candidates will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. We are still in the early stages of development of our product candidates. As a result, we are not profitable and have incurred significant operating losses, including operating losses of $2.8 million and $3.2 million for the years ended December 31, 2012 and 2013, respectively. For the six months ended June 30, 2013 and 2014, our operating losses were $1.8 million and $5.0 million, respectively. As a result, our 2013 annual financial statements and our unaudited condensed interim financial statements for the six months ended June 30, 2014 note that there is a substantial doubt about our ability to continue as a going concern.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses and future capital requirements may increase substantially if and as we:

      accelerate our clinical development activities, particularly with respect to our clinical trials for ND0612H and ND0612L;

      initiate our European bioequivalence trials for ND0612H and ND0680 and our other planned clinical trials;

      seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials;

      initiate additional preclinical, clinical or other studies for our current product candidates and seek to identify and validate new product candidates;

      acquire rights to other product candidates and technologies;

      increase the manufacturing and supply orders for our product candidates;

      invest further in developing pump delivery systems for our products;

      change or add suppliers or manufacturers;

      maintain, expand and protect our intellectual property portfolio;

      attract and retain skilled personnel;

      engage third-party manufacturers to commercialize any of our product candidates for which we obtain marketing approval;

      create additional infrastructure to support our operations as a public company; and

      experience any delays or encounter issues with any of the above.

As of June 30, 2014, we had an accumulated deficit of $108.4 million (which includes $84.1 million of non-cash financial expenses incurred since January 1, 2013 related to the increase in the value of the host

16


Table of Contents

contract (the loan without the conversion feature and the prepayment feature) in the convertible loans and the fair value of the embedded derivatives and warrants, and the issuance of new shares to noteholders that was treated as an induced conversion expense). We expect to continue to incur substantial net losses and negative cash flow for the foreseeable future. These losses and negative cash flows have had, and will continue to have, an adverse effect on our shareholders' equity and working capital.

We may never achieve profitability.

Because of the numerous risks and uncertainties associated with pharmaceutical product development and commercialization, we are unable to accurately predict the timing or amount of future revenue or expenses or when, or if, we will be able to achieve profitability. We have financed our operations primarily through convertible shareholders' loans, issuance and sale of equity, including ordinary shares, preferred shares and warrants and government and third-party 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 commercialize our product candidates or if revenue from any of our product candidates that receives marketing approval is insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability.

We may need substantial additional capital in the future, which may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our product candidates or intellectual property. If additional capital is not available, we may have to delay, reduce or cease operations.

In order to continue the development of our clinical trials for our product candidates, we may seek additional funding through equity offerings, debt financings, collaborations, licensing arrangements or any other means to conduct clinical trials, develop our product candidates and expand our sales and marketing capabilities or other general corporate purposes. Securing additional financing may divert our management's attention from our day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. Additional funding may not be available to us on acceptable terms, or at all. We believe that based on our current business plan, our existing cash and cash equivalents and the net proceeds from this offering, we will have sufficient funds to meet our currently anticipated cash requirements through at least the next 12 months.

To the extent that we raise additional capital through, for example, the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur debt or to issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our ordinary shares to decline. In the event that we enter into collaborations or licensing arrangements in order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to product candidates or intellectual property that we otherwise would seek to develop or commercialize ourselves or reserve for future potential arrangements when we might be able to achieve more favorable terms.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

      significantly delay, scale back or discontinue the development, manufacturing scale-up or commercialization of our product candidates;

      seek corporate partners on terms that are less favorable than might otherwise be available; or

      relinquish or license on unfavorable terms our rights to our product candidates that we otherwise would seek to develop or commercialize ourselves.

17


Table of Contents

Any such consequence will have a material adverse effect on our business, operating results and prospects and on our ability to develop our product candidates.

Risks Related to Our Business and Our Industry

Even if our products obtain regulatory approval, they may cause undesirable side effects or have other properties, which may limit market acceptance.

We are conducting clinical trials to determine the safety and efficacy of our product candidates. Our current data of local tolerability and side effects caused by our product candidates is limited. Many of our patients have only used our product candidates for 24-hour periods during our clinical trials. Based on our recently completed Phase II trial, ND0612L was generally well tolerated and safe, causing only minimal and transient local reactions at the infusion site and no particular systemic adverse events. Patients may decide to use other currently available treatments instead of our product candidates based on the prevalence and severity of any side effects associated with our product candidates. For example, patients suffering from moderate Parkinson's disease may be less tolerant of inconveniences that may be associated with the use of ND0612L and may instead continue using currently available orally administered LD/CD. Similarly, if patients experience adverse side effects from our other Parkinson's disease product candidates, patients who suffer from moderate to severe Parkinson's disease may opt for other treatments. In addition, certain patients may find our belt pump administration systems to be unduly burdensome or restrictive.

Upon the conclusion of our trials, and if we receive marketing authorization for a product candidate, we will be required to list side effects associated with the product candidates. However, if after we receive marketing authorization, we or others identify previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, problems with our manufacturers or manufacturing processes, or failure to comply with regulatory requirements, 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 product recalls;

      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 regulatory authority to approve pending applications or supplements to approved applications filed by us, or suspension 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 our product candidates, which would adversely affect our business, prospects, financial condition and results of operations.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

We have invested a significant portion of our efforts and financial resources in the identification and preclinical development of product candidates. Our ability to generate product revenues, if ever, will depend heavily on our ability to advance our product candidates into clinical trials. We are currently conducting, at our own expense, preclinical and clinical trials for our product candidates 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. A failure 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. Even if preclinical or clinical trials are successful, we still may be unable to

18


Table of Contents

commercialize the product, as success in preclinical trials, early clinical trials, including Phase II trials, or previous clinical trials, does not ensure that later clinical trials will be successful.

If our competitors are able to obtain orphan drug exclusivity for their products that are the same drug as our product candidates, or can be classified as a similar medicinal product within the meaning of EU law, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.

Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of market exclusivity, which, subject to certain exceptions, precludes the FDA from approving another marketing application for the same drug for the same indication for that time period or precludes the European Medicines Agency, or the EMA, and other national drug regulators in the EU, from accepting another marketing application for a similar medicinal product for the same indication. The applicable market exclusivity period is seven years in the United States and 10 years in the European Union. See "Business — Government Regulation — United States — Orphan Drug Designation and Exclusivity" and "Business — Government Regulation — European Union — Orphan Drug Designation." If a competitor obtains orphan drug exclusivity for, and approval of, a product with the same indication as any of our product candidates before we do and if the competitor's product is the same drug or a similar medicinal product as ours, we could be excluded from the market during the market exclusivity period. However, if a product candidate that is the same drug or a similar medicinal product as an approved, orphan-designated product is shown to be clinically superior to such orphan-designated product, the orphan drug exclusivity will not block the approval of such competitive product. In addition, orphan drug exclusivity will not prevent the approval of a product candidate that is the same drug as such orphan-designated product if the FDA or EMA finds that the product sponsor or marketing authorization holder cannot assure the availability of sufficient quantities of the orphan-designated product to meet the needs of the persons with the disease or condition for which the drug was designated.

For example, AbbVie Inc.'s product Duodopa, which is currently seeking marketing approval in the United States under the name Duopa, has received orphan drug designation in the United States for the treatment of "late stage Parkinson's disease" and "advanced idiopathic Parkinson's disease with severe motor complications and not responding to oral treatment." However, if Duopa receives marketing authorization as an orphan drug in the United States, we may be precluded from receiving marketing approval for ND0680 until the expiration of the orphan drug market exclusivity period, which will occur seven years after Duopa is approved. Although we do not believe that ND0612H will be limited by Duopa's potential market exclusivity, if the FDA determines that ND0612H is so limited, ND0612H may also be subject to the same marketing preclusion.

In the European Union, Duodopa received marketing authorization via the mutual recognition procedure for "treatment of advanced levodopa-responsive Parkinson's disease with severe motor fluctuations and hyper-/dyskinesia when available combinations of Parkinson medicinal products have not given satisfactory results." See "Business — Government Regulation — European Union — Marketing authorization." In May 2001, the EMA granted NeoPharma Production AB orphan drug designation for LD/CD (gastroenteral use) for the treatment of "advanced idiopathic Parkinson's disease with severe motor fluctuations and not responding to oral treatment." The sponsorship of this orphan designation was transferred to AbbVie Ltd. in February 2013. As the orphan indication is different from the approved indication for Duodopa, it is possible that AbbVie Ltd. could still seek approval of a product for that orphan indication. If that occurs, and we wish to market a product with the same indication but are unable to show that our product candidates are clinically superior (due to greater efficacy, greater safety or a major contribution to patient care) to the approved orphan drug, we may be precluded from receiving marketing approval for ND0680 for advanced idiopathic Parkinson's disease with severe motor fluctuations and not responding to oral treatment until the expiration of the orphan drug market exclusivity period, which is at least 10 years after the orphan

19


Table of Contents

drug is centrally approved, unless the EMA exercises its discretion to reduce that period to six years on the basis that the product no longer fulfills the orphan criteria when the authorization is renewed after five years.

We may be unsuccessful in utilizing abbreviated regulatory pathways for marketing approval of our product candidates in the United States and Europe.

We are currently pursuing regulatory pathways that would provide accelerated marketing approval for our product candidates in the United States and Europe. On April 10, 2012, we held a pre-Investigational New Drug application, or pre-IND meeting with the United States Food and Drug Administration, or the FDA, Division of Neurology Products, or the DNP. In this meeting, the DNP stated that ND0612L would be eligible for the submission of a 505(b)(2) regulatory pathway application, which allows expedited approval with reduced clinical trials, provided we establish a clinical trials framework that would allow a 505(b)(2) submission. On May 22, 2014, the EMA confirmed that our product candidate, ND0612H, was eligible for a European Union marketing authorization application via a centralized procedure, which allows ND0612H to benefit from more streamlined access to the EU market. See "Business — Government Regulation."

Although we believe that we have developed our clinical trials based on a framework that would allow for expedited approval, the FDA, the EMA or other drug regulators in the EU may prohibit us from utilizing expedited regulatory approval pathways or require us to conduct additional, large clinical trials. For example, we expect to seek abbreviated regulatory approval through a European bioequivalence pathway for ND0612H by conducting a bioequivalence clinical trial to compare the pharmacokinetics of the continuous infusion of ND0612H with that of Duodopa; however, the EMA or other national drug regulators in the EU might require that we conduct additional clinical trials. Additionally, based on our ongoing and planned clinical trials, we may alter the concentration of carbidopa in our LC/CD product candidates. If we were to alter the carbidopa concentrations, the completion of our clinical trials may be delayed by up to six months. Any requirement to conduct additional trials or failure to follow an abbreviated regulatory pathway for our product candidates would delay receiving marketing approval for our product candidates and adversely affect our business, prospects, financial condition and results of operations.

If we experience delays in our clinical trials, our costs may increase and our business may be harmed.

We do not know whether clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. Our product development costs will increase if we experience delays in clinical testing. Significant delays could also shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to the market before we do, impairing our ability to commercialize our product candidates. Events may delay or prevent our ability to complete necessary clinical trials for our 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 obtaining institutional review board, or IRB, approval;

      delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites;

      failure of our third-party contractors, such as CROs, to satisfy their contractual duties or meet expected deadlines;

      our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional trials;

20


Table of Contents

      the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower or more difficult than we expect, or patients may not participate in necessary follow-up visits to obtain required data, any of which would result in significant delays in our clinical testing process;

      insufficient or inadequate supply or quality of a product candidate or other materials necessary to conduct our clinical trials;

      our third-party contractors, such as a research institute, manufacturer or supplier, may fail to comply with regulatory requirements or meet their contractual obligations to us;

      we may be forced to suspend or terminate our clinical trials if the participants are being exposed, or are thought to be exposed, to unacceptable health risks or if any participant experiences an unexpected serious adverse event, or if our product candidates prove to be ineffective;

      regulators or IRBs may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;

      undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review of one or more of our marketing applications by regulatory agencies, and result in the recall of any approved product distributed pursuant to data determined to be fraudulent;

      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, which could lead to disqualification of the results and the need to perform additional studies; and

      delays may occur in obtaining our clinical materials.

For example, on June 13, 2014, we received a letter from the FDA placing a clinical hold on our Phase IIa study until we provide an extractables and leachables study as well as additional information related to the EU-approved devices used with our product candidates. We subsequently conducted the Phase IIa trial in Israel only, have already presented results for the first eight patients and anticipate presenting final results in the last quarter of 2014. We intend to submit an amendment to our IND before the end of 2014 after the anticipated condition of the study to address the FDA's letter. Our next U.S. trials are planned to commence in the second half of 2015. While we do not expect this to delay our timeline for completion of our clinical trials and although we have not experienced other risks involved with conducting clinical trials, including increased expense and delay, to date, there can be no assurance that we will not experience delays or such risks in the future as we progress with our planned clinical trials. Any delay in receiving regulatory clearance to commence our clinical trials or any suspension of clinical trials may delay possible regulatory approval, if any, and adversely impact our ability to develop products and generate revenue.

Positive results in previous preclinical or clinical trials of our product candidates may not be replicated in future clinical trials of our product candidates, which could result in development delays or a failure to obtain marketing approval.

Positive results in previous preclinical or clinical studies of our product candidates may not be predictive of similar results in future clinical trials. In addition, interim results during a clinical trial do not necessarily predict final results. Interim data are also subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. As a result, preliminary and interim data should be viewed with caution until the final data are available. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results from the completed preclinical studies and clinical trials for our product candidates may not be predictive of the results we may obtain in later stage trials. Our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies

21


Table of Contents

that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain approval from the FDA, the EMA or other regulatory agencies for their products.

Development and commercialization of our product candidates in the United States and elsewhere requires successful completion of the regulatory approval process, and may suffer delays or fail.

We are required to apply for and receive marketing authorization in a jurisdiction, including the United States and Europe, before we can market our product candidates in such jurisdiction. This process can be time consuming and complicated and may result in unanticipated delays. To secure marketing authorization, an applicant generally is required to submit an application that includes the data supporting preclinical and clinical safety and efficacy as well as detailed information on the manufacture and composition of the product candidate, control of product development, proposed labeling and other additional information. Before marketing authorization is granted, regulatory authorities generally require the inspection of manufacturing facilities and quality systems of our third-party manufacturers at which the product candidate is produced, to assess compliance with strictly enforced current good manufacturing practices, or cGMP, as well as potential audits of the non-clinical and clinical trial sites that generated the data cited in the marketing authorization application.

We cannot predict how long the applicable regulatory authority or agency will take to grant marketing authorization or whether any such authorizations will ultimately be granted. Regulatory agencies, including the FDA and the EMA, have substantial discretion in the approval process, and the approval process and the requirements governing clinical trials vary from country to country. The policies of the FDA, 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 our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, in the United States, Europe or elsewhere. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

Any delays or failures in obtaining regulatory and marketing approval for our product candidates in the United States, Europe or worldwide would adversely affect our business, prospects, financial condition and results of operations.

We may be unsuccessful in commercializing our products due to unfavorable pricing regulations, third-party coverage and reimbursement policies or healthcare reform initiatives.

If we receive marketing approval for any of our product candidates, we cannot guarantee that we will receive favorable pricing and reimbursement in any jurisdiction. The regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country. In some foreign jurisdictions, including the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these jurisdictions, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product candidate. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenue we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in our product candidates, even after obtaining regulatory approval.

The United States and several other jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals to change the healthcare system in ways that may affect our ability to sell our product candidates profitably, if approved. We cannot predict the initiatives that may be adopted in

22


Table of Contents

the future. The continuing efforts of governments, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

      the market acceptance or demand for our product candidates, if approved;

      the ability to set a price that we believe is fair for our 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.

Additionally, we cannot be sure that reimbursement will be available for any of our product candidates that we commercialize in the future and, if reimbursement is available, what the level of reimbursement will be. Reimbursement may affect the demand for, or the price of, any product for which we obtain marketing approval. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any of our product candidates that we successfully develop. Eligibility for reimbursement does not imply that any product will be paid for in all cases or 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 made permanent. Payment rates may vary according to the use of the product and the clinical setting in which the product is used, may be based on payments allowed for lower cost products that are already reimbursed and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports 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 upon other payors, such as Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for any of our product candidates could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

The commercial success of our product candidates will depend upon their degree of market acceptance.

Even if we obtain marketing authorization for a product candidate, it may not gain market acceptance by physicians and their teams, healthcare payors and others in the medical community. Each of our product candidates is being developed to treat diseases for which there are established standards of care. For example, the "gold standard" of care for Parkinson's disease for the past 30 years has been oral administration of the drugs levodopa and carbidopa, or LD/CD, and physicians and patients have grown accustomed to such treatment. Although many physicians throughout the United States, Europe and other international markets may use our product candidates as part of our clinical trials, we cannot guarantee that use of our product candidates will be accepted in the market. If our product candidates do not achieve an adequate level of acceptance, we may not generate revenue and we may not achieve or sustain profitability. The degree of market acceptance of our product candidates in a jurisdiction in which we receive marketing approval will depend on a number of factors, some of which are beyond our control, including:

      the willingness of physicians to administer our products and their acceptance as part of the medical department routine;

      compliance by patients with treatment protocols;

      relative ease and convenience of administration;

      tolerance of the drugs by patients, including prevalence and severity of side effects;

      obtaining third-party coverage or reimbursement for our products;

      the ability to offer our product candidates for sale at an attractive value;

      the efficacy and potential advantages of our product candidates relative to the current standard of care; and

      the efficacy, potential advantages and timing of introduction to the market of alternative treatments.

Failure to achieve market acceptance for our product candidates, if and when they are approved for commercial sale, will have a material adverse effect on our business, financial condition and results of operations.

23


Table of Contents

We face competition from the existing standard of care and potential changes in medical practice and technology. In addition, our competitors may 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 expect to face competition from many different sources with respect to our product candidates or any product candidates that we may seek to develop or commercialize in the future. Possible competitors may be pharmaceutical companies, academic and medical institutions, governmental agencies and public and private research institutions, among others. Should any competitor's product candidates receive regulatory or marketing approval prior to ours, they may establish a strong market position and be difficult to displace, or will diminish the need for our products.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product that we may develop. Specifically, we may compete with companies that attempt to decrease the sharp fluctuations and improve the bioavailability and half-life associated with orally administered LD/CD, such as Impax Laboratories Inc., XenoPort, Inc., Intec Pharma Ltd. and Depomed, Inc., which are developing oral LD/CD drugs that include a controlled release or gastric retention attribute in order to decrease the gastronomical tract's impact on the concentration of levodopa. Similarly, Synagile Corporation is seeking to develop an ester form of levodopa for continuous subcutaneous administration. If such products are approved and successfully improve the bioavailability of LD/CD or an alternative drug, the demand for our Parkinson's disease product candidates may be significantly reduced.

Companies may also develop products that address other aspects of Parkinson's disease, such as Civitas Therapeutics, Inc., which is developing a levodopa product to address "off" episodes commonly associated with levodopa therapy. While such products would not directly compete with our Parkinson's disease product candidates, as they address specific effects of Parkinson's disease, such treatment may reduce the demand for our Parkinson's disease product candidates.

Moreover, if one of our Parkinson's disease product candidates obtains approval in the future, we believe that we would compete with traditional surgery and existing drug treatments of Parkinson's disease, including the "gold standard" of treatment for the past 30 years, oral administration of LD/CD. We may also directly compete with deep brain stimulation, or DBS, and AbbVie Inc.'s product, Duodopa, a LD/CD drug solution that comes in a gel form and is approved in several jurisdictions including Europe, Canada and Australia.

In addition, if approved, our apomorphine-based product candidate, ND0701, would directly compete with other non-LD/CD treatments. For example, in Europe, Britannia Pharmaceuticals Limited (part of the STADA Arzneimittel AG group of companies) currently markets a Parkinson's disease therapy called Apo-Go that administers apomorphine via a belt pump.

Similarly, if ND0801 obtains approval in the future, we would compete with currently existing products. For example, we are aware that a number of existing treatments for ADD/ADHD are currently on the market and are marketed by pharmaceutical companies that may be far larger and more experienced than us. Current competitor drugs to ND0801 include stimulants such as Ritalin and Adderall, as well as the non-stimulant drugs Strattera, Intuniv and Kapvay. We recognize that patients and doctors are often unwilling to change medications, and this factor may make it difficult for ND0801 to penetrate the market, even if it receives FDA approval.

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. Mergers and acquisitions in the pharmaceutical and biotechnology industries markets may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove to be

24


Table of Contents

significant competitors, particularly through collaborative arrangements with large and established companies. These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

We rely on third-party manufacturers to supply the drug substances and the medical devices necessary for administration of our product candidates. We do not have long-term contracts with such manufacturers or suppliers.

We depend on third-party manufacturers for the supply of the drug products and associated medical devices of our product candidates for use in our clinical trials. Any problems we experience with any such third parties could delay the manufacturing of our product candidates, which could harm our results of operations.

We do not currently have a long-term manufacturing contract for our reformulated LD/CD active drug substances. We receive this drug substance for use in our clinical trials of our Parkinson's disease product candidates on a purchase order basis from Nextar Chempharma Solutions Ltd., a cGMP manufacturer located in Israel. Although we are in discussions with several cGMP drug manufacturers in order to ensure we have sufficient quantities of LD/CD for our Pivotal 1 Phase III clinical trials and for marketing our Parkinson's disease product candidates if and when they are approved, we may be unable to enter into long-term agreements or agreements that would provide sufficient LD/CD.

We also engage third-party manufacturers to supply us with the medical devices for the administration of our Parkinson's disease product candidates. We currently receive the majority of our medical devices from an Italian manufacturer, on a purchase order basis. While we have not entered into supply agreements with any of our suppliers, we are in discussions with suppliers to establish long-term supply agreements.

As we do not have agreements in place that guarantee the supply or the price of the active drug and the medical devices necessary to produce our product candidates, any significant delay in the acquisition or decrease in the availability of such materials could considerably delay the manufacturing of our product candidates, which could adversely impact the timing of any planned trials or the regulatory approval of that product candidate. If we are unable to arrange for alternative third-party sources, or to do so on commercially reasonable terms or in a timely manner, we may be delayed in the development of our product candidates.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the agreement by the third party because of factors beyond our control (including a failure to manufacture our product candidates or any products we may eventually commercialize in accordance with our specifications) and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. We may therefore be subject to unexpected increases in the cost of devices, which may far exceed the cost of producing drug substances and require increased capital expenditures.

We are subject to a number of manufacturing risks, any of which could substantially increase our costs and limit supply of our products.

If our offices, which house all of our research and development facilities, or any facility of our third-party drug and device manufacturers or suppliers 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 its backup generators or similar event, we could be materially adversely affected and any of our clinical trials could be materially delayed. Such an extended shut down may force us to procure a new research and development facility or another manufacturer or supplier, which could be time-consuming. During this period, we may be unable to receive our product candidates.

25


Table of Contents

The process of manufacturing the active drug in our product candidates and related medical devices is complex, highly regulated and subject to the risk of product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes or quality requirements for our product candidates could result in reduced production yields, product defects and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are or will be made, such manufacturing facilities may need to be closed to investigate and remedy the contamination. Any adverse developments affecting manufacturing operations for our product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of our product candidates. We may also have to take inventory write-offs and incur other charges and expenses for our product candidates that fail to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

The ability of our third-party manufacturers to continue manufacturing and supplying our product candidates depends on their continued adherence to current good manufacturing practices regulations.

The manufacturing processes for our product candidates are governed by detailed cGMP regulations. Failure by third-party manufacturers and quality operations units to adhere to established regulations or to meet a specification or procedure set forth in cGMP requirements could require that a product or material be rejected and destroyed. Adherence to cGMP regulations and the effectiveness of our quality control systems are periodically assessed through inspections of manufacturing facilities by regulatory authorities. Such inspections could result in deficiency citations, which would require action to correct those deficiencies to the satisfaction of the applicable regulatory authorities. If critical deficiencies are noted or if recurrences are not prevented, we may have to recall products or suspend operations until appropriate measures are implemented. Since cGMP reflects ever-evolving standards, manufacturing processes and procedures must be regularly updated to comply with cGMP. These changes may cause us to incur additional costs and may adversely impact our results of operations. For example, more sensitive testing assays (if and when they become available) may be required or existing procedures or processes may require revalidation, all of which may be costly and time-consuming and could delay or prevent the manufacturing of our product candidates or launch of a new product.

If we change the manufacturers of our product candidates, we may be required to conduct comparability studies evaluating the manufacturing processes of the product candidates.

The FDA and other regulatory agencies maintain strict requirements governing the manufacturing process for medical devices, such as the pumps used in our product candidates. For example, when a manufacturer seeks to modify or change that process, the FDA typically requires the applicant to conduct non-clinical and, depending on the magnitude of the changes, potentially clinical comparability studies that evaluate the potential differences in the product candidates resulting from the change in the manufacturing process. If we were to change manufacturers of our drug substances or our devices during or after the clinical trials and regulatory approval process for ND0612L or any of our other product candidates, we will be required to conduct comparability studies assessing product candidates manufactured at the new manufacturing facility. Delays in designing and completing a comparability study to the satisfaction of the FDA or other regulatory agencies could delay or preclude our development plans and, thereby, delay our ability to receive marketing approval or limit our revenue and growth, once approved. In addition, in the event that the FDA or other regulatory agencies do not accept non-clinical comparability data, we may need to conduct a study involving dosing of patients comparing the two products. That study may result in a delay of the approval or launch of any of our product candidates.

26


Table of Contents

We rely on third parties to conduct our preclinical and clinical trials. The failure of these third parties to successfully carry out their contractual duties or meet expected deadlines, could substantially harm our business because we may not obtain regulatory approval for or commercialize our product candidates in a timely manner or at all.

We rely upon third-party CROs to conduct, monitor and manage data for our current and future preclinical and clinical programs. We expect to continue to rely on these parties for execution of our preclinical and clinical trials, and we control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with current Good Clinical Practices, or GCP, which are regulations and guidelines enforced by the FDA, the EMA and comparable foreign regulatory authorities for all of our products in clinical development. Regulatory authorities enforce these GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, we must conduct our clinical trials with products produced under cGMP requirements. Failure to comply with these regulations may require us to repeat preclinical and clinical trials, which would delay the regulatory approval process.

Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed. To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business may be adversely affected.

We currently have limited sales and marketing staff and no product distribution network. If we are unable to develop sales and marketing infrastructure, we will not be successful in commercializing our products.

We do not currently have a sales or marketing infrastructure and do not have experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for our product candidates in the United States, the European Union and other jurisdictions, we may enter sales, marketing and distribution agreements with third parties in respect of the commercialization of our product candidates in such jurisdictions. Entering into arrangements with third parties to perform these services may result in lower product revenues and profitability, if any, than if we were to market, sell and distribute our product candidates ourselves. In addition, we may not be successful in entering into arrangements with third parties in the future to sell, market and distribute our product candidates or may be unable to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively.

Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern.

In its report accompanying our audited financial statements for the year ended December 31, 2013, our independent registered public accounting firm included an explanatory paragraph stating that our recurring

27


Table of Contents

losses from operations and negative cash flows raise substantial doubt as to our ability to continue as a going concern. The inclusion of a going concern explanatory paragraph in the report of our independent registered public accounting firm may make it more difficult for us to secure additional financing on terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we might obtain.

Risks Related to Government Regulation and Other Legal Compliance Matters

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

Any regulatory approval that we receive may also contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of the approved product. 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. For any clinical trials that we conduct post-approval, these requirements include submission of safety and other post-marketing information and reports, registration and continued compliance with cGMP. Although the manufacturing facilities of the third parties from whom we order are cGMP-certified, they may face difficulties in maintaining regulatory approval for the manufacturing and quality control process of our product candidates.

We may not benefit from the regulatory data protection and/or market exclusivity period afforded to our underlying drug substances in the European Union.

There is no formal "grant" of regulatory data exclusivity under EU law. The rules are complex and are constantly evolving. For example, the issue of regulatory data protection and market exclusivity for combination products is the subject of litigation involving Teva Pharmaceutical Industries Ltd., or Teva, before the Court of Justice of the European Union, or CJEU. The outcome of this case or other cases or changes in policy may impact the regulatory data exclusivity period of combination drugs that rely on the standard "8+2(+1)" marketing and regulatory data exclusivity protection of their underlying components under EU law. The standard "8+2(+1)" exclusivity protection provides that data exclusivity applies during the first eight years from the grant of the innovator company's marketing authorization. After the eight years have expired, a generic company can make use of the preclinical and clinical trial data of the originator in its regulatory applications but still cannot market its product until the end of 10 years. Additional market exclusivity of one further year can be obtained if during the first eight of those 10 years, the marketing approval holder obtains approval for one or more new therapeutic indications which, during the scientific evaluation prior to their approval, are determined to bring a significant clinical benefit in comparison with existing therapies. Our product candidates may be negatively impacted by a decision of the CJEU or a change in policy that precludes combination drugs from benefitting from such a period of market and/or regulatory data exclusivity beyond that of their component parts.

Products developed and approved based on a complete, free-standing marketing authorization dossier may benefit from the standard "8+2(+1)" period of regulatory data exclusivity protection notwithstanding that products containing the same active substances have existed in the European Union for some time. Even where products benefit from regulatory data exclusivity, however, the exclusivity will only attach to the novel data that the company generates. For example, one possible regulatory route in the European Union is to compile a complete "mixed data" application dossier comprising a mixture of the company's own data and data compiled from peer-reviewed literature. The company may benefit from exclusivity in respect of the dossier it submits, but it may be relatively easy for a competitor to repeat the study or studies that the company has done and compile the same additional data from peer-reviewed literature, as well.

Approvals based on a hybrid generic application (e.g., using an oral or gastrointestinal LD/CD product as the reference, supplemented by bridging data for subcutaneous or transdermal administration) are currently not valid reference products for the purpose of generic applications. However, potential generic competitors

28


Table of Contents

could seek to rely on data for the LD/CD reference product, supplemented with their own bridging data for subcutaneous or transdermal administration.

The medical devices associated with our product candidates are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause delay or prevent approval of our product candidates.

The medical device industry is regulated extensively by governmental authorities. The regulations are complex and are subject to rapid change and varying interpretations. Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales. We intend to submit an NDA for the administration of our product candidate ND0612H for use with the CRONO Twin ND device, and of our product candidates ND0612L, ND0680 and ND0701 for use with the CRONO ND device, both of which will undergo a drug-device combination approval process. While such clearance is not required in order for us to receive marketing authorization for our product candidates, any delay in such process may delay the approval process for our product candidates.

Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some customers from using our products and adversely affect our reputation and the perceived safety and efficacy of our products and the devices we use to administer them.

Regulatory approval for our product candidates would be limited to specific indications and conditions for which clinical safety and efficacy have been demonstrated, and the prescription or promotion of off-label uses could adversely affect our business.

Any regulatory approval of our product candidates would be limited to those specific indications for which such product candidates had been deemed safe and effective by the FDA, the EMA or other regulatory authority. Additionally, labeling restrictions may also limit the manner in which a product is approved to be used. It is not, however, unusual for physicians to prescribe medication or use medical devices for unapproved, 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 and produce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer. In addition, should any of our future products have a significant price difference and if they are used interchangeably, off-label uses may cause a decline in our revenues or potential revenues.

Furthermore, while physicians may choose to prescribe treatments for uses that are not described in the products' labeling and for uses that differ from those approved by regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA, the EMA or other regulatory authorities. Although regulatory authorities generally do not regulate the behavior of physicians, they do restrict communications by companies on the subject of off-label use. If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In the United States, "off-label promotion" by pharmaceutical companies has resulted in significant litigation under the federal False Claims Act, violations of which may result in substantial civil penalties and fines. More generally, failure to follow the rules and guidelines of regulatory agencies relating to promotion and advertising, such that promotional materials are not false or misleading, can result in refusal to approve a product, the suspension or withdrawal of an approved product from the market, product recalls, fines, disgorgement of money, operating restrictions, injunctions or criminal prosecution.

29


Table of Contents

Certain of our business practices could become subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens.

The laws governing our conduct in the United States are enforceable by criminal, civil and administrative penalties. Violations of laws such as the Federal Food, Drug and Cosmetic Act, or the FDCA, the Public Health Service Act, the federal False Claims Act, provisions of the U.S. Social Security Act, including the provision known as the "Anti-Kickback Law," or any regulations promulgated under their authority, may result in various administrative, civil and criminal sanctions, jail sentences, fines or exclusion from federal and state programs, as may be determined by Medicare, Medicaid, other regulatory authorities and the courts. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen "relators" under federal or state false claims laws.

For example, under the Anti-Kickback Law, and similar state laws and regulations, even common business arrangements, such as discounted terms and volume incentives for customers in a position to recommend or choose drugs and devices for patients, such as physicians and hospitals, can result in substantial legal penalties, including, among others, exclusion from Medicare and Medicaid programs. As a result, arrangements with potential referral sources must be structured with care to comply with applicable requirements. Also, certain business practices, such as payment of consulting fees to healthcare providers, sponsorship of educational or research grants, charitable donations, interactions with healthcare providers and financial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid any possibility of wrongfully influencing healthcare providers to prescribe or purchase particular products or of rewarding past prescribing.

In addition, significant enforcement activity has taken place under federal and state false claims act statutes and violations of the federal False Claims Act can result in treble damages, and penalties of up to $11,000 for each false claim submitted for payment. The federal False Claims Act, as well as certain state false claims acts, permit relators to file complaints in the name of the United States (and if applicable, particular states). These relators may be entitled to receive up to 30% of total recoveries and have been active in pursuing cases against pharmaceutical companies. Where practices have been found to involve improper incentives to use products, the submission of false claims, or other improper 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 Agreements that prescribe allowable corporate conduct. Failure to satisfy requirements under the FDCA can also result in a variety of administrative, civil and criminal penalties, including injunctions or consent decrees that prescribe allowable corporate conduct.

To enhance compliance with applicable healthcare laws, and mitigate potential liability in the event of noncompliance, regulatory authorities, such as the Office of Inspector General of the U.S. Department of Health and Human Services, or OIG, have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the U.S. Sentencing Commission Guidelines Manual. Increasing numbers of U.S.-based pharmaceutical companies have such programs. As our product candidates are 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, but even if we do, having such a program can be no assurance that we will avoid any compliance issues.

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 to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require

30


Table of Contents

drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances. Many of these laws differ from each other in significant ways and often are not preempted by the U.S. Health Insurance Portability and Accountability Act of 1996 thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may 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 of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, including, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, which could have a material adverse effect on our business. If any of the physicians or other healthcare 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, civil or 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, or the Exchange Act, we will be subject to the U.S. Foreign Corrupt Practices Act, or FCPA. The FCPA and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. We intend to implement policies mandating compliance with these anti-bribery laws. However, we may operate in parts of the world that have experienced governmental corruption to some degree and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices or may require us to interact with 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 and procedures may not be sufficient to effectively protect us against reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cash flows.

We could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities.

The development of pharmaceutical products involves an inherent risk of product liability claims and associated adverse publicity. Our product candidates may 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 discontinue production of certain product candidates. Although we usually obtain approximately $3.0 million in clinical trial liability insurance per clinical trial, this coverage may not adequately cover all liabilities that we may incur. Such 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 product liability claims that could impede or prevent commercialization of our product candidates. Furthermore, a product liability claim 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 or the withdrawal of a product from the market could have a material adverse effect on our business or financial condition. Additionally, product liability lawsuits, regardless of their success, would likely be time-consuming and expensive to resolve and would divert management's time and attention, which could seriously harm our business.

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. If an accident, spill or release of any such chemicals or substances

31


Table of Contents

occurs, we could be held liable for resulting damages, including for investigation, remediation and monitoring of the contamination, including natural resource damages, the costs of which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures. Although we maintain workers' compensation insurance to cover the costs and expenses that may be incurred because of injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. Additional or more stringent laws and regulations affecting our operations may be adopted in the future. We may incur substantial capital costs and operating expenses and may be required to obtain consents to comply with any of these or certain other laws or regulations and the terms and conditions of any permits required pursuant to such laws and regulations, including costs 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, or comply with the terms and conditions of, required environmental or other permits or consents.

Risks Related to Our Intellectual Property

Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or incorporated into our technology and products.

Our commercial success depends in part on our ability to obtain and maintain patent protection and trade secret protection for our intellectual property 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 invention agreements and other restrictions on disclosure and use to protect our intellectual property rights.

However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information and we may not be able to obtain adequate remedies for such breaches. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and financial condition.

We have currently been granted eight patents, including in Australia, Japan, Mexico, New Zealand, South Africa and the United States, and have over 45 pending patent applications worldwide, including two pending and three national phase international applications filed under the Patent Cooperation Treaty, or PCT. However, there can be no assurance that patent applications relating to our product candidates, processes or technologies will result in patents being issued, or that any patents that have been issued will be adequate to protect our intellectual property or that we will enjoy patent protection for any significant period of time. Additionally, any issued patents may be challenged by third parties, and patents that we hold may be found by a judicial authority to be invalid or unenforceable. Other parties may independently develop similar or competing technology or design around any 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 adverse effects on our business.

Patents that claim specific molecules or active ingredients are generally considered to be the strongest form of intellectual property protection. However, as our product candidates are formulations based on existing drugs, those types of claims are limited for our products. Instead, our main patents and patent applications underlying our product candidates cover specific compositions and methods of use of the active drug substance in ND0612H, ND0612L, ND680 and ND0801. If our patents or pending applications in various jurisdictions were subject to a successful challenge or failed to issue, or if our competitors were able to

32


Table of Contents

design around the claims of our issued patents, our business and competitive advantage could be significantly affected.

In addition, we may fail to apply for or be unable to obtain patents necessary to protect our technology 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 using similar technology or marketing similar products, or limit the length of time our technologies and products have patent protection.

Unauthorized use of our intellectual property may have occurred or may occur in the future. Any reported adverse events involving counterfeit products that purport to be our products could harm our reputation and the sale of our products. Moreover, if we are required to commence litigation related to unauthorized use, whether as a plaintiff or defendant, such litigation would be time-consuming, force us to incur significant costs and divert our attention and the efforts of our management and other employees, which could, in turn, result in lower revenue and higher expenses. Lawsuits may ultimately be unsuccessful and may also subject us to counterclaims and cause our intellectual property rights to be challenged, narrowed, invalidated or held to be unenforceable. Any failure to identify unauthorized use of, and otherwise adequately protect, our intellectual property could adversely affect our business, including by reducing the demand for our products.

Our material patents also may not afford us adequate protection against competitors with similar technology.

Patent applications in the United States and many other jurisdictions are typically not published until 18 months after their filing, if at all, and because publications of discoveries in scientific literature 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 our or 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 patent applications. As a result, our patents may be invalidated in the future, and our patent applications 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 be required to participate in an adversarial proceeding known as an "interference proceeding," declared by the U.S. Patent and Trademark Office, or the USPTO, or its foreign counterparts, to determine priority of invention. The costs of these proceedings could be substantial and our efforts in them could be unsuccessful, resulting in 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 from practicing technology or marketing products covered by that patent without obtaining a license from such third party, which we may not be able to obtain on commercially reasonable terms. Additionally, patents and patent applications owned by third parties may prevent us from pursuing certain opportunities such as entering into specific markets or developing certain products. Finally, we may choose to enter into markets where certain competitors have patents or patent protection over technology that may impede our ability to compete effectively.

Absent patent-term extensions, our existing patents for our product candidates will expire between 2028 and 2031. However, because of the extensive time required for development, testing and regulatory review of a potential product, and although such delays may entitle patent term extensions, it is possible that, before our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercial launch, thereby reducing any advantages of the patent. Our pending 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 with any 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;

33


Table of Contents

      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 our agreements 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 other payments.

Effective protection of our intellectual property rights may be unavailable or limited in some countries.

The patent landscape in the pharmaceutical and biotechnology fields is highly uncertain and involves complex legal, factual and scientific questions, and changes 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 our intellectual property or narrow the scope of our patent protection. Effective protection of our intellectual property rights may also be unavailable or limited in some countries, and even if available, we may fail to pursue or obtain necessary intellectual property protection in such countries because filing, prosecuting, maintaining and defending patents on product candidates in all countries throughout the world would be prohibitively expensive. In addition, the legal systems of certain countries, particularly of certain developing countries, do not favor the aggressive enforcement of patents and other intellectual property rights, and the laws of foreign countries do not protect our rights to the same extent as the laws of the United States. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and we may be unable to prevent those competitors from importing those infringing products into territories where we have patent protection but enforcement is not as strong as in the United States or into jurisdictions in which we do not have patent protection. These products may compete with our product candidates and our patents and other intellectual property rights may not be effective or sufficient to prevent them from competing in those jurisdictions. Moreover, competitors or others in the chain of commerce may raise legal challenges against our intellectual property rights or may infringe upon our intellectual property rights, including through means that may be difficult to prevent or detect.

Proceedings to enforce our patent rights in the United States or foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert patent infringement or other claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license from third parties.

In addition to patents, 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 be patentable, or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with our employees, consultants, contractors, scientific advisors and third parties. However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or otherwise fail to prevent disclosure, third-party infringement or misappropriation of our

34


Table of Contents

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 have limited control over the protection of trade secrets used by our suppliers, manufacturers and service providers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, our proprietary information may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants, contractors, scientific advisors and other third parties use intellectual property 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-consuming litigation could be necessary to enforce and determine the scope of our and relevant third parties' proprietary rights, failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position and if third parties are able to establish that we are using their proprietary information without their permission, we may be required to obtain a license to that 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.

We also rely on physical and electronic security measures to protect our proprietary information, but we cannot provide assurance that these security measures will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such information or take appropriate 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 potential competitors. 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 be subject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietary information of any such employee's former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defending ourselves, 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 paying monetary damages, we may lose valuable intellectual property rights or personnel.

We are in the process of registering our trademarks. Failure to secure those registrations could adversely affect our business.

We are in the process of obtaining trademark registrations, including for the trademark "NeuroDerm," in certain jurisdictions that we consider material to the marketing of our product candidates. While we intend for our applications to mature into registrations, we cannot be certain that we will obtain such registrations or that the permissible use of those marks will not be limited in scope. For example, the USPTO has recently informed us that a third party has a prior trademark registration for "neuroderm" classified in the same class of goods as our product candidates. While we believe that our product candidates under this trademark are different from the products of such third party and unlikely to cause any confusion, we cannot guarantee the USPTO will withdraw the citation of such prior trademark. Consequently, we might not be able to secure trademark registration for "NeuroDerm" in the United States. In addition, in the USPTO or its foreign counterparts, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. If we do not secure registrations for each of our trademarks, we may not be able to use such trademarks in conducting our business (including forfeiting any goodwill we have built-up related to such trademarks), and if we are able to use them, then we may encounter more difficulty in enforcing them against third parties than we otherwise would, each of which could adversely affect our business.

35


Table of Contents

We may be subject to claims that we infringe, misappropriate or otherwise violate the intellectual property rights of third parties.

Our development, manufacturing, marketing or sale of our product candidates may infringe or be accused of infringing one or more claims 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 which we do not hold a license or other rights. Our product candidates are reformulated versions of existing approved drugs, and we may be subject to claims that such reformulations, our proposed uses or label claims, violate the intellectual property rights of others relating to the underlying drugs. In such case, we may not be able to design around such third party intellectual property rights or obtain licenses to use such intellectual property on acceptable terms, or at all, especially if our reformulated version is perceived to be a competitive threat to the pre-existing product. We may also be subject to claims that we are infringing, misappropriating or otherwise violating other intellectual property rights, such as trademarks, copyrights or trade secrets. Third parties could therefore bring claims against us or our third-party manufacturers or partners that would cause us to incur substantial expenses, including litigation costs or costs associated with settlement, and, if successful against us, could cause us to pay substantial damages. Further, if such a claim were brought against us, we could be forced to temporarily delay or permanently stop manufacturing or sales of our product candidates that is 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 to avoid 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 could be substantial. These licenses may not be available on terms acceptable to us, 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, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened claims, we or our partners are unable to enter into licenses on acceptable terms. If we cannot operate without infringing on the proprietary rights of others, we will not earn revenues on our product candidates and our business would be materially adversely affected.

There have been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition, to the extent that we gain greater visibility and market exposure as a public company in the United States, we face a greater risk of being involved in such litigation. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference, opposition, re-examination and similar proceedings, such as the America Invents Act post grant proceedings, before the USPTO and its foreign counterparts, regarding intellectual property rights with respect to our product candidates. The cost to us of any patent litigation 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 us or our collaborators from 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 sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the 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.

Risks Related to Our Management and Employees

We depend on our executive officers to operate our business effectively, and we must attract and retain highly skilled employees in order to succeed.

Our success depends upon the continued service and performance of our executive officers who are essential to our growth and development. The loss of one or more of our executive officers could delay or

36


Table of Contents

prevent the continued successful implementation of our growth strategy, could affect our ability to manage our company effectively and to carry out our business plan, or could otherwise be detrimental to us. As of September 30, 2014, we employed 21 people and knowledge of our product candidates and clinical trials is concentrated among a small number of individuals. Members of our executive team as well as key clinical, scientific and technical personnel may resign at any time and there can be no assurance that we will be able to continue to retain such personnel. If we cannot recruit suitable replacements in a timely manner, our business will be adversely impacted.

Our growth and continued success will also depend on our ability to attract and retain additional highly qualified and skilled research and development, operational, managerial and finance personnel. However, we face significant competition for experienced personnel in the pharmaceutical field. Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to quality candidates than what we have to offer. If we cannot retain our existing skilled scientific and operational personnel and attract and retain sufficiently-skilled additional scientific and operational personnel, as required, for our research and development and manufacturing operations on acceptable terms, we may not be able to continue to develop and commercialize our existing product candidates or new products. Further, any failure to effectively integrate new personnel could prevent us from successfully growing our company.

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 laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the protection of a company's trade secrets or other intellectual property.

If we fail to manage our growth effectively, our business could be disrupted.

Our future financial performance and ability to successfully commercialize our product candidates and to compete effectively will depend, in part, on our ability 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 and clinical trials for new indications. We may acquire or make investments in businesses, technologies or products, whether complementary or otherwise, as a means to expand our business, if appropriate opportunities arise. We cannot give assurances that we will be able to identify future suitable acquisition or investment candidates, or, if we do identify suitable candidates, that we will be able to make the acquisitions or investments on reasonable terms or at all. In addition, we have no prior experience in integrating acquisitions and we could experience difficulties incorporating an acquired company's personnel, operations, technology or product offerings into our own or in retaining and motivating key personnel from these businesses. We may also incur unanticipated liabilities. The financing of any such acquisition or investment, or of a significant general expansion of our business, may not be readily available on favorable terms. Any significant acquisition or investment, or major expansion of our business, may require us to explore external financing sources, such as an offering of our equity or debt securities. We cannot be certain that these financing sources will be available to us or that we will be able to negotiate commercially reasonable terms for any such financing, or that our actual cash requirements for an acquisition, investment or expansion will not be greater than anticipated. In addition, any indebtedness

37


Table of Contents

that we may incur in such a financing may inhibit our operational freedom, while any equity securities that we may issue in connection with such a financing would dilute our shareholders.

We must also be prepared to expand our work force and train, motivate and manage additional employees as the need for additional personnel arises. Even following expansion, our facilities, personnel, systems, procedures and controls may not be adequate to support our future operations, or we may expand, but then fail to grow our sales of our product candidates sufficiently to support such operational growth. Any failure to manage future growth effectively could have a material adverse effect on our business and results of operations.

Our results of operations may be adversely affected by fluctuations in currency exchange rates and we may not adequately hedge against them.

Our functional currency is the NIS but our presentation currency is the U.S. dollar. A significant portion of our operating expenses are incurred in NIS; however, a portion of our expenses are denominated in U.S. dollars, accounting for 14.0% and 6.0% of our expenses in the years ended December 31, 2012 and 2013, respectively. 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, that the 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 any such event, the dollar cost of our operations in Israel would increase and our dollar-denominated results of operations would be adversely affected. We cannot predict 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, although the dollar appreciated against the shekel in 2011, the rate of devaluation of the dollar against the shekel was 2.3% and 7.0% in 2012 and 2013, respectively, which was compounded by inflation in Israel at a rate of 1.6% and 1.9%, respectively. This had the effect of increasing the dollar cost of our operations in Israel by 3.9% and 8.9% respectively, in such years. If the dollar cost of our operations in Israel increases, our dollar-measured results of operations will be adversely affected. Our operations also could be adversely affected if we are unable to effectively hedge against currency fluctuations in the future.

Risks Related to Our Ordinary Shares and the Offering

Our share price may be volatile, and you may lose all or part of your investment.

The initial public offering price for the ordinary shares sold in this offering will be determined by negotiation between us and representatives of the underwriters. This price may not reflect the market price of our ordinary shares following this offering and the price of our ordinary shares may decline. In addition, the market price of our ordinary shares could be highly volatile and may fluctuate substantially as a result of many factors, including:

      actual or anticipated fluctuations in our results of operations;

      variance in our financial performance from the expectations of market analysts;

      announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions or expansion plans;

      changes in the prices of our products and services;

      our involvement in litigation;

      our sale of ordinary shares or other securities in the future;

      market conditions in our industry;

      changes in key personnel;

      the trading volume of our ordinary shares;

      changes in the estimation of the future size and growth rate of our markets; and

      general economic and market conditions.

38


Table of Contents

In addition, the stock markets have experienced extreme price and volume fluctuations. Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted against that company. If we were involved in any similar litigation we could incur substantial costs and our management's attention and resources could be diverted.

There has been no prior public market for our ordinary shares, and an active trading market may not develop.

Prior to this offering, there has been no public market for our ordinary shares. An active trading market may not develop following completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling share capital and may impair our ability to acquire other companies by using our shares as consideration.

If we do not meet the expectations of equity research analysts, if they do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our ordinary 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 our business. The analysts' estimates are based upon their own opinions and are often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market analysts and investors, our stock price could decline. Moreover, the price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Following the closing of this offering, a small number of significant beneficial owners of our shares acting together will have a controlling influence over matters requiring shareholder approval, which could delay or prevent a change of control.

Following the closing of this offering, the largest beneficial owners of our shares, are Robert Taub, Uwe Wascher and Shmuel Cabilly, who currently beneficially own 28.2%, 26.1% and 22.4% of our outstanding shares, respectively, will beneficially own in the aggregate 48.6% of our ordinary shares or 46.7% if the underwriters exercise their option to purchase additional ordinary shares. As a result, these shareholders, acting together, could exercise a controlling influence over our operations and business strategy and will have sufficient voting power to control the outcome of matters requiring shareholder approval. These matters may include:

      the composition of our board of directors which has the authority to direct our business and to appoint and remove our officers;

      approving or rejecting a merger, consolidation or other business combination;

      raising future capital; and

      amending our articles of association which govern the rights attached to our ordinary shares.

This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our ordinary shares. This concentration of ownership may also adversely affect our share price.

39


Table of Contents

As a foreign private issuer, we are permitted, and intend, to follow certain home country corporate governance practices instead of otherwise applicable Securities Exchange Commission, or SEC, and NASDAQ requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.

As a foreign private issuer, we will be permitted, and intend, to follow certain home country corporate governance practices instead of those otherwise required under the Listing Rules of the NASDAQ Stock Market for domestic U.S. issuers. For instance, we intend to follow home country practice in Israel with regard to the quorum requirement for shareholder meetings. As permitted under the Israeli Companies Law, our amended and restated articles of association to be effective upon the closing of this offering, or our amended articles of association, will provide that the quorum for any meeting of shareholders shall be the presence of at least two shareholders present in person, by proxy or by a voting instrument, who hold at least 25% of the voting power of our shares instead of 331/3% of the issued share capital requirement. We may in the future elect to follow home country practices in Israel with regard to other matters, including the formation of compensation, nominating and corporate governance committees, separate executive sessions of independent directors and non-management directors and the requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company). Following our home country governance practices as 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 than what is accorded to investors under the Listing Rules of the NASDAQ Stock Market applicable to domestic U.S. issuers.

As a foreign private issuer we will not be subject to U.S. proxy rules and will be exempt from filing certain Exchange Act reports.

In addition, as a foreign private issuer, we will be exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, we will be permitted to disclose limited compensation information for our executive officers on an individual basis and we will generally be exempt from filing quarterly reports with the SEC under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.

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 highly compensated executive officers on an individual, rather than an aggregate, basis. Nevertheless, a recent amendment to the regulations promulgated under the Israeli Companies Law will require us, after we become a public company, to disclose the annual compensation of our five most highly compensated officers on an individual basis, rather than on an aggregate basis, as was previously permitted for Israeli public companies listed overseas. This disclosure will not be as extensive as that required of a U.S. domestic issuer. We intend to commence providing such disclosure, at the latest, in the notice (which is generally part of the proxy statement) for our 2015 annual meeting of shareholders, which will be filed under cover of a Form 6-K.

In addition, we would lose our foreign private issuer status if a majority of our directors or executive officers are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of

40


Table of Contents

foreign private issuer status would make such provisions mandatory, including, for example, the requirement that the annual compensation of our executive officers and directors be disclosed on an individual basis. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration 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 may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability 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 we cannot be certain whether the reduced requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 effective on April 5, 2012, or the JOBS Act, and we may take advantage of certain exemptions from various requirements that are applicable to other public companies that are not "emerging growth companies." Most of such requirements 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 foreign private issuer that is an emerging growth company, we will not be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, for up to five fiscal years after the date of this 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 $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous three-year period, issued more 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 are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.

The market price of our ordinary shares could be negatively affected by future sales of our ordinary shares.

After this offering, there will be 16,404,960 of our ordinary shares outstanding. Sales by us or our shareholders of a substantial number of ordinary shares in the public market following this offering, or the perception that 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. Of our issued and outstanding shares, all the ordinary shares sold in this offering will be freely transferable, except for any shares acquired by our "affiliates," as that term is defined in Rule 144 under the U.S. Securities Act of 1933. Following completion of this offering, 64% of our outstanding ordinary shares (or 61% if the underwriters exercise their option in full) will be considered restricted shares and will be held by our affiliates. Such securities can be resold into the public markets in the future in accordance with the requirements of Rule 144, including volume limitations, manner of sale requirements and notice requirements. See "Shares Eligible for Future Sale."

We, our executive officers and directors, and the holders of approximately 97% of our outstanding ordinary shares, have agreed with the underwriters that, subject to limited exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, grant any option to purchase or otherwise dispose of any ordinary shares or any securities convertible into or exercisable or exchangeable for ordinary shares, or in any manner transfer all or a portion of the economic consequences associated with the ownership of ordinary shares, or cause a registration statement covering any ordinary shares to be filed except for the ordinary shares offered in this offering, without the prior

41


Table of Contents

written consent of the designated representatives of the underwriters, who may, in their sole discretion and at any time without notice, release all or any portion of the shares subject to these lock-up agreements.

At any time following the closing of this offering, subject, however, to the 180-day lock-up agreement entered into with the underwriters, the holders of 11,867,840 of our ordinary shares are entitled to require that we register their shares under the U.S. Securities Act of 1933 for resale into the public markets. All shares sold pursuant to an offering covered by such registration statement will be freely transferable. See "Shares Eligible for Future Sale — Registration Rights."

In addition to our current shareholders' registration rights, as of June 30, 2014, we had 1,748,240 ordinary shares that were subject to outstanding options. Following this offering, we intend to file a registration statement on Form S-8 under the U.S. Securities Act of 1933 registering the shares under our share option plans. Shares included in such registration statement will be available for sale in the public market immediately after such filing, subject to vesting provisions, except for shares held by affiliates who will have certain restrictions on their ability to sell.

We expect to be classified as a passive foreign investment company for the taxable year ending December 31, 2014.

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-through rules 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. Based on certain estimates of our gross income and gross assets and the nature of our business, we expect to be classified, and you should assume that we will be classified, as a PFIC for the taxable year ending December 31, 2014. Because we must determine our PFIC status annually based on tests, which are factual in nature, our status in future years will depend on our income, assets and activities in those years. There can be no assurance that we will not be considered a PFIC for any taxable year. Our classification as a PFIC may result in material adverse consequences for you if you are a U.S. taxable investor, including having gains realized on the sale of the ordinary shares treated as ordinary income, rather than capital gains, having potentially punitive interest charges apply to those gains, and the denial of the taxation of certain dividends we pay at the lower rates applicable to long-term capital gains. A U.S. investor may be able to mitigate some of the adverse U.S. federal income tax consequences described above with respect to owning the ordinary shares if we are classified as a PFIC for our taxable year ending December 31, 2014, provided that such U.S. investor is eligible to make, and successfully makes, a "mark-to-market" election. U.S. investors could also mitigate some of the adverse U.S. federal income tax consequences of us being classified as a PFIC by making a "qualified electing fund" election, provided that we provide the information necessary for a U.S. investor to make such an election. We intend to make available to U.S. investors upon request the information necessary for U.S. holders to make qualified electing fund elections if we are classified as a PFIC. Prospective U.S. investors should consult their own tax advisers regarding the potential application of the PFIC rules to them. For more information related to classification as a PFIC, see "Taxation and Government Programs — U.S. Federal Income Taxation — Passive Foreign Investment Company Considerations."

You will experience immediate and substantial dilution in the net tangible book value of the ordinary shares you purchase in this offering.

The initial public offering price of our ordinary shares substantially exceeds the net tangible book value per share of our ordinary shares immediately after this offering. Therefore, if you purchase our ordinary shares in this offering, you will suffer, as of June 30, 2014, immediate dilution of $10.65 per share or $10.31 per share if the underwriters exercise their option in full, in net tangible book value after giving effect to the sale of 4,500,000 ordinary shares in this offering at an assumed public offering price of $14.50 per share, the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, less underwriting discounts and commissions and the estimated expenses payable by us. If outstanding options to purchase our ordinary shares are exercised in the future, you will experience additional dilution. See "Dilution."

42


Table of Contents

We have broad discretion over the use of proceeds we receive in this offering and may not apply the proceeds in ways that increase the value of your investment.

Our management will have broad discretion in the application of the net proceeds from this offering and, as a result, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds in ways that not all shareholders approve of or that may not yield a favorable return. The failure by our management to apply these funds effectively could harm our business.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company whose ordinary shares are listed in the United States, we will incur accounting, legal and other expenses that we did not incur as a private company, including costs associated with our reporting requirements under the Exchange Act. We are an "emerging growth company," as defined in the JOBS Act, and therefore we will take advantage of temporary exemptions from reporting requirements, including, but not limited to, the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the SEC thereunder). When these exceptions cease to apply, we expect to incur additional expenses and to devote increased management efforts toward ensuring compliance with them. In addition, we anticipate that we will incur costs associated with corporate governance requirements as well as rules implemented by the SEC and the NASDAQ Stock Market, and provisions of Israeli corporate and securities laws applicable to public companies. We expect that these rules and regulations will increase our legal and financial compliance costs, introduce new costs such as investor relations and stock exchange listing fees, and will make some activities more time-consuming and costly. We estimate that the additional annual costs we will incur as a public company will range from $350,000 to $500,000, including legal and accounting expenses, directors fees (excluding stock-based compensation expenses) and other fees.

Furthermore, changes in the laws and regulations affecting public companies will result in increased costs to us as we respond to their requirements. These laws and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. We cannot predict or estimate the amount or timing of additional costs we may incur in order to comply with such requirements.

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 the foreseeable 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 investors' sole source of gain for the foreseeable future. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes, and our payment of dividends (out of tax-exempt income) may subject us to certain Israeli taxes, to which we would not otherwise be subject (see "Dividend Policy," "Description of Share Capital — Dividend and Liquidation Rights" and "Taxation and Government Programs — Israeli Tax Considerations and Government Programs").

43


Table of Contents

We have not yet determined whether our existing internal controls over financial reporting systems are compliant with Section 404 of the Sarbanes-Oxley Act, and we cannot provide any assurance that there are no material weaknesses or significant deficiencies in our existing internal controls.

Pursuant to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the SEC and the Public Company Accounting Oversight Board, starting with the second annual report that we file with the SEC after the consummation of this offering, our management will be required to report on the effectiveness of our internal control over financial reporting. In addition, once we no longer qualify as an "emerging growth company" under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above, our independent registered public accounting firm will also need to attest to the effectiveness of our internal control over financial reporting under Section 404. We have not yet commenced the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in our existing internal controls. This process will require the investment of substantial time and resources, including by our Chief Financial Officer and other members of our senior management. In addition, we cannot predict the outcome of this determination and whether we will need to implement remedial actions in order to implement effective control over financial reporting. The determination and any remedial actions required could result in us incurring additional costs that we did not anticipate. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. As a result, we may experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. If we are unable to implement any of the required changes to our internal control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could adversely affect our operations, financial reporting and/or results of operations and could result in an adverse opinion on internal controls from our independent auditors.

Risks Relating to Our Incorporation and Location in Israel

Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel.

Our headquarters and principal research and development facilities are located in Rehovot, Israel. In addition, the majority of our key employees, officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. Although Israel is a party to peace agreements with Egypt and Jordan and agreements with the Palestinian Authority, it is unclear whether any negotiations that may occur between Israel and the Palestinian Authority will result in any additional agreements. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations.

During the Second Lebanon War of 2006, between Israel and Hezbollah, a militant Islamic movement, rockets were fired from Lebanon into Israel causing casualties and major disruption of economic activities in northern Israel. An escalation in tension and violence between Israel and the militant Hamas movement (which controls the Gaza Strip) and other Palestinian Arab groups, has led to Israeli military campaigns in Gaza in December 2008, in November 2012 and from July through August 2014, in an endeavor to prevent continued rocket attacks in Israel's southern and central regions. In addition, Israel faces threats from more distant neighbors, in particular, Iran, an ally of Hezbollah and Hamas, which has threatened to attack Israel and is believed to be developing nuclear weapons. Iran is also believed to have a strong influence among parties hostile to Israel, such as the Syrian government, Hamas in Gaza and Hezbollah in Lebanon.

Recent political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel's neighbors Egypt and Syria are affecting the political stability of those countries. This instability may lead to deterioration in the political and trade relationships that exist between the State

44


Table of Contents

of Israel and these countries and have raised concerns regarding security in the region and the potential for armed conflict. Furthermore, several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in the region continue or intensify. Such restrictions may seriously limit our ability to sell our products to customers in those countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or significant downturns in the economic or financial condition of Israel, could materially and adversely affect our operations and product development, detrimentally affect our potential to generate revenues and adversely affect the share price of publicly traded companies having operations in Israel, such as us. Similarly, Israeli corporations are limited in conducting business with entities from several countries. For example, in 2008, the Israeli legislator enacted a law forbidding any investments in entities that transact business with Iran.

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. Although Israeli legislation requires the Israeli government to cover the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts, terrorist activities or political instability in the region would likely negatively affect business conditions generally and could harm our results of operations.

We received Israeli government grants for certain research and development activities. The terms of those grants require us to satisfy specified conditions and 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 Office of the Chief Scientist, or OCS. As of December 31, 2012 and 2013 and June 30, 2014, we have received in the aggregate $1.4 million, $1.5 million and $1.9 million, respectively, from OCS for our research and development programs. As of June 30, 2014, we had not paid any royalties to OCS. We expect to receive additional grants from OCS through March 2015, and we intend to apply for further grants for our clinical trials related to ND0612H. However, as the funds available for OCS grants 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 we will be entitled to any future grants, or the amounts of any such grants.

Even following full repayment of any OCS grants, we must nevertheless continue to comply with the requirements of the Israeli Law for the Encouragement of Industrial Research and Development, 5744-1984, and related regulations, or collectively, the R&D Law. When a company develops know-how, technology or products using OCS grants, the terms of these grants and the R&D Law restrict the transfer outside of Israel of such know-how, and the manufacturing or manufacturing rights of such products, technologies or know-how, without the prior approval of OCS. Therefore, if aspects of our technologies are deemed to have been developed with OCS funding, the discretionary approval of an OCS committee would be required for any transfer to third parties outside of Israel of OCS-supported technology, know-how or manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, OCS may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel.

The transfer of OCS-supported technology or know-how or manufacturing or manufacturing rights related to aspects of such technologies outside of Israel may involve the payment of significant penalties and other amounts, depending upon the value of the transferred technology, know-how, manufacturing or manufacturing rights, the amount of OCS support, the time of completion of OCS-supported research projects and other factors. These restrictions and requirements for payment may impair our ability to sell our technology assets 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 developed

45


Table of Contents

with OCS funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to OCS.

We may not be eligible for tax benefits that may be available to us under Israeli law and such benefits may be terminated or reduced in the future.

We may be eligible for certain tax benefits provided to "Preferred Enterprises" under the Israeli Law for the Encouragement of Capital Investments, 1959, referred to as the Investment Law. In order to be eligible for the tax benefits for "Preferred Enterprises," we must meet certain conditions stipulated in the Investment Law and its regulations, as amended. If we do not satisfy these conditions, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies was increased to 26.5% for 2014 and thereafter. Even if we were to become eligible for these tax benefits, they may be reduced, cancelled or discontinued. See "Taxation and Government Programs — Israeli Tax Considerations and Government Programs — Law for the Encouragement of Capital Investments, 5719-1959."

We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

We enter into assignment-of-invention agreements with our employees pursuant to which such individuals agree to assign to us all rights to any inventions created in the scope of their employment or engagement with us. A significant portion of our intellectual property has been developed by our employees during the course of their employment by us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the scope of his or her employment with a company are regarded as "service inventions," which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her inventions. Recent decisions by the Committee have created uncertainty in this area, as it held that employees may be entitled to remuneration for their service inventions despite having specifically waived any such rights. Further, the Committee has not yet determined the method for calculating this Committee-enforced remuneration or the criteria or circumstances under which an employee's assignment of all rights and/or waiver of his or her right to remuneration will be disregarded. Although our employees have agreed to assign to us service invention rights, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.

Provisions of Israeli law and/or our amended articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, even when the terms of such a transaction are favorable to us and our shareholders.

Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares and voting rights above specified thresholds, requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a tender offer for all of a company's issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders 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 a personal interest in the tender offer, unless at least 98% of the company's outstanding shares are tendered. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer (unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek appraisal rights), may, at any time within six months following the completion of the tender offer, petition an Israeli court to alter the consideration for the acquisition. See "Description of Share Capital — Acquisitions under Israeli Law" for additional information.

46


Table of Contents

Our amended articles of association provide that our directors (other than external directors) are elected on a staggered basis, such that a potential acquiror cannot readily replace our entire board of directors at a single annual general shareholder meeting. This could prevent a potential acquiror from receiving board approval for an acquisition proposal that our board of directors opposes.

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not 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 the same 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 the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.

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 prospectus in Israel or the 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. The majority of our directors and executive officers, and the Israeli experts listed in this prospectus 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 of these 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 and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in 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 laws reasoning 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 may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as 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 is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court. See "Enforceability of Civil Liabilities" for additional information on your ability to enforce a civil claim against us and our executive officers or directors named in this prospectus.

Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.

The rights and responsibilities of the holders of our ordinary shares are governed by our amended articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in U.S.-based corporations. In particular, a shareholder 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 the company and other shareholders, and to refrain from abusing its power in the company, including, among other things, in voting at a general meeting of shareholders on matters such as amendments to a company's articles of association, increases in a company's authorized share capital, mergers and related party transactions requiring shareholder approval. In addition, a shareholder who is aware that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

47


Table of Contents


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this prospectus that are subject to 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 of the ongoing and planned clinical trials conducted by our CROs, including statements regarding the progress and results of current and future preclinical studies and clinical trials, and our research and development programs;

      our plans regarding utilization of regulatory pathways that would allow for accelerated marketing approval in the United States and Europe;

      our expectations regarding receipt of regulatory approval for any of our product candidates;

      the clinical utility, potential advantages and timing or likelihood of regulatory filings and approvals of our product candidates;

      our ongoing and planned discovery and development of product candidates;

      our expectations regarding future growth, including our ability to develop new products;

      our ability to maintain adequate protection of our intellectual property;

      our estimates regarding the market opportunity for our product candidates;

      our expectations regarding future changes in our cost of revenues and our operating expenses on an absolute basis and as a percentage of our revenues;

      our planned level of capital expenditures and our belief that our existing cash and the net proceeds from this offering will be sufficient to fund our operations for at least the next 12 months;

      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;

      the impact of government laws and regulations; and

      our expectations regarding the use of proceeds from this offering.

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 our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks provided under "Risk Factors" in this prospectus.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus, to conform these statements to actual results or to changes in our expectations.

48


Table of Contents


FUNCTIONAL CURRENCY AND EXCHANGE RATE INFORMATION

Our functional currency is the NIS; however, our presentation currency is the U.S. dollar. As a result, our financial statements are translated into the presentation currency as follows: equity accounts are translated using historical exchange rates (as reported by the Bank of Israel). All other statements of financial position accounts are translated using the year-end exchange rate (as reported by the Bank of Israel). Statement of comprehensive loss amounts are translated using the exchange rates prevailing at the dates of the transactions. The resulting translation differences relating to the conversion from functional currency to presentation currency are reported in other comprehensive loss.

Foreign currency transactions in currencies different from the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recorded to the statement of comprehensive loss among finance income or expenses

The following table sets forth, for each period indicated, the low and high exchange rates for NIS expressed in U.S. dollars, the exchange rate at the end of such period and the average of such exchange rates on the last day of each month during such period, based upon the representative rate of exchange as published by the Bank of Israel. The exchange rates set forth below demonstrate trends in exchange rates, but the actual exchange rates used throughout this prospectus may vary.


 
  YEAR ENDED DECEMBER 31,  
 
  2012   2013  

High

    0.270     0.288  

Low

    0.245     0.264  

Period end

    0.268     0.288  

Average rate

    0.259     0.277  

The following table sets forth, for each of the last six months, the low and high exchange rates for NIS expressed in U.S. dollars, the exchange rate at the end of the month and the average of such exchange rates, based on the daily representative rate of exchange as published by the Bank of Israel.


 
  LAST SIX MONTHS  
 
  MAY   JUNE   JULY   AUGUST   SEPTEMBER   OCTOBER  
 
  2014  

High

    0.290     0.291     0.294     0.293     0.279     0.274  

Low

    0.287     0.288     0.291     0.279     0.271     0.264  

End of month

    0.288     0.291     0.292     0.280     0.271     0.264  

Average rate

    0.289     0.290     0.292     0.286     0.276     0.268  

As of December 31, 2013, the representative exchange rate last published by the Bank of Israel was $1.00 = NIS 3.471. As of June 30, 2014, the representative exchange rate last published by the Bank of Israel was $1.00 = NIS 3.438.

49


Table of Contents


USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately $58.3 million, or approximately $67.4 million if the underwriters exercise in full their option to purchase additional ordinary shares, based upon an assumed initial public offering price of $14.50 per ordinary share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus.

A $1.00 increase (decrease) in the assumed initial public offering price of $14.50 per ordinary share would increase (decrease) the net proceeds to us from this offering by approximately $4.2 million, assuming the number of shares offered by us as set forth on the cover page of this prospectus remains the same and after deducting the underwriting discounts and commissions. Similarly, each increase (decrease) of 100,000 shares in the number of ordinary shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $1.3 million, assuming that the assumed initial public offering price remains the same, and after deducting the underwriting discounts and commissions.

We currently estimate that we will use the net proceeds as follows:

      approximately $20 million with respect to our ND0612H product candidate through completion of phase III clinical trials in 2017 and receipt of marketing approval which, depending on the results of our clinical trials and the regulatory approval process, we expect to receive in Europe by the first half of 2018 and in the United States by the second half of 2018;

      approximately $20 million with respect to our ND0612L product candidate through the commencement of our two pivotal phase III clinical trials in 2015 in the United States and Europe to support an NDA submission to the FDA (but not to fund the completion of such clinical trials or receipt of marketing approval); and

      approximately $5 million to advance the development of our other product candidates and general research activities.

To the extent the net proceeds raised in this offering exceed the uses set forth above, we would use the excess (i) to fund the completion of our two pivotal phase III clinical trials for our ND0612L product candidate and receipt of marketing approval in the United States and Europe for ND0612L which, depending on the results of our clinical trials and the regulatory approval process, we expect to receive in the United States and Europe by the second half of 2018, and (ii) for working capital and general corporate purposes.

The above estimates and dates may change based on the results of our clinical trials and the regulatory approval process. See "Risk Factors—Risks Related to Our Business and Our Industry—If we experience delays in our clinical trials, our costs may increase and our business may be harmed."

This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development, the status of and results from clinical trials, as well as any collaborations that we may enter into with third parties for our product candidates, and any unforeseen cash needs. As a result, our management retains broad discretion over the allocation of the net proceeds from this offering. Our management will have significant flexibility in applying the net proceeds. Pending the uses described above, we intend to invest the net proceeds in interest-bearing investment-grade securities or deposits.

50


Table of Contents


DIVIDEND POLICY

We have never declared or paid any cash dividends on our ordinary shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. See "Risk Factors — Risks Related to Our Ordinary Shares and the Offering — We have never paid cash dividends on our share capital, and we do not anticipate paying any cash dividends in the foreseeable future" and "Description of Share Capital — Dividend and Liquidation Rights" for an explanation concerning the payment of dividends under Israeli Law.

51


Table of Contents


CAPITALIZATION

The following table sets forth our cash and cash equivalents and total capitalization as of June 30, 2014, as follows:

      on an actual basis;

      on a subsequent event pro forma basis for the issuance of $5.6 million principal amount of convertible notes, reflecting its fair value, pursuant to an agreement entered into in August 2014;

      on a pro forma basis to give effect immediately prior to the closing of this offering to (a) the conversion of $11.0 million in convertible notes into 1,697,120 ordinary shares (which includes the conversion of the 2013 and 2014 convertible loans); (b) the receipt of $3.6 million pursuant to the all cash exercise of warrants held by certain of our shareholders, the related issuance of 714,880 ordinary shares as a result thereof and the payment by us of approximately $2.5 million on account of tax payments in connection with the exercise of our outstanding warrants; (c) the conversion of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares into ordinary shares; (d) the payment by us of $1.0 million in cash due to certain investors upon the conversion of the convertible notes issued by us in August 2014; and (e) the recognition of the unrecognized Day 1 Loss related to the conversion of the 2013 Notes, outstanding warrants and 2014 Notes upon conversion, which we estimate on a preliminary basis will amount to between $23.7 million and $25.7 million and, accordingly, is reflected in the pro forma column at $24.7 million. Information regarding the actual unrecognized Day 1 loss will be reported in our results for the year ended December 31, 2014 based on the completion of this offering in 2014. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Components of Statement of Operations—Financial income/Financial expenses;" and

      on a pro forma as adjusted basis to give further effect to (a) the issuance and sale of ordinary shares by us in this offering at an assumed initial public offering price of $14.50 per ordinary share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, (b) share-based compensation expenses of $2.7 million for the period between the date of grant in March 2014 through June 30, 2014 that was not recorded in the financial statements for the six months ended June 30, 2014 as the options only begin to vest from the date of grant upon completion of the offering, and (c) the payment of a bonus of approximately $0.4 million in the aggregate to certain of our employees (which may include our executive officers) for their contribution to completing this offering.

You should read this information in conjunction with our financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other financial information contained in this prospectus.

52


Table of Contents


 
  AS OF JUNE 30, 2014  
 
  ACTUAL   SUBSEQUENT
EVENT
PRO FORMA
BASIS
  PRO FORMA   PRO FORMA
AS ADJUSTED(1)
 
 
  (in thousands, except share and
per share amounts)

   
 

Cash and cash equivalents

  $ 1,632   $ 7,273   $ 7,376   $ 66,259  
                   
                   

Non-current liabilities:

                         

Convertible loans

    5,762     11,403          

Warrants

    2,023     2,023          

Shareholders' equity (deficit):

                         

Ordinary Shares, par value NIS 0.01 per share; 131,158,240 shares authorized, actual; 160,000,000 shares authorized pro forma and pro forma as adjusted; 392,320 shares issued and outstanding, actual; 11,904,960 shares issued and outstanding, pro forma; 16,404,960 shares issued and outstanding, pro forma as adjusted

    *     *     34     47  

A-1 Ordinary Shares, par value NIS 0.01 per share; 361,760 shares authorized, actual; zero shares authorized pro forma and pro forma as adjusted; 361,760 shares issued and outstanding, actual; zero shares issued and outstanding, pro forma and pro forma as adjusted

    *     *          

A-2 Ordinary Shares, par value NIS 0.01 per share; 104,400 shares authorized, actual; zero shares authorized pro forma and pro forma as adjusted; 104,400 shares issued and outstanding, actual; zero shares issued and outstanding, pro forma and pro forma as adjusted

    *     *          

A Preferred Shares, par value NIS 0.10 per share; 4,695 shares authorized, actual; zero shares authorized pro forma and pro forma as adjusted; 3,130 shares issued and outstanding, actual; zero shares issued and outstanding, pro forma and pro forma as adjusted

    *     *          

A-1 Preferred Shares, par value NIS 0.10 per share; 350,000 shares authorized, actual; zero shares authorized pro forma and pro forma as adjusted; 104,801 shares issued and outstanding, actual; zero shares issued and outstanding, pro forma and pro forma as adjusted

    3     3          

Additional paid-in capital

   
100,060
   
100,060
   
138,258
   
197,128
 

Share-based compensation capital reserve

    809     809     809     3,509  

Accumulated deficit

    (108,406 )   (108,406 )   (133,106 )   (135,806 )

Foreign currency translation difference

    (1,783 )   (1,783 )   (1,783 )   (1,783 )
                   

Total shareholders' equity (deficit)

    (9,317 )   (9,317 )   4,212     63,095  
                   

Total capitalization

  $ (1,532 ) $ 4,109   $ 4,212   $ 63,095  
                   
                   


*
Represents an amount less than $1,000.

(1)
Reflects the payment of $1.0 million of expenses related to this offering through June 30, 2014.

53


Table of Contents

The foregoing table excludes:

      1,748,240 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of $1.71 per share; and

      2,800 ordinary shares issuable upon the exercise of warrants at an exercise price of $6.28 per share.

A $1.00 increase (decrease) in the assumed initial public offering price of $14.50 per ordinary share, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total shareholders' equity (deficit) and total capitalization by approximately $4.2 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

An increase (decrease) of 100,000 in the number of ordinary shares we are offering would increase (decrease) the as adjusted amount of cash and cash equivalents, additional paid-in capital, working capital, total shareholders' equity (deficit) and total capitalization by approximately $1.3 million, assuming the assumed initial public offering price per ordinary share, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

54


Table of Contents


DILUTION

If you invest in our ordinary shares in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per ordinary share after this offering. Our pro forma net tangible book value as of June 30, 2014 was $0.35 per ordinary share.

Pro forma net tangible book value per ordinary share was calculated by:

      subtracting the deferred issuance cost balance and our liabilities, except the deferred revenues balance, from our tangible assets; and

      dividing the difference by the number of ordinary shares outstanding.

Pro forma net tangible book value per ordinary share furthermore reflects immediately prior to the closing of this offering: (i) the conversion of $11.0 million in convertible loans (which includes the conversion of the 2013 and 2014 convertible loans) into 1,697,120 ordinary shares; (ii) the receipt of $3.6 million pursuant to the all cash exercise of warrants held by certain of our shareholders, the related issuance of 714,880 ordinary shares as a result thereof and the payment by us of approximately $2.5 million on account of tax payments in connection with the exercise of our outstanding warrants; (iii) the conversion of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares, into an aggregate of 11,512,640 ordinary shares, as if such conversions and exercises had occurred on June 30, 2014; (iv) the payment by us of $1.0 million in cash due to certain investors upon the conversion of the convertible notes issued by us in August 2014; and (v) the recognition of the unrecognized Day 1 Loss related to the conversion of the 2013 Notes, outstanding warrants and 2014 Notes upon conversion, which we estimate on a preliminary basis will amount to between $23.7 million and $25.7 million and, accordingly, is reflected in the pro forma column at $24.7 million. Information regarding the actual unrecognized Day 1 loss will be reported in our results for the year ended December 31, 2014 based on the completion of this offering in 2014.

Giving effect to the sale of ordinary shares that we are offering at an assumed initial public offering price of $14.50 per ordinary share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value on an adjusted basis as of June 30, 2014 would have been $3.85 per ordinary share. This amount represents an immediate increase in pro forma net tangible book value of $3.50 per ordinary share to our existing shareholders and an immediate dilution in pro forma net tangible book value of $10.65 per ordinary share to new investors purchasing ordinary shares in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for an ordinary share.

The following table illustrates this dilution:


Assumed initial public offering price per ordinary share

        $ 14.50  

Pro forma net tangible book value per share as of June 30, 2014

  $ 0.35        

Increase per share attributable to this offering

    3.50        
             

Pro forma as adjusted net tangible book value per share after this offering

          3.85  
             

Dilution per share to new investors in this offering

        $ 10.65  

Each $1.00 increase or decrease in the assumed public offering price of $14.50 per ordinary share, the mid-point of the price range set forth on the cover page of this prospectus, would increase or decrease, respectively, our pro forma as adjusted net tangible book value by $3.6 million, or $0.21 per share, and the pro forma dilution per share to new investors in this offering by $0.79 per share, assuming that the number

55


Table of Contents

of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions, and estimated offering expenses payable by us.

We may also increase or decrease the number of shares we are offering. Assuming the assumed initial public offering price per share remains the same, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, an increase of 100,000 in the number of shares we are offering would increase our pro forma as adjusted net tangible book value by approximately $0.7 million, or $0.02 per share, the increase in pro forma as adjusted net tangible book value per share to existing shareholders would be $3.51 per share and the dilution to new investors purchasing shares in this offering would be $10.63 per share. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

If the underwriters exercise their option to purchase additional ordinary shares in full in this offering, the pro forma as adjusted net tangible book value after the offering would be $4.19 per share, the increase in net tangible book value per share to existing shareholders would be $3.84 and the dilution in net tangible book value per share to new investors would be $10.31 per share, in each case assuming an initial public offering price of $14.50 per ordinary share.

The following table summarizes, as of June 30, 2014 the differences between the number of shares purchased from us, the total consideration paid to us in cash and the average price per share that existing shareholders paid during the past five years, on the one hand, and the average price per share that new investors are paying in this offering, on the other hand. The calculation below is based on an assumed initial public offering price of $14.50 per ordinary share before deducting underwriting discounts and commissions and estimated offering expenses payable by us.


 
   
   
  TOTAL
CONSIDERATION
   
 
 
  SHARES PURCHASED    
 
 
  AVERAGE
PRICE PER
SHARE
 
 
  NUMBER   PERCENT   AMOUNT   PERCENT  

Existing shareholders

    11,904,960     72.6 % $ 22,461,056     25.6 % $ 1.89  

New investors

    4,500,000     27.4     65,250,000     74.4     14.50  
                         

Total

    16,404,960     100.0 %   87,711,056     100.0 %      

The foregoing tables and calculations exclude outstanding options to purchase 1,748,240 shares at a weighted average exercise price of $1.71 per share as of June 30, 2014.

To the extent any of these outstanding options is exercised, there will be further dilution to new investors. To the extent all of such outstanding options had been exercised as of June 30, 2014, the as adjusted net tangible book value per share after this offering would be $3.48, and total dilution per share to new investors would be $11.02.

Certain of our existing shareholders, including affiliates of certain of our directors, have indicated an interest in purchasing (or having their affiliates purchase) approximately $14.0 million of our ordinary shares in this offering. Because indications of interest are not binding agreements or commitments to purchase, these persons may decide to buy, or the underwriters may decide to sell to them, a greater or lesser amount of shares or no shares at all. The foregoing discussion and tables do not reflect any potential purchases by these persons.

If the underwriters exercise their option to purchase additional shares in full:

      the percentage of ordinary shares held by existing shareholders will decrease to approximately 69.7% of the total number of our ordinary shares outstanding after this offering; and

      the number of shares held by new investors will increase to 5,175,000, or approximately 30.3% of the total number of our ordinary shares outstanding after this offering.

56


Table of Contents


SELECTED FINANCIAL AND OTHER DATA

The following tables set forth our selected financial data. You should read the following selected financial data in conjunction with, and it is qualified in its entirety by reference to our historical financial information and other information provided in this prospectus, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes appearing elsewhere in this prospectus.

The selected statements of operations data for the years ended December 31, 2012 and 2013, and the balance sheet data as of December 31, 2012 and 2013 are derived from our audited financial statements appearing elsewhere in this prospectus. The historical results set forth below are not necessarily indicative of the results to be expected in future periods. The statement of operations data for the six months ended June 30, 2013 and 2014 and the balance sheet data as of June 30, 2013 and 2014 are derived from our unaudited condensed interim financial statements presented elsewhere in this prospectus. In the opinion of management, these unaudited condensed interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our financial position and operating results for these periods. Results for interim periods are not necessarily indicative of results that may be expected for the entire year. Our financial statements have been prepared in accordance with IFRS, as issued by the IASB.

Our functional currency is the NIS; however, our presentation currency is the U.S. dollar. As a result, our financial statements are translated into the presentation currency as follows: equity accounts are translated using historical exchange rates (as reported by the Bank of Israel). All other statements of financial position accounts are translated using the year-end exchange rate (as reported by the Bank of Israel). Statement of comprehensive loss amounts are translated using the exchange rates prevailing at the dates of the transactions. The resulting translation differences relating to the conversion from functional currency to presentation currency are reported in other comprehensive loss.

Foreign currency transactions in currencies different from the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recorded to the statement of comprehensive loss among finance income or expenses.

57


Table of Contents


 
  YEAR ENDED
DECEMBER 31,
  SIX MONTHS
ENDED JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands, except share and
per share data)

 

Statements of operations data:

                         

Operating expenses:

                         

Research and development

  $ 2,396   $ 3,426   $ 1,644   $ 3,675  

Participation in research and development

    (41 )   (808 )   (175 )   (339 )
                   

Research and development, net(1)

  $ 2,355   $ 2,618   $ 1,469   $ 3,336  

General and administrative(1)

    449     628     325     1,703  
                   

Operating loss

  $ 2,804   $ 3,246   $ 1,794   $ 5,039  

Financial income

    550     3     (3 )   *  

Financial expenses

    2,316     83,650     16,340     602  
                   

Financial expenses, net

    1,766     83,647     16,337     602  
                   

Net loss

  $ 4,570   $ 86,893   $ 18,131   $ 5,641  
                   
                   

Foreign currency translation differences

    280     2,021     2,156     64  
                   

Total comprehensive loss

  $ 4,850   $ 88,914   $ 20,287   $ 5,705  
                   
                   

Basic and diluted net loss per ordinary share(2)

  $ 12   $ 221   $ 46   $ 14  
                   
                   

Weighted average number of ordinary shares used in computing net loss per ordinary share(2)

    392,320     392,320     392,320     392,320  
                   
                   

Basic and diluted pro forma net loss per ordinary share(3)

        $ 9         $ *  
                       
                       

Weighted average number of shares used in computing pro forma basic and diluted net loss per ordinary share(3)

          9,492,960           9,492,960  
                       
                       

 


*
Represents an amount less than $1,000.

 
  AS OF DECEMBER 31,   AS OF JUNE 30,  
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands)
 

Balance sheet data:

                         

Cash and cash equivalents

  $ 1,847   $ 2,435   $ 677   $ 1,632  

Working capital(4)

    (1,479 )   1,246     (3,941 )   (1,745 )

Total assets

    2,787     3,050     1,045     2,054  

Total non-current liabilities

    9,649     4,970     (27,335 )   7,785  

Total shareholders' deficit

    (11,028 )   (3,646 )   (31,183 )   (9,317 )

(1)
Includes equity-based compensation expenses as follows:

58


Table of Contents

 
  YEAR ENDED
DECEMBER 31,
  SIX MONTHS
ENDED
JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands)
 

Research and development, net

  $ 11   $ 102   $ 69   $ 23  

General and administrative

    26     82     63     11  
                   

Total equity-based compensation

  $ 37   $ 184   $ 132   $ 34  
                   
                   
(2)
Basic and diluted loss per ordinary share is computed based on the basic and diluted weighted average number of ordinary shares outstanding during each period. For additional information, see Note 16 to our annual financial statements included elsewhere in this prospectus.

(3)
Pro forma net loss per share and pro forma weighted average shares outstanding assume the conversion of all series A-1 ordinary shares, series A-2 ordinary shares, series A preferred shares and series A-1 preferred shares into 9,100,640 ordinary shares, which will occur immediately prior to the closing of this offering, but do not include the issuance of shares in connection with this offering, the conversion of the convertible notes or the exercise of the outstanding warrants. For additional information on the conversion of the preferred shares, see Note 9 to our financial statements included elsewhere in this prospectus.

(4)
Working capital is defined as total current assets minus total current liabilities.

59


Table of Contents


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those set forth in the section entitled "Risk Factors" and elsewhere in this prospectus. You should read the following discussion in conjunction with "Special Note Regarding Forward-Looking Statements" and "Risk Factors."

Overview

We are a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives. Product candidates in our pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally. Additionally, because our product candidates are based on reformulations of leading, approved drugs, we believe that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval.

For moderate to severe Parkinson's disease, our product candidates are aimed at overcoming the most significant limitations of current LD/CD therapy. For over 30 years, oral administration of LD/CD has been the standard of care for Parkinson's disease. However, despite its wide acceptance, oral LD/CD has significant limitations, primarily short half-life as well as low absorption and availability in the body. As a result, plasma levodopa concentrations fluctuate sharply, contributing to patients' motor complications. At the advanced stages of the disease, patients do not respond to oral administration of LD/CD, motor complications are exacerbated and patients are left with limited treatment options that are highly invasive and/or burdensome. We have developed liquid formulations that for the first time enable 24-hour, continuous subcutaneous administration of LD/CD to overcome these limitations, maintain steady levodopa levels and offer patients a better quality of life.

We were founded in 2003 and have achieved a number of significant milestones since then:

      In 2007, we completed our first round of financing, raising $2.5 million.

      In 2009, we developed the technology underlying the drug reformulations that underpin our current Parkinson's Disease product candidates.

      In 2010, we were awarded a $1.0 million grant from the MJFF for our Phase I trial of ND0612L.

      In 2012, we held pre-IND discussions with the Division of Neurology Products of the United States Food and Drug Administration, which resulted in a defined clinical pathway to accelerated marketing approval in the United States for ND0612L.

      In 2013, we were awarded a $1.0 million grant from MJFF for our Phase II trial of ND0612L.

To date, we have financed our operations primarily with convertible loans, the issuance and sale of equity instruments and grants from MJFF and from OCS.

Since our inception, we have incurred significant operating losses. Our net losses were $4.6 million and $86.9 million for the years ended December 31, 2012 and 2013, respectively. For the six months ended June 30, 2013 and 2014, our net losses were $18.1 million and $5.6 million, respectively. As of June 30, 2014, we had an accumulated deficit of $108.4 million. We have not generated any revenue to date.

We expect to continue to incur significant expenses and net losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we:

      initiate Phase IIa, Phase II and Phase III studies of ND0612H;

60


Table of Contents

      initiate Phase IIa, Pivotal 1 Phase III and Pivotal 2 Phase III clinical trials of ND0612L to support an NDA submission to the FDA;

      conduct a bioequivalence study of ND0680 in Europe;

      establish a sales, marketing and distribution infrastructure to commercialize any of our product candidates for which we may obtain marketing approval;

      continue our research and preclinical and clinical development of ND0701 and ND0801;

      fund the development and establishment of the large-scale, third-party production of the future delivery devices associated with our product candidates;

      maintain, expand and protect our intellectual property portfolio;

      hire additional operational, clinical, quality control and scientific personnel;

      prepare for regulatory approval process;

      add operational, financial and management information systems and personnel, including personnel to support our product development, any commercialization efforts and our transition to a public company;

      acquire or in-license products and technologies; and

      identify additional product candidates.

Components of Statement of Operations

Revenue

Our ability to generate revenue will depend on receiving marketing authorization for, followed by successful commercialization of, our pipeline of product candidates.

Operating expenses

Research and development expenses

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher 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 for the foreseeable future as our product candidates progress in clinical trials. See "Business — Parkinson's Disease Product Candidates" and "Business — Cognition and our ND0801 Product Candidate." We do not believe that it is possible at this time to accurately project total program-specific expenses to reach commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will affect our clinical development programs and plans. As a result, our product development faces numerous uncertainties, including:

      the scope, rate of progress and expense of our research and development activities;

      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 any product candidate that we may develop in the future.

A change in the outcome of any of these variables could result in a significant change in the costs and timing associated with the development of our product candidates. See "Risk Factors — Risks Related to Our Business and Our Industry — If we experience delays in our clinical trials, our costs may increase and our business may be harmed."

During the years ended December 31, 2012 and December 31, 2013, we have incurred a total of $5.8 million in expenses for research and development, of which $0.8 million was funded by grants from MJFF

61


Table of Contents

and OCS. During the six months ended June 30, 2014, we incurred a total of $3.7 million in expenses for research and development. Our research and development expenses relate primarily to the development of our Parkinson's disease product candidates and are charged to operating expenses as they are incurred. We expect research and development expenses to increase in absolute terms in the near term.

Research and development expenses consist of costs incurred for our research activities, which primarily include the following:

      employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses;

      expenses incurred under agreements with third parties, including contract research organizations, contract manufacturing organizations and consultants that conduct regulatory activities, clinical trials and preclinical studies;

      expenses incurred to acquire, develop and manufacture clinical trial materials, including the active drug ingredient, the medical devices and the manufacturing of our product candidates;

      costs associated with preclinical activities and regulatory operations;

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

      costs associated with obtaining and maintaining patents and other intellectual property; and

      depreciation of tangible and intangible fixed assets used to develop our product candidates.

Participations by third parties

Our research and development expenses are presented net of the following grants by third parties.

Michael J. Fox Foundation.    In 2013, we received approval for an 18-month, $1.0 million grant from MJFF, subject to achievement of milestones, for our Phase II clinical trial of ND0612L. Upon commercialization of ND0612L or a derivative product, we are obligated to pay MJFF royalties of 10% of the revenue received from the option, license, sale, transfer or use of ND0612L, its derivative product candidates or any new invention arising from the project or any product incorporating ND0612L and its derivatives after approval for marketing. We are obligated to pay a maximum of $2.0 million in such royalty payments to MJFF, after which no future royalty payment obligation will exist. As of December 31, 2013, we received two installments of the grant totaling approximately $0.4 million. In January and August 2014, we received the third and fourth installments, respectively, of the grant totaling approximately $0.7 million. For additional information related to our MJFF grant, see "Business—Research and Development."

Office of the Chief Scientist.    We receive grants as part of our research and development programs approved by OCS. The requirements and restrictions for these grants are described in the R&D Law. Under the R&D Law, royalties of 3% to 4.5% on the revenues derived from sales of products or services developed in whole or in part using these OCS grants are payable by us to the Israeli government. The maximum aggregate royalties paid generally cannot exceed 100% of the grants made to us, plus annual interest, generally equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. As of December 31, 2012 and 2013 and June 30, 2014, we had received in the aggregate $1.4 million, $1.5 million and $1.9 million, respectively, from OCS for our research and development programs. Under applicable accounting rules, the grants from the OCS have been accounted for as an offset against the related research and development expenses in our financial statements. As a result, our research and development expenses are shown on our financial statements net of the OCS grants. Upon our generation of revenue, we intend to account for the royalties owed to the OCS as a liability.

In addition to paying any royalties due, we must abide by other restrictions associated with receiving such grants under the R&D Law, which will continue to apply to us following full repayment to OCS. These restrictions may impair our ability to outsource manufacturing, engage in change of control transactions or otherwise transfer our know-how outside of Israel and require us to obtain the approval of OCS for certain actions and transactions and pay additional royalties and other amounts to OCS. In addition, any change of control and any change of ownership of our ordinary shares that would cause a non-Israeli citizen or

62


Table of Contents

resident to become an "interested party," as defined in the R&D Law, requires prior written notice to OCS. These restrictions apply to all of our products and not just to ND0612L. If we fail to comply with the R&D Law, we may be subject to criminal charges.

In January 2014, OCS approved a new grant for our research and development programs in the amount of approximately $0.4 million, of which we have received approximately $0.3 million through June 30, 2014. In August 2014, the OCS approved an additional grant for our research and development programs in the amount of approximately $0.4 million.

General and administrative expenses

Our general and administrative expenses consist principally of:

      employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses;

      legal and professional fees for auditors and other consulting expenses not related to research and development activities;

      communication and office expenses;

      other expenses, including travel overseas, not related to research and development activities;

      information technology expenses; and

      depreciation of tangible fixed assets related to our general and administrative activities.

We expect that our general and administrative expenses will increase in the future as our business expands and we incur additional costs associated with being a public company in the United States, including compliance under the Sarbanes-Oxley Act of 2002 and rules promulgated by the SEC. These public company-related costs will likely include costs associated with hiring additional personnel, increased legal, accounting and audit fees, directors' liability insurance premiums and costs related to investor relations. In addition, upon the completion of this offering, we have agreed to pay a bonus of approximately $0.4 million in the aggregate to certain of our employees (which may include our executive officers) for their contribution to completing this offering.

Financial income/Financial expenses

Financial income includes interest income on cash equivalents and the fair value of income on warrants. Financial expenses consist primarily of bank account fees, differences resulting for foreign exchanges, fair value of expenses on embedded derivatives, fair value of expenses on warrants (including accruals on account of taxes to which the warrantholders may be subject and that we have agreed to bear) and interest and exchange differences on convertible loans and expenses from induced conversion. Our financial expenses have been significantly impacted by the fair value expense of embedded derivatives and expenses from induced conversion.

The fair value expense of embedded derivatives are the non-cash expenses related to the increase in the value of the shares underlying our convertible loans and warrants from the date of issuance. The conversion feature and the prepayment feature of our convertible loans are considered to be embedded derivatives because their economic characteristics and risks are not closely related to the economic characteristics and risks of the host contract (the loan without the conversion feature and the prepayment feature). The issuance of certain convertible loans and warrants is initially recognized at fair value adjusted to defer the difference between the fair value at initial recognition and the transaction price ("Day 1 profit or loss"). Therefore, an unrecognized Day 1 Loss occurred on first recognition of these financial instruments. Our accounting policy with respect to unrecognized Day 1 Loss is that such loss remains unrecognized until all market inputs become observable, unless there is a change in a factor (including time) that market participants would take into account when pricing the asset or liability.

The expenses from induced conversion relate to the issuance of additional shares to the holders of the notes prior to our 2013 convertible loan agreement, in connection with the conversion of such notes in 2013. The issuance of such shares was made for no additional consideration and, accordingly, is treated as an inducement for such conversion and were expensed at their fair value as of the date on which the relevant note agreements were amended.

63


Table of Contents

Taxes on income

The standard corporate tax rate in Israel was 25% for the 2012 and 2013 tax years and was increased to 26.5% for 2014 and thereafter.

To date, we have not generated taxable income due to our operating losses. We have Israeli carry forward tax losses totaling approximately $13.2 million as of December 31, 2013. 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.

Results of Operations

Comparison of Period to Period

The following table summarizes our results of operations for the periods presented:


 
  YEAR ENDED
DECEMBER 31,
  SIX MONTHS ENDED
JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands)
 

Operating expenses:

                         

Research and development

  $ 2,396   $ 3,426   $ 1,644   $ 3,675  

Participation in research and development

    (41 )   (808 )   (175 )   (339 )
                   

Research and development, net

  $ 2,355   $ 2,618   $ 1,469   $ 3,336  

General and administrative

    449     628     325     1,703  
                   

Operating loss

  $ 2,804   $ 3,246   $ 1,794   $ 5,039  

Financial income

    550     3     (3 )   *  

Financial expenses

    2,316     83,650     16,340     602  
                   

Financial expenses, net

    1,766     83,647     16,337     602  
                   

Net loss

  $ 4,570   $ 86,893   $ 18,131   $ 5,641  
                   
                   

Foreign currency translation differences

    280     2,021     2,156     64  
                   

Total comprehensive loss

  $ 4,850   $ 88,914   $ 20,287   $ 5,705  
                   
                   

*
Represents an amount less than $1,000.

Comparison of the Six Months Ended June 30, 2013 and 2014

Operating Expenses

Research and development expenses, net.    Research and development expenses, net, increased from $1.5 million for the six months ended June 30, 2013 to $3.3 million for the six months ended June 30, 2014, primarily due to an increase in professional services expenses and material subcontracting relating to the development of our product candidates. Professional services expenses increased and material subcontracting costs increased by $1.8 million for the six months ended June 30, 2014, primarily due to the commencement of our Phase IIa trial in Israel and the submission of our IND application.

General and administrative.    General and administrative expenses increased from $0.3 million for the six months ended June 30, 2013 to $1.7 million for the six months ended June 30, 2014. The increase in general and administrative expenses is primarily due to an increase of $1.4 million in legal and accounting expenses.

Financial income

Financial income was a de minimis amount in each of the six month periods ended June 30, 2013 and June 30, 2014.

64


Table of Contents

Financial expenses

Financial expenses decreased from $16.3 million for the six months ended June 30, 2013 to $0.6 million for the six months ended June 30, 2014. The decrease is primarily due to the conversion to equity in October 2013 of our 2009, 2011 and 2012 convertible loans, the fair values of which had increased in the six months ended June 30, 2013, but which no longer incurred financial expenses after the conversion. In October 2013, we entered into the 2013 convertible loan agreement, resulting in financial expenses of $0.7 million for the six months ended June 30, 2014, including financial expenses of $0.1 million relating to the increase in fair value of warrants. For further discussion regarding the convertible loans, see "Certain Relationships and Related Party Transactions — Financing Transactions."

Comparison of Years Ended December 31, 2012 and 2013

Operating expenses

Research and development expenses, net

Research and development expenses, net, increased from $2.4 million for the year ended December 31, 2012 to $2.6 million for the year ended December 31, 2013, primarily due to an increase in material and subcontracting costs, payroll and related expenses and professional services expenses relating to the development of our product candidates. Professional services expenses increased by $0.4 million and material and subcontracting costs increased by $0.3 million for the year ended December 31, 2013, each primarily due to the completion and initiation of preclinical trials and the preparations for our Phase II clinical trial for ND0612L. Payroll and related expenses increased by $0.3 million for the year ended December 31, 2013 mainly due to salary increases. The increase in research and development expenses, net, was partially offset by grants from MJFF and OCS, which increased by $0.8 million for the year ended December 31, 2013.

General and administrative expenses

General and administrative expenses increased from $0.4 million for the year ended December 31, 2012 to $0.6 million for the year ended December 31, 2013. The increase in general and administrative expenses was primarily due to an increase of $0.1 million in professional services fees.

Financial income

Financial income decreased from $0.5 million in the year ended December 31, 2012 to a de minimis amount in the year ended December 31, 2013. The decrease was due to an increase in the fair value of the warrants.

Financial expenses

Financial expenses increased from $2.3 million for the year ended December 31, 2012 to $83.6 million for the year ended December 31, 2013. The increase was primarily due to an increase of $46.2 million in the fair value of embedded derivatives, an increase of $33.4 million in the expenses from the induced conversion of notes, an increase of $1.2 million in the fair value expenses on warrants, and an increase of $0.5 million in the interest and exchange differences on convertible loans, all resulting mainly from the increase in share value valuation of our loans until the day they were converted into shares.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through the issuance of equity securities, proceeds from convertible loans, grants from MJFF and government grants from OCS. As of June 30, 2014 and December 31, 2013, we had $1.6 million and $2.4 million of cash and cash equivalents, respectively.

In August 2014, we entered into a convertible loan agreement with several investors, which we refer to as the 2014 Convertible Loan Agreement, pursuant to which, the investors agreed to purchase up to $17.8 million principal amount of convertible notes, or the 2014 Notes, from us. The 2014 Notes will be sold to the investors in three equal tranches. To date, we have issued $5.6 million in principal amount of notes (and received payment for) the first tranche, in a total amount of $5.6 million. We may determine not to issue or sell the second and/or third tranches, although even if we determine to issue and sell those additional tranches, Mr. Robert Taub, as representative of the holders of the 2014 Notes, may reject our request to do so. The 2014 Notes bear interest at an annual rate of 10%, and will be repaid on the earlier of two years after issuance or following an event of default. Upon the closing of this offering, the

65


Table of Contents

outstanding notes will automatically convert into ordinary shares. See "Certain Relationship and Related Party Transactions—Financing Transactions."

Our financial statements for the fiscal year ended December 31, 2013 and for the six months ended June 30, 2014, state that there is a substantial doubt that we will be able to continue as a going concern. This is due to the current cash balances and our current and future expenses run rate. However, we believe that based on our current business plan, our existing cash and cash equivalents and the net proceeds from this offering we will have sufficient funds to meet our currently anticipated cash requirements through at least the next 12 months. See "Use of Proceeds." We have based this estimate on assumptions that may prove to be wrong, and we may use our capital resources sooner than we currently expect.

In the six months ended, June 30, 2014, we had capital expenditures of $120,000, which consisted of investments in property, plant and equipment. In the years ended December 31, 2012 and 2013, we had capital expenditures of $3,000 and $7,000, respectively, which consisted of investments in property, plant and equipment. We expect to spend approximately $19.0 million through December 31, 2014 primarily related to research and development efforts. We may also invest in the development of next-generation medical devices for our product candidates or acquire complementary businesses or technologies. Our present and future funding requirements will depend on many factors, including, among other things:

      the progress, timing and completion of preclinical testing and clinical trials for our product candidates;
      the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these products;
      the number of potential new products we identify and decide to develop; and
      the costs involved in filing patent applications and maintaining and enforcing patents or defending against claims or infringements raised by third parties.

For more information as to the risks associated with our future funding needs, see "Risk Factors — We may need substantial additional capital in the future, which may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our product candidates or intellectual property. If additional capital is not available, we may have to delay, reduce or cease operations."

To the extent that existing cash, cash from operations and net proceeds from this offering are insufficient to fund our future activities, we may need to raise additional funding through debt and equity financing. Additional funds may not be available on favorable terms or at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our drug candidate.

Cash flows

The following table summarizes our statement of cash flows for the periods presented.


 
  YEAR ENDED DECEMBER 31,   SIX MONTHS ENDED
JUNE 30,
 
 
  2012   2013   2013   2014  
 
   
   
  (unaudited)
 
 
  (in thousands)
 

Net cash provided by (used in):

                         

Operating activities

  $ (2,275 ) $ (2,531 )   (1,860 )   (2,825 )

Investing activities

    (675 )   670     679     (165 )

Financing activities

    4,300     3,200         2,178  

66


Table of Contents

Net cash used in 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 of working capital. Adjustments for non-cash items include depreciation, exchange differences of cash and cash equivalents, interest on bank deposits, exchange differences of convertible loans, fair value losses arising from embedded derivatives, warrants and share based compensation.

Net cash used in operating activities was $1.9 million for the six months ended June 30, 2013 compared to $2.8 million for the six months ended June 30, 2014. The increase in operating activities was primarily due to a $2.3 million decrease in working capital, which was offset by a $15.8 million increase of non-cash items, which include depreciation, exchange differences of cash and cash equivalents, interest and exchange differences of convertible loans, fair value losses arising from embedded derivatives, warrants and share based compensation. Net cash used in operating activities was $2.3 million for the year ended December 31, 2012 compared to $2.5 million for the year ended December 31, 2013. The increase was attributable primarily to the increase in research and development expenses.

Net cash provided by (used in) investing activities

Net cash provided by investing activities was $0.7 million for the six months ended June 30, 2013 compared to $(0.2) million for the six months ended June 30, 2014. This decrease was primarily attributable to a $0.6 million decrease in restricted bank deposits, net. Net cash provided by investing activities was $(0.7) million for the year ended December 31, 2012 compared to $0.7 million for the year ended December 31, 2013. The increase was attributable to an increase in cash that was restricted in 2012 and was no longer restricted in 2013.

Net cash provided by financing activities

Our financing activities have consisted of proceeds from convertible shareholders loans. Net cash provided by financing activities was $2.2 million for the six months ended June 30, 2014. For the years ended December 31, 2012 and 2013, financing activities provided $4.3 million and $3.2 million in cash, respectively. We expect the completion of this offering to result in a material increase in our cash flows from financing activities.

The table below summarizes our sources of financing for the periods presented.


 
  NET CONVERTIBLE LOANS
AND WARRANTS
FROM SHAREHOLDERS
  PARTICIPATION BY
MJFF AND OCS
  TOTAL  
 
  (in thousands)
 

Six months ended June 30, 2014

  $ 2,178   $ 645   $ 2,823  

Year ended December 31, 2013

    3,200     536     3,736  

Six months ended June 30, 2013

             

Year ended December 31, 2012

    4,300     286     4,586  

We have no ongoing material financial commitments (such as lines of credit), other than leases, that we expect will affect our liquidity over the next five years.

67


Table of Contents

Contractual obligations

Our significant contractual obligations as of December 31, 2013 are summarized in the following table:


 
  PAYMENTS DUE BY PERIOD  
 
  LESS THAN 1
YEAR
  BETWEEN 1
AND 2 YEARS
  BETWEEN 2
AND 5 YEARS
  MORE THAN 5
YEARS
  TOTAL  
 
  (in thousands)
 

Convertible loan(1)

  $  —   $  —   $ 3,796   $   $ 3,796  

Medical sites

    900                 900  

Operating lease obligations(2)

    84     52             136  
                       

Total contractual obligations(3)

  $ 984   $ 52   $ 3,796   $   $ 4,832  
                       
                       

(1)
In October 2013, we received a commitment for a $5.4 million convertible loan from certain of our shareholders. As of December 31, 2013, we received $3.2 million of the $5.4 million commitment amount. The loan bore interest at 5% per year. The loan has since converted into 2014 Notes and will convert into ordinary shares immediately prior to the closing of this offering. For more details about the loan, please refer to Note 9 in our 2013 financial statements included elsewhere in this prospectus and "Certain Relationships and Related Party Transactions—Financing Transactions."

(2)
Operating lease obligations consist of payments pursuant to lease agreements for office and laboratory facilities, as well as lease agreements for vehicles, which generally run for a period of three years. The lease of our offices as of December 31, 2013 expired in February 2014. In February 2014, we entered into a four-year agreement for the lease of our new facilities. Lease payments and monthly management fees total approximately $12,000 per month. Such amounts are linked to the Israeli consumer price index of November 2013.

(3)
Does not include grants we received from the OCS and MJFF, pursuant to which we will owe royalties upon commercialization of our product candidates.

In connection with the convertible loan referenced above, we agreed to bear the cost of tax payments to which the lenders may be subject upon the conversion of warrants issued therewith. We estimate such amount to be approximately $2.5 million assuming the exercise of such warrants upon the closing of this offering. Such amount is not included in the table above since the date of payment is not fixed and depends on the date upon which the warrants are exercised.

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 variable interest entities, which includes special purposes entities and other structured finance entities.

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to a variety of financial risks, including market risk (including foreign exchange risk and price risk), credit and interest risks and liquidity risk. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance.

Liquidity risk

We monitor rolling forecasts of our liquidity reserve (comprising cash and cash equivalents and deposits). This is generally carried out based on the expected cash flows in accordance with practice and limits set by our management. We are in the research and development stage and have not yet generated any revenue from sales of our product candidates; we are therefore exposed to liquidity risk. However, we believe that the net proceeds of this offering, together with our existing cash and cash equivalents, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

68


Table of Contents

Foreign currency exchange risk

Given that our functional currency is the NIS but our presentation currency is the U.S. dollar, the impact on our operating expenses of a change in the exchange rate between these currencies impacts our total comprehensive loss as reported in U.S. dollars. We also make payments to service providers and invest in currencies other than in NIS. Our operating expenses in U.S. dollars accounted for 14% and 6% of our operating expenses in the years ended December 31, 2012 and 2013, respectively. In the six months ended June 30, 2014 and 2013, our operating expenses in U.S. dollars accounted for 33% and 15% of our operating expenses, respectively. See "Risk Factors — Risks Related to Our Management and Employees — Our results of operations may be adversely affected by fluctuations in currency exchange rates and we may not adequately hedge against them."

To the extent the U.S. dollar weakens against the shekel, we will experience a negative impact on our operating expenses. A devaluation of the shekel in relation to the U.S. dollar has the effect of reducing the U.S. dollar amount of our expenses 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 the shekel 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 on our operating expenses. In 2013, the value of the shekel appreciated in relation to the U.S. dollar by 7.0%, the effect of which was compounded by inflation in Israel, at a rate of 1.9%. In 2012, the value of the shekel appreciated in relation to the U.S. dollar by 2.3%, the effect of which was compounded by inflation in Israel, at the rate of 1.6%.

Because exchange rates between the shekel and the U.S. dollar (as well as between the shekel and other currencies) fluctuate continuously, such fluctuations have an impact on our results and period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our financial statements of comprehensive losses.

The following table presents information about the changes in the exchange rates of the shekel against the U.S. dollar:


PERIOD
  CHANGE IN AVERAGE EXCHANGE RATE
SHEKEL AGAINST THE U.S. DOLLAR (%)
 

2014 (through June 30, 2014)

    0.3  

2013

    7.0  

2012

    2.3  

A 10% increase (decrease) in the value of the NIS against the U.S. dollar would have increased (decreased) our operating loss by 8% in 2013.

We do not currently engage in currency hedging activities in order to reduce this currency exposure, but we may begin to do so in the future. Instruments that may be used to hedge future risks may include foreign currency forward and swap contracts. These instruments may be used to selectively manage risks, but there can be no assurance that we will be fully protected against material foreign currency fluctuations.

Credit and rate risks

Credit and interest rate risks arise from cash and cash equivalents, deposits with banks bearing floating rate interest. A substantial portion of our liquid instruments is invested in short-term deposits in highly-rated banks. We estimate that since the liquid instruments are mainly invested for the short-term and with highly-rated institutions, the credit and cash flow interest rate risks associated with these balances is immaterial.

69


Table of Contents

Inflation-related risks

We do not believe that the rate of inflation in Israel has had a material impact 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 if the timing of such devaluation lags behind inflation in Israel.

Application of Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with IFRS as issued by the IASB and IFRS Interpretations Committee. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management's estimates and assumptions. We consider an accounting estimate to be critical if: (a) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (b) changes in the estimate could have a material impact on our financial condition or results of operations.

Fair value of derivative instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. We use our judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. We have used discounted cash flow analysis and option pricing model for the fair value of derivatives and convertible loans.

Issuances of convertible loans and warrants are initially recognized at fair value adjusted to defer the difference between the fair value at initial recognition and the transaction price ("Day 1 profit or loss"). An unrecognized Day 1 Loss occurred on first recognition of these financial instruments.

Our accounting policy with respect to unrecognized Day 1 Loss is that such loss remains unrecognized until all market inputs become observable, unless there is a change in a factor (including time) that market participants would take into account when pricing the asset or liability.

The following is an analysis of financial instruments measured at fair value using valuation methods. The different levels have been defined as follows:

      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 for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

      Level 3: Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs).

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

As to specific valuation techniques used to value financial instruments included in level 3, please see note 9b of our financial reports.

70


Table of Contents

The following table presents our liabilities measured at fair value, net of unrecognized Day 1 Loss:


 
  DECEMBER 31,
2013
  JUNE 30,
2014
 
 
  LEVEL 3  
 
  US DOLLARS
IN THOUSANDS

 

Embedded derivatives in convertible loans

  $ 3,249   $ 5,762  
           
           

Warrants

  $ 1,721   $ 2,023  
           
           

The fair value of the derivatives embedded in the convertible loans and of the warrants is measured in accordance to the option pricing method and includes the following parameters:


 
  DECEMBER 31,    
 
  SIX MONTHS ENDED
JUNE 30, 2014
 
  2012   2013

Risk-free interest rate

  0.32%   0.12% - 0.25%   0.1% - 0.21%

Total equity value

  $19,500,000   $91,800,000 - $135,000,000   $103,280,000 - $150,000,000

Weighted average volatility

  71.54%   74.21%   72.37%

Share-based compensation

We account for our equity-based compensation for employees in accordance with the provisions of IFRS 2 "Share-based Payment," which requires us to measure the cost of equity-based compensation based on the fair value of the award on the grant date.

Option Valuations

We selected the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value of our share-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 separate amortization period from grant date to vest date, and classify these amounts in the financial statements based on the department to which the related employee reports.

The determination of the grant date fair value of options using an option pricing model is affected by estimates and assumptions regarding a number of complex and subjective variables. These variables include the expected volatility of our share price over the expected term of the options, share option exercise and cancellation behaviors, risk-free interest rates and expected dividends, which are estimated as follows:

      Fair Value of our Ordinary Shares.  Because our shares are not publicly traded, we have estimated the fair value of ordinary shares, as discussed in "—Ordinary Share Valuations" below.

      Volatility.  The expected share price volatility was based on historical volatilities of companies in comparable stages as well as companies in the industry. Each company's historical volatility is weighted based on certain factors and combined to produce a single volatility factor used by the Company.

      Expected Term.  The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected term is four years.

      Risk-Free Rate.  The risk-free rate is based on redemption yield rates of unlinked, fixed-rate U.S. treasury bonds with a maturity that coincides with the expected exercise date of the option.

71


Table of Contents

      Expected Dividend Yield.  We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes model change significantly, equity-based compensation for future awards may differ materially compared with the awards granted previously.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted to employees during the period presented. No option grants were made in the year ended December 31, 2012.


 
  JANUARY 2013   MARCH 2014  

Expected volatility (%)

    79.7     71.25  

Expected term (years)

    4     4  

Risk-free rate (%)

    0.52     1.37  

Expected dividend yield (%)

    0     0  

Discount for lack of marketability

    25 %   12.9 %

Ordinary Share Valuations

The following table presents the grant dates, number of underlying shares and related exercise prices of awards granted to employees and non-employees since January 1, 2013 as well as the estimated fair value of the underlying ordinary shares on the grant date.

DATE OF GRANT
  NUMBER OF
SHARES
SUBJECT TO
AWARDS
GRANTED
  EXERCISE
PRICE
PER SHARE
  ESTIMATED FAIR
VALUE
PER ORDINARY
SHARE
AT GRANT DATE
 

January 2013

    428,000   $ 1.56   $ 1.14  

March 2014

    1,144,480     1.56     8.01  

Based on the assumed initial public offering price of $14.50 per share, the midpoint of the estimated initial public offering price range, set forth on the cover page of this prospectus, the intrinsic value of the awards outstanding as of June 30, 2014 was $0.3 million, of which $0.1 million related to vested options and $0.2 million related to unvested options.

Due to the absence of a trading market for our ordinary shares, the fair value of our ordinary shares for purposes of determining the exercise price for award grants was determined in good faith by our management and approved by our board of directors. In connection with preparing our financial statements for this offering, our management considered the fair value of our ordinary shares based on a number of objective and subjective factors consistent with the methodologies outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, referred to as the AICPA Practice Aid. We also considered independent third-party valuations. The fair value of the underlying ordinary shares will not be determined by our board of directors following this offering once our ordinary shares are listed on an established stock exchange.

As indicated above, since January 1, 2013, we have only made two option grants. We determined our equity value using the methodologies set forth below. We then used the option pricing method, or OPM, to allocate the equity value to each element of our equity capital structure. Under the OPM, ordinary and preferred shares are treated as call options, with the preferred shares having an exercise price based on the liquidation preference of the preferred shares. Ordinary shares only have value if funds available for

72


Table of Contents

distribution to the shareholders exceed the value of the liquidation preference at the time of a liquidity event such as a merger, sale or initial public offering. The ordinary shares are modeled as call options with an exercise price equal to the liquidation preference of the preferred shares. The value of the call options is determined using the Black-Scholes Merton option-pricing model. The OPM method requires significant assumptions, in particular, the time until investors in our company would experience an exit event and the volatility of our ordinary shares (which we determined based on the volatilities of public companies with business and financial risks comparable to our own).

We determined our equity value on each of the grant dates as follows:

January 2013.    We entered into a convertible loan agreement in July 2012 providing for the issuance by us of convertible securities in a principal amount of $4.3 million. These converted into Series A-1 preferred shares at a conversion price equal to the lower of 70% of the purchase price paid in a future capital raise or $7.66 per share. We estimated our equity value as of December 31, 2012 using the "backsolve method", a method that uses an allocation process, such as the OPM, to infer the equity value that equates to the value of the preferred shares in a recent financing round. Having determined our equity value, we used the OPM described above to allocate that value among the different classes of our securities, which resulted in a value of $1.52 per ordinary share to which we applied a 25% discount for lack of marketability resulting in a fair value of $1.14 per ordinary share.

March 2014.    Lacking a recent third party valuation event, we used a hybrid approach that combined two probability weighted scenarios. First, we attributed a 30% probability to an IPO and considered the valuations that we had discussed with different investment banks. We assumed that all preferred shares would convert into ordinary shares. We discounted the resulting valuation to present value resulting in a value of $12.98 per ordinary share. Second, we attributed a 70% possibility to a different liquidity event and used a discounted cash flow, or DCF, method to determine our equity value. We then used the OPM framework described above to allocate our equity value among the different classes of our securities, which resulted in a fair value of $7.56 per ordinary share. The weighted average of these values was $9.20 per ordinary share to which we applied a 12.9% discount for lack of marketability resulting in a fair value of $8.01 per ordinary share.

Anticipated Offering Price.

In early-November 2014, in consultation with the underwriters, we determined our anticipated offering price range to be $13.00 to $16.00 per share. As of the date of our most recent option grant in March 2014, we had determined the fair value of our ordinary shares to be $8.01 per share. The increase in the fair value of our ordinary shares from March 2014 to the date of this prospectus derives primarily from two factors:

    The most significant reason for the increase in the fair value of our ordinary shares is the greater certainty of an IPO. Specifically, the fair value of our ordinary shares in March 2014 considered an IPO scenario (assigning a 30% probability) and a scenario in which we remained a private company and our preferred shares benefitted from their liquidation preference (assigning a 70% probability). With the IPO scenario being assigned a 100% probability, the fair value of our ordinary shares before any discount for lack of marketability would have been $12.98 per share. This represents a significant increase over the value in a liquidation scenario where our enterprise value is allocated first to the holders of preferred shares based on their liquidation preference, with the remaining portion of the enterprise value allocated to all shareholders. Under an IPO scenario, ordinary shares are allocated the same value as preferred shares due to the assumed mandatory conversion of all preferred shares into ordinary shares.

    Our ability to consummate an IPO at a valuation significantly higher than the March 2014 valuation has resulted in part from continued improvements in the prospects for our business. Specifically, on May 22, 2014, the EMA confirmed that our product candidate, ND0612H, was eligible for a European Union marketing authorization application via a centralized procedure, which allows ND0612H to benefit from more streamlined access to the EU market. Furthermore, in August 2014,

73


Table of Contents

      we commenced our Phase IIa trial, and in October 2014, we received positive topline results from our Phase II clinical trial for ND0612L and preliminary results from our Phase IIa trial. On October 7, 2014, we had a positive meeting with the EMA regarding ND0612H, and on October 23, 2014 the EMA confirmed in a letter that it had agreed with our proposal to conduct pharmacokinetic similarity studies comparing ND0612H and Duodopa (using a nasal feeding tube) in healthy volunteers. If we are successful in such studies and the EMA accepts our pharmacokinetic study results as evidencing that NDO612H has equivalent efficacy to Duodopa, the EMA may be willing to accept a reduced clinical trial data package. These events in combination were considered important milestones to attaining our eventual goal of achieving regulatory approval for our products.

    In addition, since March 2014, market conditions in the United States have improved generally and in the healthcare sector in particular further supporting the increase in our valuation. For example, the Nasdaq Healthcare Index rose approximately 18.9% between April 1, 2014 and October 31, 2014.

    Further in March 2014, we applied a 12.9% discount for lack of marketability that investors in an IPO would not apply to our ordinary shares.

We believe that the foregoing considerations together account for the increase in the fair value of our ordinary shares from March 2014 to the date of our IPO. Although we believe that it is reasonable to expect that the completion of our IPO will add value to our ordinary shares for the reasons described above, and because they will have increased liquidity and marketability, the amount of additional value cannot be measured with absolute precision or certainty.

Recent Accounting Pronouncements

For fiscal year 2013, we adopted IFRS 13: Fair Value Measurements, or IFRS 13. IFRS 13 defines fair value, provides a single IFRS framework for measuring fair value and requires disclosure about fair value measurements. IFRS 13 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. The adoption of this standard did not have a material effect on our consolidated financial statements. There are no other IFRS standards as issued by the IASB or interpretations issued by the IFRS interpretations committee (e.g., IFRS 10, 11, 12 and IAS 19R) that are effective for the first time for the financial year beginning on or after January 1, 2013 that had or that we expect will have an effect on our financial position.

JOBS Act Exemptions

The JOBS Act permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

74


Table of Contents


BUSINESS

Our Company

We are a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives. Product candidates in our pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally. Additionally, because our product candidates are based on reformulations of leading, approved drugs, we believe that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval.

For moderate to severe Parkinson's disease, our product candidates are aimed at overcoming the most significant limitations of current levodopa-carbidopa, or LD/CD, therapy. For over 30 years, oral administration of LD/CD has been the standard of care for Parkinson's disease. However, despite its widespread acceptance, oral LD/CD has significant limitations, primarily short duration in the blood, or half-life, as well as low absorption and availability in the body. As a result, plasma levodopa concentrations fluctuate sharply, contributing to patients' motor complications. At the advanced stages of the disease, patients do not respond to oral administration of LD/CD, motor complications are exacerbated and patients are left with limited treatment options that are highly invasive and/or burdensome. We have developed liquid formulations, such as our product candidates ND0612H and ND0612L, that for the first time enable 24-hour, continuous subcutaneous administration of LD/CD to overcome these limitations, maintain steady levodopa levels and offer patients a better quality of life without the need for surgery.

There are three main stages to Parkinson's disease: mild, moderate and severe, each associated with increasing levels of motor complications and requiring different treatments. We are developing a pipeline of product candidates for the growing population of moderate and severe Parkinson's disease patients that address the deficiencies of current treatments. These product candidates are designed to administer continuous, controlled doses of LD/CD or apomorphine, utilizing customized versions of off-the-shelf, belt pump devices. We are also developing a product candidate for patients suffering from cognition disorders associated with CNS diseases. These diseases include Attention Deficit Disorder/Attention Deficit Hyperactivity Disorder, or ADD/ADHD, Parkinson's disease, Alzheimer's disease and schizophrenia. Our cognition product candidate is based on a combination of reformulated approved drugs allowing for continuous administration via transdermal patches.

In our recently completed Phase II trial, we examined plasma levodopa concentrations of individual Parkinson's disease patients treated with optimized, current standard of care and either ND0612L or a placebo as an add-on for 14 days. Additionally, in order to determine the effect of ND0612L without the standard of care, we conducted an additional week of treatment of ND0612L alone or with entacapone. The chart below shows that an average steady plasma levodopa concentration of 550ng/ml was maintained when ND0612L was administered alone, and an approximately 800ng/ml plasma levodopa concentration was maintained when ND0612L was administered together with twice-daily oral entacapone.

75


Table of Contents

GRAPHIC

Moreover, when ND0612L was compared to the standard of care in the first period of our Phase II trial, treatment with ND0612L demonstrated major clinical benefits over the placebo in all objective, in-clinic, pre-specified, exploratory efficacy end points, including off-time reduction. A mean reduction of two hours versus placebo was observed in the ND0612L treated group. Moreover, the reduction in "off" time was not accompanied by an increase in troublesome dyskinesia.



GRAPHIC

 


GRAPHIC

Our expectations below regarding the timing of our clinical trials for our product candidates are preliminary estimates since we have not yet commenced pivotal trials. The following chart provides a summary of our development pipeline:

Product
Candidate

  Active Drug
Compound

  Administration
  Indication
  Clinical Status
 
ND0612H   LD/CD   Subcutaneous   Severe Parkinson's Disease  

Ongoing Phase IIa Trial*

Planned Phase II Trial in 2015

Planned Bioequivalence Trials in 2015

Planned Phase III Trial in 2015

ND0612L

 

LD/CD

 

Subcutaneous

 

Moderate Parkinson's Disease

 

Completed Phase II Trial in 2014

Planned Pivotal 1 Phase III Trial in 2015

Planned Pivotal 2 Phase III Trial in 2015

ND0680

 

LD/CD

 

Intra-Duodenal

 

Severe Parkinson's Disease**

 

Planned Bioequivalence Trial in 2015

ND0701

 

Apomorphine

 

Subcutaneous

 

Severe Parkinson's Disease***

 

Planned Bioequivalence Trial in 2015

ND0801

 

Nicotine and Opipramol

 

Transdermal

 

Cognition disorders associated with CNS diseases

 

Ongoing Proof-of-Concept Trial


*
Our ongoing Phase IIa clinical trial evaluates both ND0612H and ND0612L.
**
For patients who require exceptionally high doses of LD/CD.
***
Primarily for patients who do not respond well to LD/CD.

76


Table of Contents

Parkinson's Disease and Current Treatment Limitations

Parkinson's disease is a progressive neurodegenerative illness characterized by reduced dopamine levels in the brain, resulting in a debilitating decrease in the patient's motor and non-motor functions. Its symptoms, such as trembling in the extremities and face, slowness of movement and impaired balance and coordination, worsen over time and gravely impact the patient's quality of life. As the disease progresses, these symptoms become more severe and complications of treatment become more pronounced, resulting in debilitating periods of decreased motor and non-motor functions, also referred to as "off" time. In addition, patients experience dyskinesia, which is typically associated with excessive levodopa doses. The "off" time and dyskinesia affect the majority of Parkinson's disease patients and interfere with day-to-day functions, causing patients to become severely disabled. Two to five years from disease diagnosis, patients can go from "on" to "off" in a rapid and sometimes erratic manner and experience an average of six hours of "off" time at various and unpredictable times throughout the day. In the most severe stage of the disease, patients may become bedridden or require a wheelchair, as oral therapy becomes mostly ineffective.

The EPDA estimates that 6.3 million people worldwide suffer from Parkinson's disease. MJFF estimates that at least one million people who suffer from Parkinson's disease live in the United States, representing an estimated one in one hundred people over age 60. According to the International Parkinson and Movement Disorder Society, the prevalence of diagnosed patients with the disease will likely double from 2010 to 2040 due to increased life expectancy. Additionally, it estimates that Parkinson's disease patients in the United States spent over $14 billion on medical expenses in 2010. According to GlobalData Ltd., the global Parkinson's disease drug market was approximately $3.3 billion in 2010. According to the Michael Stern Parkinson's Research Foundation, drugs used to treat Parkinson's disease patients can cost up to $6,000 a year in the United States. First year surgery and devices for more severe patients can cost up to $100,000, with Duodopa costing approximately $70,000 a year, outside of the United States.

Oral administration of LD/CD is regarded as the "gold standard" treatment for patients suffering from Parkinson's disease. Levodopa is a therapy that complements dopamine levels in the brain that decrease due to degeneration of dopamine producing brain cells. Whenever complementation therapy is possible, it often becomes a "gold standard" therapy. Virtually all patients diagnosed with Parkinson's disease will require levodopa at some point over the course of their treatment for the disease, and 70% to 80% of patients receive the drug at any given point in time. When LD/CD is taken orally, levodopa crosses into the brain through the "blood-brain barrier" and is converted into dopamine. The resulting increase in the brain's dopamine concentration improves nerve conductivity and helps control the motor symptoms associated with Parkinson's disease. The addition of carbidopa allows lower doses of levodopa to be used by preventing the breakdown of levodopa into dopamine before levodopa crosses into the brain.

One major limitation of oral administration of LD/CD is that it results in highly variable and fluctuating levels of levodopa in the plasma. When LD/CD is administered orally, levodopa is absorbed actively through amino acid receptors in the gastrointestinal tract and competes for necessary receptors with amino acids from food and from carbidopa. Therefore, the absorption of levodopa is erratic and its bioavailability is relatively low. Only 30% of it enters the blood stream; thus, by the time the levodopa reaches the brain, it has a significantly reduced drug concentration than when it was administered. In addition, levodopa is also known for its short half-life of approximately 50 to 90 minutes, which means that approximately three to four hours after a single dose, almost none of the drug remains in the plasma. Due to the short half-life, patients are required to take multiple LD/CD doses daily. This results in sharp fluctuations in levodopa levels, which in turn causes concomitant sharp fluctuations in brain-dopamine levels shortly after oral levodopa ingestion. When brain-dopamine levels are excessive, motor complications, such as dyskinesia, occur. Such motor complications occur at increasing levels as the disease progresses: 20% of Parkinson's disease patients develop motor complications and "off time" within six months of diagnosis, 50% after 18 months and almost all patients suffer from motor complications, with up to six hours of "off" time within two to five years. The fluctuations in brain-dopamine levels due to the oral administration of levodopa

77


Table of Contents

result in the erratic "off" and "on" periods shown in the figure below. This figure also demonstrates the narrowing of the therapeutic window over time, i.e. higher doses are needed to turn a patient "on" but may also cause dyskinesia.

GRAPHIC

There are three main stages of Parkinson's disease: mild, moderate and severe. According to MEDACorp, Inc., Ltd., patients suffering from moderate to severe Parkinson's disease constituted approximately 60% of all Parkinson's disease patients in 2011.

Mild Parkinson's disease

Early-stage patients who suffer from mild Parkinson's disease may experience shaking in the hands or fingers, slowness in movement and stiffness in the muscles. In this stage of Parkinson's disease, the brain still produces some base level of dopamine. Such patients are generally treated with one or more of these forms of treatment: oral drugs (delivered in the form of pills) such as MAO inhibitors, which help block the breakdown of dopamine in the brain; dopamine agonists (most of which are oral drugs), which activate dopamine receptors; or relatively low-dose LD/CD complementation therapy. Oral drugs are effective in reducing motor symptoms associated with mild Parkinson's disease. However, as the disease progresses, such drugs provide only modest symptomatic improvements and additional therapeutic approaches are needed, mainly consisting of higher doses of LD/CD.

Moderate Parkinson's disease

Within two to five years from the diagnosis of Parkinson's disease, the disease progresses to the moderate stage when, despite optimized LD/CD therapy, patients develop motor complications, i.e., more frequent daily "off" time causing limited mobility. At this stage of the disease, performing normal physical tasks becomes more difficult for such patients due to increased "off" time and dyskinesia. In addition, patients at this stage begin to suffer from morning akinesia. Patients with moderate Parkinson's disease are dependent on, and typically treated with, high doses of LD/CD. For example, patients may receive extended-release tablets of dopamine agonists in order to treat the symptoms of Parkinson's disease. One such extended-release tablet, Mirapex ER, had annual peak sales of $700 million worldwide.

Severe Parkinson's disease

As the Parkinson's disease progresses to the severe stage, patients' therapeutic window narrows. Patients in this stage experience extended "off" time and, as a result of frequent doses of LD/CD, frequent and severe dyskinesia, causing a small subset of these patients to become bedridden or require a wheelchair. Over time, patients who have ceased to respond to oral LD/CD therapy must either live with such conditions or undergo invasive surgical procedures to try to control or minimize motor complications. The primary existing treatments for patients who suffer from severe Parkinson's disease require surgical intervention. These

78


Table of Contents

include deep brain stimulation, or DBS, which involves inserting electrodes into the brain, or LCIG, which requires gastrointestinal surgery. We estimate that approximately 700,000 patients who suffer from severe Parkinson's disease globally do not receive such advanced Parkinson's disease treatments.

According to Transparency Market Research, the 2012 global DBS device market size for Parkinson's disease, excluding surgical costs, was approximately $500 million. DBS is a highly invasive procedure that involves open-brain surgery with local anesthesia applied to numb the scalp, during which electrodes are implanted into the brain and connected to a small electrical pulse generator that can be externally programmed. Once in place, electrical impulses are sent from the device to the brain. These impulses block the electrical signals that cause tremors and other Parkinson's disease symptoms. Studies have shown that DBS is effective in reducing tremors, stiffness, some walking problems and other movement-interfering symptoms in patients who undergo the DBS procedure. Nonetheless, DBS involves extreme risks, including coma, seizures, speech loss, cognitive deficits, infection and bleeding in the brain, which can cause stroke-like symptoms. Patients who undergo DBS are also required to have additional surgeries every three to five years in order to replace the battery. The complexity and related risks of this invasive procedure preclude physicians from referring older patients, and nearly 52% of Parkinson's disease patients who receive referrals to undergo this procedure are turned down. According to a 2012 study by the Association of American Medical Colleges, there are approximately 14,000 neurologists and geriatricians in the United States and, based on a an article titled "Neurology Residency Training in Europe—the Current Situation" in the April 2011 issue of the European Journal of Neurology along with publicly available data from the British Geriatrics Society, we estimate that there are approximately 35,000 neurologists and geriatricians in Europe, in each case, that we believe may treat patients who suffer from moderate Parkinson's disease. We further believe, based on information from leading physicians, that there are an estimated 1,500 physicians in each of the United States and Europe that may treat patients who suffer from severe Parkinson's disease.

Similarly, Duodopa, currently only available outside of the United States, with sales of $178 million for the year ended December 31, 2013, is a high dose LCIG product that is undergoing clinical trials in the United States under the name Duopa. Duodopa is administered into the duodenum via a permanent tube that is surgically inserted into the duodenum. Surgery for treatment with Duodopa involves general anesthesia and significant costs requiring gastrointestinal surgery. Patients receiving this form of treatment face potential complications, such as connector leakage, dislocation or movement of the intestinal tube, wound infection or peritonitis. In addition, patients must continuously carry a large, bulky shoulder-worn pump attached to their duodenum during the day. Duodopa is designed for continuous 16-hour administration of a gel form of high-dose LD/CD. Patients usually remove the pump at night, which affects quality of sleep and results in morning akinesia. Such complications and restrictions acutely limit the patients' day-to-day activities and prevent many of the patients from having this treatment.

Our Solutions for Parkinson's Disease

We believe we are the first company to develop liquid formulations of LD/CD, enabling continuous subcutaneous administration to more effectively treat Parkinson's disease. Our formulations, based on existing drugs enable the administration of drugs, which are currently either delivered orally and have low bioavailability, or through routes requiring surgical intervention, to be administered continuously and subcutaneously. Our Parkinson's disease product candidates are designed to provide a steady state therapeutic level of levodopa or apomorphine via continuous 24-hour administration. We expect these product candidates to reduce the debilitating "off" time that Parkinson's disease patients typically experience and to improve patients' quality of life by significantly ameliorating motor and non-motor complications, while also giving patients who suffer from severe Parkinson's disease an alternative to surgery.

Our Parkinson's disease product candidates are drug-device combination products, with distinct devices and varying LD/CD or apomorphine concentrations and dosages that are tailored to treat certain populations of Parkinson's disease patients. See "—Parkinson's Disease Product Candidates—Our Liquid LD/CD

79


Table of Contents

Formulations: ND0612H, NDO612L and NDO680—Delivery devices." To further the clinical development of our product candidates, the MJFF awarded us $1.0 million grants in each of 2010 and 2013.

Severe Parkinson's Disease: ND0612H

We are developing ND0612H for the treatment of patients suffering from severe Parkinson's disease and for whom oral drugs are no longer effective. ND0612H is designed to be more effective therapy than oral LD/CD and offers a safe and effective alternative to surgery and other highly invasive and complicated treatments such as DBS and LCIG. ND0612H is designed to provide continuous subcutaneous delivery of an adjustable dose LD/CD formulation in order to reduce the motor complications associated with orally administered LD/CD by maintaining controlled and steady plasma levodopa concentration levels between 1,500 and 2,000 ng/ml, which are currently achieved only with Duodopa. Like ND0612H, ND0612L is designed to allow LD/CD over night to avoid morning "off" time and improve sleep quality. Furthermore, unlike Duodopa's 16-hour, duodenal administration by way of a large shoulder-worn pump, ND0612H's 24-hour, subcutaneous administration by way of a more convenient and smaller belt-pump resembles the administration of insulin to diabetic patients.

Moderate Parkinson's Disease: ND0612L

We are developing ND0612L for the treatment of patients at the moderate stage of Parkinson's disease that can no longer effectively control motor complications with oral levodopa. Each dose of ND0612L is designed to be continuously administered to such patients for a 24-hour period via the Crono ND belt pump. ND0612L is designed to administer approximately 40% of the maximum daily levodopa dosage delivered by ND0612H. By maintaining a steady plasma levodopa concentration between 700 and 1,000 ng/ml, we aim to reduce dyskinesia and "off" periods and to improve sleep quality. In addition, we are designing ND0612L to allow patients to receive LD/CD overnight. We expect that ND0612L will serve as a second-line therapy for patients suffering from moderate Parkinson's disease and may be used as an adjunct or mono-therapy.

Our Other Solutions for Parkinson's Disease

We are developing ND0680 for the treatment of a small subset of severe Parkinson's disease patients whose symptoms have advanced to a more severe stage, requiring even higher doses of LD/CD than ND0612H is designed to provide. ND0680 contains a very concentrated formulation of LD/CD and is expected to be administered via a wearable belt pump to the duodenum. ND0680 is designed to provide a number of advantages over Duodopa's LCIG treatment, in particular: (i) 24-hour treatment compared to Duodopa's 16-hour treatment, (ii) administration at smaller volumes and higher concentrations, and (iii) administration via a smaller belt pump identical to the pump used for ND0612L, instead of Duodopa's larger shoulder-worn pump.

We have also designed ND0701, an apomorphine-based product candidate designed to offer a next-generation alternative to the continuously administered apomorphine product currently approved and sold outside the United States in order to significantly improve local tolerability and allow a much lower daily administration volume. ND0701, for patients who suffer from Parkinson's disease, may be used mostly by patients who do not respond well to LD/CD. ND0701 is administered via CRONO ND belt pump. See "— Parkinson's Disease Product Candidates — ND0701."

Our Cognition Disorders Product Candidate

We are also developing a product candidate, ND0801, to treat cognition disorders associated with CNS diseases, such as ADD/ADHD, Alzheimer's disease and schizophrenia. ND0801's reformulation is designed to be a safe and non-addictive nicotine-based treatment administered via a transdermal patch. See "— Cognition and our ND0801 Product Candidate."

80


Table of Contents

Our Competitive Strengths

The products we develop leverage our expertise in our proprietary reformulating methodology and clinical experience to create new, best-in-class therapies targeting Parkinson's disease and other CNS disorders.

      Expertise in proprietary reformulation of existing drugs for clinically superior benefits.  We primarily focus on developing proprietary liquid reformulations of orally administered drugs for CNS diseases whose efficacy is limited by the current routes of administration. Our expertise has enabled our research and development team to develop proprietary formulations for continuous 24-hour subcutaneous administration of LD/CD for the first time. For Parkinson's disease, we leveraged our expertise to create what we believe are the only viable liquid formulations of LD/CD that can be continuously administered to patients in order to overcome oral LD/CD fluctuations that lead to "off" time, dyskinesia and other side-effects.

      Lower development risks and costs for our pipeline products.  We believe that our focus on developing product candidates based on reformulations of existing drugs will decrease our development and regulatory risks and allow us to develop our products in a cost-effective manner compared to novel drug development. By developing therapies based on reformulations of already approved drugs, we plan to pursue abbreviated regulatory approval pathways through a 505(b)(2) or comparable pathway. These pathways provide an accelerated, lower-cost and lower risk timeline to drug approval. On April 10, 2012, during our pre-IND meeting, the FDA's Division of Neurology Products stated that ND0612L would be eligible for the submission of a 505(b)(2) regulatory pathway application.

      Comprehensive product pipeline for the treatment of Parkinson's disease.  Our product pipeline is focused on developing drugs for a significant portion of the Parkinson's disease population. We currently have product candidates aimed at treating patients suffering from moderate to severe Parkinson's disease. In 2011, approximately 60% of the Parkinson's disease patient population suffered from moderate to severe Parkinson's disease, representing a significant market where we believe we are well positioned to become the new best-in-class standard of care.

      Strong intellectual property position.  We have over 10 years of experience and know-how in reformulating existing drugs. We have a robust intellectual property portfolio that includes our four patent families covering our novel LD/CD formulations. We have currently been granted eight patents, including patents in Australia, Japan, Mexico, New Zealand, South Africa and the United States. Our existing patents will expire between 2030 and 2031 for our LD/CD product candidates and between 2028 and 2031 for our nicotine-based product candidate. We have over 45 pending patent applications worldwide, which include applications that, if approved, will expire in 2035. Additionally, if our product candidates are approved under 505(b)(2), we expect they will enjoy at least three years of market exclusivity in the United States. In Europe, if our product candidates are developed and approved based on a complete, free-standing marketing authorization dossier, we may benefit from eight years' data exclusivity in respect of data that we generate followed by two years' market exclusivity for our product during which regulators can review generic applications but the generic product cannot launch.

Our Growth Strategy

Our goal is to discover, develop and commercialize best-in-class standard of care treatments based on reformulations of existing drugs for CNS diseases. Key elements of our strategy are to:

      Develop our Parkinson's disease product candidates as the best-in-class treatment options in their category.  We are currently pursuing regulatory approval of our four Parkinson's disease product candidates: ND0612H, ND0612L, ND0680 and ND0701. We intend to continue developing our liquid LD/CD-based treatments for patients suffering from moderate to severe Parkinson's disease and our liquid apomorphine-based product candidate, ND0701, for the treatment of patients suffering from severe Parkinson's disease who may not respond well to LD/CD. We intend to continue

81


Table of Contents

      developing these product candidates through our clinical trials in order to become the new best-in-class standard of care for a large majority of patients suffering from Parkinson's disease.

      Leverage our expertise in proprietary reformulation of existing drugs and delivery technologies to treat other CNS diseases that are limited by the oral administration of drugs.  We plan to develop product candidates for other CNS diseases by applying our expertise in reformulating existing drugs, which will allow us to alter the means of administration of such drugs. We believe that reformulated drugs administered via non-oral routes will allow us to overcome the limitations associated with the oral administration of drugs for the treatment of CNS diseases other than Parkinson's disease. We have identified several other diseases, for which the efficacy of treatment is limited by orally administered drug therapies, which would allow us to expand into new markets. For example, we are currently developing ND0801 to treat cognitive disorders associated with CNS diseases, such as ADD/ADHD.

      Selectively seek and evaluate potential partnership opportunities.  We will continue to seek and evaluate partnership opportunities that would allow us to obtain financial support and to capitalize on the expertise and resources of our potential partners, which could accelerate the development and commercialization of our drug candidates. Where we deem appropriate, we plan to retain certain rights to participate in the development of drug candidates and commercialization of potential drugs arising from our programs, so that we can expand and capitalize on our own reformulation expertise and build commercialization capabilities.

      Expand our product candidates and research in order to seek a method of reducing the progression of Parkinson's disease.  In the future, we may expand our therapies to treat patients suffering from mild Parkinson's disease, enabling us to treat the entire Parkinson's disease patient population while potentially reducing the progression of the disease. If we are successful in commercializing our product candidates, we may conduct large, more expensive clinical trials in order to study the effect of our products on reducing the progression of Parkinson's disease. By expanding into mild Parkinson's disease, our product pipeline would represent a comprehensive portfolio addressing the entire Parkinson's disease patient population.

82


Table of Contents

Parkinson's Disease Product Candidates

Our Liquid LD/CD Formulations: ND0612H, ND0612L and ND0680

ND0612H, ND0612L and ND0680 are each designed to administer varying concentrations and dosages of our proprietary liquid formulations of LD/CD to treat certain populations of Parkinson's disease patients.

      ND0612H is designed to be a safe and effective alternative to surgical intervention by offering continuous 24-hour subcutaneous administration of an adjustable dose LD/CD formulation, allowing administration of LD/CD for the treatment of patients who suffer from severe Parkinson's disease. ND0612H is being developed for patients who suffer from severe Parkinson's disease and for whom neither oral administration of LD/CD nor ND0612L can provide sufficient levodopa to treat their symptoms. These patients face treatment options that include continuous, subcutaneous apomorphine administration, which is associated with numerous adverse effects, or treatments that require highly invasive surgical interventions, such as DBS or LCIG. We are designing ND0612H, administered via the CRONO Twin ND belt-pump (described below), to become a first-line treatment alternative for such patients. Depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in Europe and the United States for ND0612H by the first half and second half of 2018, respectively.

      ND0612L is designed to significantly reduce "off" time and dyskinesia compared to the current standard of care by offering continuous 24-hour subcutaneous administration of a fixed dose of LD/CD. ND0612L is being developed primarily for the treatment of patients who suffer from moderate Parkinson's disease. ND0612L is designed to administer approximately 40% of the maximum daily levodopa dosage delivered by ND0612H. We are currently administering ND0612L in clinical trials utilizing the CRONO ND belt-pump (described below). Depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in the United States and Europe for ND0612L by the second half of 2018. We are also working with our third-party medical device manufacturers on a smaller, next-generation patch-pump device for use with ND0612L in the future.

      ND0680 is designed to offer an improved, next-generation, more convenient alternative to the currently available LCIG product for the small subset of severe Parkinson's disease patients who require exceptionally high LD/CD doses, which cannot be achieved with oral LD/CD or ND0612H. ND0680 contains a highly concentrated formulation of LD/CD and is expected to be administered with the CRONO ND belt pump via the duodenum. We first expect to target patients who have already undergone surgery for LCIG treatment, such as Duodopa, and who seek a similar but less burdensome product. Later, we expect to target patients who have yet to undergo surgery. We expect to seek approval to initiate clinical trials in Europe for ND0680 in the second half of 2015, and depending on the results of our clinical trials and the regulatory approval process, we expect to receive marketing approval in Europe for ND0680 in the second half of 2017.

Our expectations above regarding the timing of marketing approval for our product candidates are preliminary estimates since each is in an early stage of clinical development.

Delivery devices

Both the CRONO ND and CRONO Twin ND belt pumps are manufactured by a cGMP-certified, third-party medical device manufacturer. The CRONO ND belt pump has been "CE" marked in accordance with EU law and will be submitted for regulatory approval in the United States as the device component of the ND0612L drug-device combination product. Similarly, the CRONO Twin ND belt pump's design has been "CE" marked in accordance with EU law and will undergo a drug-device combination approval process in the United States. See "Business — Government Regulation."

83


Table of Contents

    CRONO ND. CRONO ND is a simple-to-operate, fixed-dose belt pump that operates 24 hours a day and can be preprogrammed to the desired delivery profile of LD/CD. This device is used to administer our ND0612L and ND0680 drug formulations. CRONO ND consists of two parts: a preprogrammed pump device that regulates the delivery rate of the drug, and a single-use, disposable cartridge, which holds our liquid reformulation of LD/CD and which is connected to an infusion tube. For ND0612L, the CRONO ND infusion tube is attached to a small disposable cannula, or flexible needle, positioned to subcutaneously deliver 4.5ml of LD/CD to the patient per day. The disposable cartridge and needle are discarded and replaced by the patient daily. For ND0680, CRONO ND can be attached to surgically placed tubing connected to the small intestine through the same or a similar type of trans-abdominal port used to administer Duodopa, allowing for intra-duodenal administration of our reformulated LD/CD. We believe that the CRONO ND tubing design is interchangeable with, and is considerably smaller than, the tubing used to administer Duodopa, while allowing for 24-hour drug delivery unlike the device associated with Duodopa.

    CRONO Twin ND. CRONO Twin ND is also a simple-to-operate, adjustable belt pump. The durable belt pump fits into a case that can be attached to a patient's belt and shares the same characteristics of the CRONO ND, in that it is preprogrammed to pump up to 12ml of LD/CD subcutaneously for 24 hours a day through a small tube connected to the disposable cartridge. However, the CRONO Twin ND belt-pump delivers LD/CD subcutaneously through two insertion points, allowing administration of up to 2.6 times more levodopa than CRONO ND.

    Second-Generation Patch Pump. We have engaged a third-party firm to design and manufacture a patch pump that will replace the CRONO ND belt pump for the administration of ND0612L. The patch pump would be worn directly on the skin underneath a patient's clothing and preprogrammed to subcutaneously deliver our reformulated LD/CD, 24 hours a day without requiring further attention from the patient. The patch pump will be a smaller and even more convenient device than CRONO ND, with similar characteristics: a single-use portion, from which the cannula is placed under the skin, and a durable portion, which controls and regulates the administration of the drug. We currently expect that the second-generation patch pump will be utilized in our ND0612L product candidate approximately 18 months after ND0612L is approved for marketing by the FDA.

Preclinical trials

Our preclinical trials for ND0612L have shown a positive, linear, correlation between the subcutaneous doses of LD/CD and plasma levodopa concentrations. The variability of plasma concentrations attained by subcutaneous administration is significantly less than that obtained with oral LD/CD administration, providing more reliable, predictive and constant plasma levodopa concentration. Preclinical trials demonstrated a dose-response correlation between ND0612L and plasma levodopa concentrations.

We have also conducted a nonclinical study of ND0612L for 28 consecutive days on pigs. The study was carried out on 18 pigs divided into three equal groups of three male and three female pigs. Group one acted as control and received the placebo, while groups two and three received two different doses of ND0612L. The primary endpoint was ND0612L's local and systemic toxicity when administered by continuous subcutaneous infusion. No signs of systemic toxicity were observed during the study and local reactions at the administration site were rare, minimal and sporadic.

We recently completed a 90-day, local tolerability and toxicity study in mini-pigs to evaluate potential local and systemic reactions to long-term exposure to ND0612H and ND0612L. No systemic adverse effects were observed after 13 weeks of continuous subcutaneous infusion with either ND0612H or ND0612L. Treatment-related findings included minimal to moderate reactions at the injection sites, which correlated to the frequency of administration at those sites and was less evident at sites when administered with longer intervals between treatments (³15 days). All sites displayed a significant degree of recovery within 30 days. Drug absorption was not affected by such local reactions and levodopa blood levels were similar throughout the study period. In our pre-IND meeting with the FDA, it was agreed that this would serve as the preclinical requirement for an NDA submission.

84


Table of Contents

Clinical trials

To date, we have completed the following clinical studies for ND0612L using the CRONO ND belt-pump device design:

      Phase I and Phase Ib — Israel.  We conducted a Phase I, single dose, 24-hour continuous administration, single-center, randomized, double-blind, placebo-controlled dose escalation study to evaluate the safety, tolerability and plasma levodopa concentration following continuous subcutaneous delivery of LD/CD in 36 healthy subjects for one day. The subjects were divided into six equal groups, receiving LD/CD at a rate of (i) 80 µl/h; (ii) 120µl/h; (iii) 160 µl/h; (iv) 200 µl/h; (v) 200µl/h using a shorter cannula infusion; or (vi) 240 µl/h. The primary endpoint was the drug's safety and tolerability and its pharmacokinetic attributes under each rate of infusion. Data showed that the plasma levodopa levels increased linearly with the dose. The following chart shows mean plasma levodopa concentrations at varied doses of LD/CD from 15 to 24 hours after infusion. Pursuant to the design of the study, the infusion occurred at hour zero but the plasma sampling commenced at hour 15. For the purposes of this chart, we combined the two groups of patients who received LD/CD at the rate 200 µl/h and 200µl/h using a shorter cannula infusion as there was no statistical difference in the mean LD plasma concentrations of these patients. GRAPHIC

    A continuation study of the Phase I trial was subsequently conducted as a Phase Ib study on an additional 18 healthy male volunteers to evaluate three additional doses. The subjects were divided into three equal groups of six patients, receiving either (i) 5%/1.25% LD/CD at a rate of 240 µl/h for 24 hours; (ii) 6%/1.5% LD/CD at rates of 240 µl/h for 16 hours and 80 µl/h for eight hours; or (iii) 6%/1.5% LD/CD at a rate of 240 µl/h for 24 hours with oral entacapone administered every two hours for 10 hours. The primary endpoint was the drug's safety and tolerability and the pharmacokinetic attributes of a specific dose and rate of infusion. ND0612L demonstrated good tolerability and safety at each tested rate. Additionally, adverse local response was minor, typical to other continuously subcutaneously administered drugs.

      Phase IIa — Israel.  We conducted a Phase IIa, single dose, 24-hour continuous administration, single-center, randomized, double-blind, placebo-controlled, cross-over study on eight subjects with moderate Parkinson's disease. The eight subjects were randomly treated with either placebo or ND0612L continuously for twenty-four hours. One week later, the same eight subjects switched to the other treatment (e.g., patients who had previously received placebo were treated with ND0612L) and received such treatment continuously for twenty-four hours. The primary endpoint was the pharmacokinetic attributes of the plasma concentrations of levodopa following subcutaneous delivery of ND0612L, and the secondary endpoint was the safety and tolerability of ND0612L compared to saline. The preliminary data showed that subcutaneous delivery of ND0612L achieved steady-state plasma levodopa concentrations ranging from 700-1,000 ng/ml (which is estimated to be within the typical therapeutic range). Additionally, fluctuations in plasma levodopa concentration were significantly reduced. The chart below compares the mean plasma levodopa concentrations in subjects treated either with ND0612L or a

85


Table of Contents

      saline solution. All patients received Stalevo, an orally administered triple combination drug that includes levodopa, carbidopa and entacapone. The addition of carbidopa and entacapone extends the half life of levodopa. Continuous administration of ND0612L resulted in subjects having a higher mean plasma levodopa concentration than the control group.

      GRAPHIC

    Phase II — Israel. In October 2014, we successfully completed a randomized, placebo-controlled, double-blind clinical study of ND0612L of 30 subjects with moderate to severe Parkinson's disease. The purpose of this study was to examine the safety, tolerability, LD/CD plasma levels (pharmacokinetics) and exploratory efficacy end points following subcutaneous delivery of ND0612L.

        Study design

    The study included two treatment periods. In the first period, all patients received optimized, current oral standard of care and were then randomized (in a 2:1 ratio) to receive as an add-on a subcutaneous infusion of either ND0612L or placebo for 14 days. After 14 days, according to the protocol, 16 patients were offered an additional week of treatment, in which they were randomized to receive either ND0612L alone or ND0612L with oral entacapone, in each case, without the patient's standard of care.

    All parameters, including safety, tolerability and pharmacokinetics, were compared to the patients' original baseline standard of care and between groups. Additionally, exploratory efficacy end points, including daily duration of "off" time, "on" time (with and without troublesome dyskinesia), quality of sleep, quality of life and disease improvement were assessed in the clinic and reported in subjective home diaries. Eligible patients included male or female individuals with Parkinson's disease, experiencing motor fluctuations averaging more than two hours of "off" time per day on optimized levodopa treatment and, if necessary, additional Parkinson's disease drugs. Patients treated with controlled-release levodopa formulations who had undergone neurosurgical intervention for Parkinson's disease or who suffered from severe disabling dyskinesia were excluded.

    Topline results of this study are presented below:

        Safety and tolerability results

    ND0612L was generally well tolerated and safe, causing only minimal and transient local reactions at the infusion site and no particular systemic adverse events, which corroborates the results obtained in our previous Phase I and Phase IIa studies. No adverse events, local or systemic, caused treatment discontinuation or withdrawal from the study, and the 16 patients chose to continue to the second phase of the study. Additionally, all patients complied with treatment protocol and successfully operated the pump, with some patients being assisted by a caregiver or a nurse.

        Pharmacokinetics results

    Treatment with ND0612L resulted in a clinically significant reduction in fluctuations of plasma levodopa concentrations when compared to the placebo. In the group treated with ND0612L, plasma levodopa concentrations were relatively stable and were maintained above an average minimum of approximately 800ng/ml, avoiding the low trough concentrations observed in the placebo group (approximately 180ng/ml), as shown in the chart below. Compared to the placebo, ND0612L also

86


Table of Contents

    demonstrated a markedly reduced peak-to-trough ratio, which measures the maximum concentration relative to the minimum, and fluctuation index, which measures the concentration fluctuations relative to the average level of levodopa, as shown in the table below.

    GRAPHIC

    In order to determine the effect of ND0612L without the standard of care, following the first period, 16 patients, as planned pursuant to the protocol, volunteered for an additional week of open label study with treatment of ND0612L alone or with entacapone. The chart below shows that an average steady plasma levodopa concentration of 550ng/ml was maintained when ND0612L was administered alone, and an approximately 800ng/ml plasma levodopa concentration was maintained when ND0612L was administered together with twice-daily oral entacapone.

 
GRAPHIC
   

              *
              Includes 10 out of 16 patients, who did not require additional oral levodopa to control
              their disease during the assessment period.

        Futility analysis

    ND0612L successfully met the primary end point of the exploratory efficacy futility analysis, pre-specified in the statistical plan, a reduction in "off" time greater than a threshold of at least 1.6 hours, by demonstrating an average reduction of 2.1 hours in "off" time based on home diaries. Therefore, we intend to proceed to pivotal clinical studies of ND0612L.

        First period clinical efficacy results

    Treatment with ND0612L demonstrated significant clinical benefits over the placebo in all objective, in-clinic, pre-specified, exploratory efficacy end points, in spite of being a low-powered study,

87


Table of Contents

    including only 30 patients, that was not designed to achieve statistical significance of an efficacy endpoint. Accordingly, statistically significant values (p-values) are not presented.

        Off-time:  A mean reduction of two hours versus placebo was observed in the ND0612L treated group in spite of a marked reduction in oral levodopa dose. Moreover, the reduction in "off" time was not accompanied by an increase in troublesome dyskinesia.1


GRAPHIC

 


GRAPHIC


    1
    Data was only available from 29 patients for "off" time reduction and troublesome dyskinesia, as one in-clinic diary was lost at the
    clinical center.

    As compared to in-clinic results, a smaller reduction in "off" time versus placebo was observed in the home diaries due to the strong placebo-effect common to Parkinson's disease studies.

        Sleep quality:  ND0612L improved quality of sleep by 30.3% compared to 0.9% in the placebo group, expressed by reduction in the Parkinson's Disease Sleep Scale, or PDSS. This highlights the fact that, unlike current Parkinson's drug therapies, ND0612L demonstrates the ability to treat patients throughout the night.

        Quality of life:   ND0612L improved quality of life score by 17.1% compared to 4.8% in the placebo group as determined by the Parkinson's Disease Questionnaire, or PDQ-39.

        Global disease improvement (CGI-C):  ND0612L patients showed clinical improvement in 89.5% of patients compared with only 36.0% of patients in the placebo group. This improvement was determined by physician's assessment based on a seven-point scale, the Clinical Global Impression, or CGI-C.


GRAPHIC

 


GRAPHIC

 


GRAPHIC

        Second period clinical efficacy results

    Similar trends were also observed in the second period of the study. All patients markedly reduced their oral levodopa intake during the second period by a median of 80%, with 19% of the patients discontinuing oral levodopa treatment completely.

Current and future clinical trials with ND0612H and ND0612L

On April 10, 2012, we held a pre-IND meeting with the FDA. In this meeting, the FDA stated that ND0612L was eligible for the submission of a 505(b)(2) regulatory pathway application, which allows

88


Table of Contents

expedited regulatory approval with reduced clinical trials, see "Business — Government Regulation — United States — Section 505(b)(2) NDAs." The FDA also provided a clinical trials framework that would allow a 505(b)(2) submission for ND0612L. We intend to meet with the FDA in the first half of 2015 to confirm our clinical developmental plan for ND0612H. Similarly, we intend to have preliminary discussions with the EMA seeking scientific advice on our product candidates in order to expedite the marketing approval process in Europe.

The clinical trials and regulatory development of ND0612H and ND0612L partly overlap as both products have similar reformulations of the same active drug substance, LD/CD. Accordingly, we have planned the following clinical trials and are currently discussing the following clinical plan with regulatory agencies in the United States and Europe:

STUDY
  ESTIMATED
COMPLETION DATE
  POPULATION TYPE*   DESIGN**   NO.
PATIENTS
  PRIMARY ENDPOINT   TREATMENT
DURATION

  Clinical Development of ND0612H

 

Phase IIa***

  Second half 2014   PD with motor complications   Open   16   Pharmacokinetic attributes
Dose finding
  Five days
 

Phase II

  First half 2016   PD with at least 2.5 hours of "off" time per day and symptoms not being adequately controlled   Open   30   Efficacy   Two to four weeks
 

Pivotal Phase III

  Second half 2017   PD with at least 2.5 hours of "off" time per day and symptoms not being adequately controlled   DB   80 - 120   Efficacy   16 weeks
 

Safety follow-up

  Second half 2017   PD with motor complications   Open   50 to 150   Local safety   Six to 12 months
 

  Clinical Development of ND0612L

 

Phase II

 

Completed 2014

 

PD with motor complications

 

DB

 

30

 

Pharmacokinetic attributes
Dose adjustments Safety

 

Two to Three weeks

 

Phase IIa***

 

Second half 2014

 

PD with motor complications

 

Open

 

16

 

Pharmacokinetic attributes
Dose finding

 

Five days

 

Pivotal 1 Phase III

 

First half 2017

 

PD with at least 2.5 hours of "off" time per day

 

DB

 

240 - 360

 

Efficacy

 

Six weeks

 

Pivotal 2 Phase III

 

First half 2017

 

PD with at least 2.5 hours of "off" time per day

 

DB

 

360

 

Efficacy

 

12 weeks

 

Safety follow-up

 

First half 2017

 

PD with motor complications

 

DB

 

50 to 150

 

Local Safety

 

Six to 12 months

 

    *
    "PD" stands for patients suffering from Parkinson's disease.

    **
    "DB" stands for double-blind study.

    ***
    Evaluates both ND0612H and ND0612L.

89


Table of Contents

Ongoing Studies

Phase IIa — Israel.  In August 2014, we commenced enrollment and treatment in a multicenter, open-label, dose-finding Phase IIa study of 16 subjects with motor complications caused by Parkinson's disease. On April 29, 2014, we submitted an IND application to the FDA in order to allow us to commence this trial in the United States (one center) and in Israel (multiple centers). On June 13, 2014, we received a letter from the FDA placing a clinical hold on this trial until we provide an extractables and leachables study as well as additional information related to the EU-approved devices we used with our product candidates. The extractables and leachables analysis is used to determine whether there is an interaction between the device components and ND0612H and ND0612L drug products. We subsequently conducted this Phase IIa trial in Israel only, where it has enrolled and treated approximately 75% of the patients. Results from the first eight patients were presented at the Michael J. Fox Foundation's Parkinson's Disease Therapeutics Conference in October 2014 and are discussed below. We expect to complete this trial as planned and anticipate final results in the last quarter of 2014.

    We intend to submit an amendment to our IND before the end of 2014 after the anticipated completion of the study to address the FDA's request. Our next U.S. trials are planned to commence in the second half of 2015; therefore, the FDA's hold has not had, and we anticipate it will not have, an impact on the timeline of our trials.

 

 

The primary endpoints of this study are to assess the safety, tolerability and pharmacokinetics of six dose regimens of ND0612H and ND0612L compared to the patient's standard oral doses of LD/CD, including high and low concentrations of carbidopa and the concomitant administration of oral entacapone. Subjects are treated for eight hours a day for five days with the varying doses.

 

 

In October 2014, we received preliminary pharmacokinetic results from the first eight (50% of total) patients in this study. These results show that plasma levodopa concentrations reached steady daytime levels of approximately 1,500ng/ml with ND0612H as a monotherapy and approximately 1,900ng/ml with ND0612H co-administered with twice-daily oral entacapone.

 

 

The chart below presents the plasma levodopa concentrations obtained with ND0612H and ND0612L and with entacapone.

GRAPHIC

    We believe these results suggest that ND0612H could provide an effective treatment option for the majority of advanced Parkinson's disease patients that are considering or are currently treated with DBS or Duodopa.

90


Table of Contents

Planned Studies

Pivotal 1 Phase III - ND0612L — United States and Europe.  We plan to initiate a multicenter, double-blind, placebo-controlled, Phase II/III study of 240 to 360 subjects with Parkinson's disease, who experience at least 2.5 hours of "off" time per day. We expect this study to commence during the second half of 2015. The purpose of the study is to assess the efficacy, safety, tolerability and pharmacokinetics of one or two doses of ND0612L in patients suffering from moderate to severe Parkinson's disease. Subjects will be treated for six weeks. The primary endpoint is the reduction of "off" time. The co-secondary endpoints are the effect on dyskinesia and quality of life. Additional exploratory endpoints include non-motor functions. We expect results in the first half of 2017.

Pivotal 2 Phase III - ND0612L — United States and Europe.  We plan to initiate a multi-center, double-blind, placebo-controlled, randomized pivotal Phase III study of approximately 360 subjects with Parkinson's disease, who experience at least 2.5 hours of "off" time per day. We expect this study to commence during the second half of 2015. The purpose of this study is to assess the efficacy, safety, tolerability and pharmacokinetics of one dose of ND0612L in patients suffering from moderate to severe Parkinson's disease. Subjects will be treated for twelve weeks and will be separated into three treatment groups in a 1:1:1 ratio, with all patients remaining on their standard LD/CD dose: (i) placebo; (ii) active comparator; and (iii) continuous subcutaneous infusion of ND0612L. The primary endpoint is the reduction of "off" time. The co-secondary endpoints are the effect on dyskinesia and quality of life. Additional exploratory endpoints include non-motor functions, such as cognition. We expect results in the first half of 2017.

Phase II - ND0612H — United States and Israel.  We expect to commence a multicenter, open-label Phase II study of approximately 30 subjects, with Parkinson's disease, who experience at least 2.5 hours of "off" time per day and whose symptoms are not adequately controlled. We expect this study to commence in the second half of 2015. The primary endpoints are to assess the effect of one to two doses of ND0612H on "off" time and dyskinesia in comparison to standard LD/CD therapy. Subjects will be treated for two to four weeks and will provide self-assessments related to their "off" time and dyskinesia. We anticipate results in the first half of 2016.

Pivotal Phase III - ND0612H — United States and Europe.  We plan to initiate a replacement Phase III multi-center, double-blind, double-dummy placebo-controlled randomized study of approximately 80 to 120 patients suffering from severe Parkinson's disease. Subjects must experience at least 2.5 hours of "off" time per day and their symptoms must not be adequately controlled with optimized medical therapy. We expect to commence this study during the second half of 2016. The purpose of this study is to assess the efficacy, safety, tolerability and pharmacokinetics of one dose of ND0612H versus standard oral treatment in patients suffering from severe Parkinson's disease. Subjects will be randomized in a 1:1 ratio of ND0612H to standard oral LD/CD administration with both groups titrated to an optimal state. The primary endpoint is the reduction of "off" time, while the secondary endpoint is troublesome dyskinesia. Exploratory endpoints are an assessment of the effect of ND0612H's continuous infusion on non-motor features such as cognition. We expect results in the second half of 2017.

Safety Follow-up Studies - ND0612H and ND0612L — United States and Europe.  We plan to initiate a multicenter, open extension studies of each of ND0612H and ND0612L, to follow between 50 and 150 subjects respectively who participated in our earlier Phase II and III clinical trials in order to assess the long-term safety, particularly dermal safety, of continuous subcutaneous infusion of ND0612H and ND0612L. We expect these safety follow-up studies to commence in the second half of 2015 and to last approximately six to 18 months.

Clinical development and overall safety assessment

Based on our clinical trials to date, there was no increased pattern in the type, severity or frequency of adverse events, with patients primarily experiencing mild and transient side effects. Examination of the skin at the application site revealed temporary, circumscribed, firm areas under the skin, varying in size from a pinhead to one square centimeter, which were noted only upon deep palpation and were not associated with

91


Table of Contents

pain or discomfort. Other safety parameters, including physical examination, vital signs and electrocardiograms did not reveal any notable issues or differences between study groups.

Pharmacokinetic Studies

We initially plan to seek marketing authorization in Europe based on our planned pharmacokinetic trials for both ND0612H and ND0680:

        ND0612H

    The below pharmacokinetic studies for ND0612H are planned to support our EU regulatory file. On October 7, 2014, we had a positive meeting with the EMA regarding ND0612H, and on October 23, 2014 the EMA confirmed in a letter that it had agreed with our proposal to conduct pharmacokinetic similarity studies comparing ND0612H and Duodopa (using a nasal feeding tube) in healthy volunteers. If we are successful in such studies and the EMA accepts our pharmacokinetic study results as evidencing that ND0612H has equivalent efficacy to Duodopa, the EMA may be willing to accept a reduced clinical trial data package.

      Pharmacokinetic Pilot — Europe and Israel.  We have initiated preparations for an open-label, Phase IIa study of up to 20 healthy volunteers. We expect this study to commence in the first half of 2015. The primary endpoint is to define the bioequivalent dose of the LD/CD plasma concentrations of ND0612H compared to Duodopa. We expect results in the second half of 2015. Depending on the regulatory development of Duodopa in the United States and the results of this trial, we may conduct additional studies in the United States.

      Pharmacokinetic Bioequivalence (Europe).  We plan to initiate an open-label, bioequivalence study of 20 to 40 healthy volunteers. We expect to commence the study in the second half of 2015. The purpose of the study is to compare the bioequivalence of ND0612H with that of Duodopa. We expect results in the first half of 2016.

        ND0680

      Pharmacokinetic Bioequivalence.  We plan to initiate an open-label, bioequivalence study for approximately 20 patients suffering from severe Parkinson's disease. We expect to commence the study in the second half of 2015. The purpose of the study is to compare the pharmacokinetics of the continuous duodenal infusion of ND0680 with that of Duodopa. We anticipate that the treatment duration of this study will be from four to six days. We expect results in the second half of 2016.

ND0701

ND0701 is designed to offer a next-generation alternative to an existing continuously administered apomorphine product, which is currently approved and sold outside the United States. ND0701 is for severe Parkinson's disease patients who may not respond well to LD/CD, but who do respond well to apomorphine, an alternative drug used to treat Parkinson's disease. The currently available apomorphine product has several limitations, including local side effects such as pain and nodules, and the need for assistance from a caregiver or healthcare provider to administer the drug. Based on our preclinical studies, ND0701 has improved local tolerability and requires as little as one-seventh of the standard daily volume of currently prescribed apomorphine to achieve therapeutic levels.

The same CRONO ND belt pump used to administer ND0612L is used to continuously administer ND0701 for 24 hours a day. This drug-device combination will allow for greater mobility and convenience of patients, while substantially reducing the pain associated with currently available subcutaneous apomorphine-based treatment. We expect to seek approval to initiate clinical trials in Europe for ND0701 in the second half of 2015.

Preclinical trial

We have conducted multiple preclinical studies and based on such studies, including histological and MRI evaluations, the pharmacokinetics of ND0701 and the commercial apomorphine-HCl solution, Apo-Go, are equivalent. Also, ND0701 has favorable local safety, even when administered at concentrations five times higher than Apo-Go.

92


Table of Contents

Planned and future clinical trials

      Pharmacokinetic Bioequivalence.  We plan to initiate an open-label, bioequivalence study of approximately 20 patients suffering from severe Parkinson's disease. We may also conduct the study in healthy volunteers, which we believe would shorten development timelines significantly. We are seeking the advice of the regulatory authorities in Europe regarding this possibility. We expect to commence the study in the second half of 2015. The purpose of this study is to compare the pharmacokinetics of the continuous subcutaneous infusion of ND0701 with that of apomorphine. We anticipate that the treatment duration of this study will be from four to six days. We expect that results of this study will be available in the second half of 2016.

Cognition and our ND0801 Product Candidate

We are also developing a product candidate, ND0801, to treat cognition disorders associated with CNS diseases, such as ADD/ADHD, Alzheimer's disease and schizophrenia. Cognition refers to mental processes and brain functions that involve one's ability to learn, understand and remember information; to organize, plan and problem-solve; to focus, maintain and shift attention; and to understand and use language. The therapeutic drugs most commonly used to treat the symptoms associated with ADD/ADHD are stimulants, such as Ritalin and Adderall, which have significant abuse and misuse potential because their use is associated with severe psychological or physical dependence. Non-stimulant drugs may also be prescribed to treat the symptoms associated with ADD/ADHD, although the significant side effects of such drugs, including fatigue, decreased appetite, sexual problems, palpitations, increased heart rate and high blood pressure, have limited their use.

To treat cognition disorders associated with CNS diseases, we are developing ND0801, a non-addictive treatment, which is a combination of nicotine and opripramol. We are currently testing ND0801 to be administered via a transdermal patch for the treatment of ADD/ADHD, but we may consider treating other cognition disorders associated with Alzheimer's disease, schizophrenia or Parkinson's disease with this product candidate, as well. For ADD/ADHD, we believe our nicotine-based treatment will eliminate the side effects associated with the current standard of care, which are addiction and toxicity.

Preclinical studies and development

We have conducted preclinical studies to examine the effect of opipramol on nicotine addiction in animals. In one such study, we tested the effect of opripramol on the withdrawal symptoms associated with nicotine. This study consisted of eight separate groups with either six or seven subjects per group: group 1 received a saline solution for nine days and served as the control group; group 2 received nicotine for seven days; groups 3 and 4 received opripramol for ten days; groups 5 and 6 received opripramol and nicotine for seven days and just opripramol one day prior and one day after co-administration with nicotine; and groups 7 and 8 received nicotine for seven days and opripramol on the eighth day. Per our examination of the subjects following the end of nicotine administration, we determined that daily oral administration of opipramol with nicotine materially reduces the occurrence of nicotine withdrawal symptoms 23-24 hours after ceasing nicotine administration. In another preclinical study, we injected nicotine into rats, which produced a typical 1.5 degree reduction in the rats' body temperature. Following controlled, repeated injections, the effect of nicotine on the rats' body temperature was significantly reduced overtime. In contrast, repeated injections of a combination of nicotine and opipramol maintained nicotine's effect on body temperature.

Clinical trials

We have also conducted an open-label Phase IIa proof-of-concept study with 30 patients suffering from ADD/ADHD at two centers in Israel. The study examined the safety, tolerability and optimal therapeutic doses of ND0801, within the approved range, and evaluated the cognitive improvement in the subjects following treatment with escalating doses of ND0801 using standard cognition scale tests and computerized tests. We expect results by the first half of 2015.

93


Table of Contents

Following the final results of the Phase IIa study, we will examine what specific cognition indications to pursue. We expect to develop a more detailed clinical plan for ND0801 by the first half of 2015.

Research and Development

Our research and development strategy is centered on continuing the clinical development of our product candidates and developing additional formulations based on well-established drugs for high-value indications. Our research and development team, located at our facilities in Rehovot, Israel, consisted of 15 employees as of June 30, 2014 and is supported by highly experienced consultants, comprised of our clinical guidance committee and scientific advisory board, in various research and development disciplines.

Our clinical guidance committee and scientific advisory board are comprised of:

    Warren Olanow, MD—Dr. Olanow is a Professor and the Chairman Emeritus of the Department of Neurology at the Mount Sinai School of Medicine in New York City, New York. His clinical and basic science research efforts are directed toward defining more effective therapies for Parkinson's disease and other neurodegenerative disorders. He is a member of the executive committee of the Michael J. Fox Foundation Scientific Advisory Board and is presently Co-Editor-in-Chief of the journal Movement Disorders.

    Olivier Rascol, MD—Dr. Rascol is a Professor of Clinical Pharmacology at Toulouse University Hospital in Toulouse, France. Dr. Rascol has been actively involved in the development of several marketed anti-Parkinsonian medications.

    Karl Kieburtz, MD, MPH—Dr. Kieburtz is the Director of the Clinical and Translational Science Institute in Rochester, New York and a Professor and Senior Associate Dean at the University of Rochester in Rochester, New York. He has led numerous multi-site projects in neurodegenerative diseases and has served on and chaired various research groups related to Parkinson's disease research and other neurological conditions. He has served as the Chair of the Executive Committee of the Parkinson Study Group and has served on the International Executive Committee of the Movement Disorders Society, the Executive Council of the American Neurological Association, and the Chair of the Peripheral and Central Nervous System Advisory Committee of the FDA.

    Peter A. LeWitt, MD—Dr. LeWitt is a Professor of Neurology at Wayne State University School of Medicine in Detroit, Michigan and directs the Parkinson's Disease and Movement Disorders Program at Henry Ford Hospital in West Bloomfield, Michigan. Dr. LeWitt has directed laboratory research investigating neurochemical mechanisms and diagnostic markers in Parkinson's and Alzheimer's diseases.

    Nir Giladi, MD—Dr. Giladi is the Chairman and a Professor at the Department of Neurology in the Tel Aviv Medical Center in Tel Aviv, Israel, Director of the Department of Neurology Sackler School of Medicine in Tel Aviv University and Chairman of the Medical Advisory Board to the Israeli Parkinson Association. Dr. Giladi specializes in movement disorders and is past treasurer of the International Society for Parkinson's disease and other movement disorders.

    John Nutt, MD—Dr. Nutt is a Professor of Neurology and Physiology & Pharmacology, Co-Founder and Emeritus Director of the OHSU Parkinson Center of Oregon and Movement Disorders Program in Portland, Oregon and Emeritus Director of the Portland VAMC Parkinson's Disease Research, Education and Clinical Center in Portland, Oregon. Dr. Nutt conducts innovative research in movement disorders.

    Werner Poewe, MD—Dr. Poewe is Professor of Neurology and Director of the Department of Neurology at Innsbruck Medical University in Innsbruck, Austria. Dr. Poewe's main research interests are in the field of movement disorders with particular emphasis on the clinical pharmacology of Parkinson's disease and dystonia. He served as President of the International Movement Disorder Society as well as the past Chair of the Movement Disorders Society/European Section. He has authored and co-authored numerous original articles and reviews in the field of movement disorders.

94


Table of Contents

We received government grants (subject to the payment of royalties) as part of our research and development programs approved by OCS. By December 31, 2012 and 2013 and June 30, 2014, we had received in the aggregate $1.4 million, $1.5 million and $1.9 million, respectively, from OCS for our research and development programs. Additionally, we receive funding for our clinical trials through private offerings, convertible loans and third-party grants.

For example, the MJFF awarded us one grant totaling $1.0 million to support our Phase I trial for ND0612L, or the 2010 Grant, and a second 18-month grant totaling $1.0 million to support our Phase II clinical study of ND0612L, or the 2013 Grant. We have performed all of our obligations under the 2010 Grant and have ongoing reporting and royalty obligations under the 2013 Grant. Pursuant to the 2013 Grant, we are obligated to pay the MJFF royalties of 10% of the revenue received from the option, license, sale, transfer or use of ND0612L, its derivative product candidates or any new invention arising from the project or any product incorporating such invention after approval for marketing. We are obligated to pay a maximum of $2.0 million in such royalty payments to MJFF, after which no future royalty obligation exists. On August 27, 2014, we received the final installment of approximately $0.3 million. If we are unable to complete the Phase II clinical trial or to deliver scheduled trial reports to MJFF, MJFF may terminate the grant (other than with respect to our royalty payment obligation).

We incurred approximately $2.4 million and $2.6 million in research and development expenses, net, in the years ended December 31, 2012 and 2013, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Components of Statement of Operations — Operating expenses — Research and development expenses."

We engage third-party research organizations to conduct clinical tests and preclinical studies to support the efficacy and safety of our products and their ingredients and to extend and validate their benefits for human health. Preclinical studies allow us to substantiate the safety of our products and obtain preliminary indications of their pharmacological profile. As of June 30, 2014, third-party research organizations had conducted more than three preclinical studies, according to the principles of Good Laboratory Practices, or GLP, and more than six clinical studies, according to the principles of GCP, for our product candidates.

Manufacturing, Supply and Production

The manufacturing of our product candidates is subject to strict safety requirements and compliance with cGMP. As we seek regulatory approval in the United States and other jurisdictions for our product candidates, the FDA or other applicable agencies may inspect the manufacturing plant in which our products are manufactured to confirm it meets all regulatory requirements. Any changes in the production processes for our product candidates for advanced clinical trials under an IND must be approved by regulatory authorities in these jurisdictions.

The active ingredients in our ND0612H, ND0612L and ND0680 are LD/CD, which are approved for use in several jurisdictions, including the United States and Europe. We currently acquire LD/CD for use in our clinical trials on a purchase order basis from Nextar Chempharma Solutions Ltd., a cGMP-compliant manufacturer located in Israel. We are in advanced discussions with a U.S. cGMP drug manufacturer in order to ensure we have sufficient amounts of LD/CD for our planned clinical trials and for marketing our Parkinson's disease product candidates if and when they are approved.

Additionally, we engage a third-party supplier to provide the CRONO ND and CRONO Twin ND medical devices for the administration of our Parkinson's disease product candidates. We currently acquire the majority of our medical devices from an Italian manufacturer on a purchase order basis. While we have not entered into supply agreements with our suppliers, we are in discussions with suppliers to establish long-term supply agreements. Moreover, two of our suppliers are currently developing new medical devices related to the administration of our product candidates. In order to continue enhancing our product candidates, we may participate in funding certain activities of such suppliers for the development of new

95


Table of Contents

medical devices. We have agreed on the design with a third-party manufacturer of a next-generation patch pump device for use with our ND0612L and ND0701 product candidates.

The active ingredient in ND0701 is apomorphine, which is approved for continuous administration in the European Union and for acute administration for rescue purposes in the United States and the European Union. We currently acquire the apomorphine used in our clinical trials on a purchase order basis from MacFarlan Smith Ltd., a cGMP-compliant manufacturer located in Scotland. We expect to engage a third party to manufacture the sterile solution for the product candidate in the future.

The active drug substances in ND0801 are nicotine and opipramol. Nicotine is approved in the United States for smoking cessation, as an over-the-counter drug, as skin patches, chewing gum or lozenges, and with a prescription, as a nasal spray or an oral inhaler. Opipramol is approved for the treatment of anxiety disorder and depression in several jurisdictions, including Germany, Israel, Switzerland and Turkey. We purchase both the active drug substances for use in our clinical trials of ND0801 and the transdermal patch for ND0801 from local pharmacies in Israel. We are in the process of identifying appropriate suppliers and CMOs for the optimization and scale up of this product.

Marketing, Sales and Distribution

We currently do not have any sales, marketing or distribution infrastructure. In the event we receive regulatory approval for our product candidates, we intend, where appropriate, to pursue commercialization relationships with pharmaceutical companies and other strategic partners in order to gain access to global markets. In the long term, we may build an internal commercial infrastructure.

Intellectual Property

Our intellectual property and proprietary technology are important to the development, manufacture and future sale of our 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, assignments of invention and other contractual arrangements with our employees, consultants, partners, suppliers, customers and others. We submit patent applications under the PCT, which is an international patent law treaty that provides a unified procedure for filing a single initial patent application to further seek patent protection for an invention simultaneously in each of the member states. Although a PCT application cannot issue as a patent, it allows the applicant to seek protection in any of the member states through national-phase applications.

Our patents and patent applications underlying our product candidates cover specific compositions and methods of use of the active drug substances for the ND0612H, ND0612L, ND0680 and ND0801 product candidate programs. For the ND0612H, ND0612L and ND0680 product candidate programs, we have four patents, including patents in the United States, South Africa and New Zealand, and have more than 35 pending patent applications worldwide, including one pending and two national phase international applications filed under the PCT. Absent patent-term extensions, these patents will expire between 2030 and 2031. Additional patent applications we have filed in this family, if approved, will expire in 2035. In addition, we have one pending international PCT application for the composition of ND0701. In relation to the composition and method of use related to ND0801, we have currently been granted four patents, including patents in Australia, Japan, Mexico, and the United States and have more than 10 pending patent applications worldwide pursuant to one national phase international application filed under the PCT. Such patents will expire between 2028 and 2031 absent patent-term extensions.

96


Table of Contents

While our policy is to obtain patents by application, license or otherwise, to maintain trade secrets and to seek to operate without infringing on the intellectual property rights of third parties, technologies related to our business have been rapidly developing in recent years. Loss or invalidation of certain of our patents, or a finding of unenforceability or limited scope of certain of our intellectual property, could have a material adverse effect on us. Additionally, patent applications 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 may receive in the future may be challenged, invalidated or circumvented. For example, we cannot predict the extent of claims that may be allowed or enforced upon our patents nor be certain of the priority of inventions covered by pending third-party patent applications. If third parties prepare and file patent applications that also claim technology or therapeutics to which we have rights, we may have to partake in proceedings to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us. Moreover, because of the extensive time required for clinical development and regulatory review of a product we may develop, it is possible that, before any of our product candidates can be commercialized, related patents will have expired or will expire a short period following commercial launch, thereby reducing the advantage of such patent. Loss or invalidation of certain of our patents, or a finding of unenforceability or limited scope of certain of our intellectual property, could have a material adverse effect on us. See "Risk Factors — Risks Related to Our Intellectual Property — Our success depends in part on our ability to obtain and maintain protection 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, technical specifications and other proprietary information in attempting to develop and maintain our competitive position. We also rely on protection available under trademark laws, and we are currently in the process of registering the trademark for "NeuroDerm," in various jurisdictions, including the United States, the European Union and Israel.

Competition

The medical, biotechnology and pharmaceutical industries are intensely competitive and subject to significant technological change and changes in practice. While we believe that our innovative technology, knowledge, experience and scientific resources provide us with competitive advantages, we may face competition from many different sources with respect to our product candidates that we may seek to develop or commercialize in the future. Academic institutions, governmental agencies and other public and private research organizations are also conducting research activities and seeking patent protection and may commercialize products on their own or through joint ventures. Smaller or other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

Additionally, many of our potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of drug candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining FDA and other marketing approvals for drugs and achieving widespread market acceptance. Our competitors' drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing the product.

Parkinson's Disease

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product that we may develop. Specifically, we may compete with companies that attempt to decrease the sharp fluctuations and improve the bioavailability and short-life associated with orally administered LD/CD, such as Impax Laboratories Inc., XenoPort, Inc., Intec

97


Table of Contents

Pharma Ltd. and Depomed, Inc., which are developing oral LD/CD drugs that include a controlled release or gastric retention attribute in order to decrease the gastronomical tract's impact on the concentration of levodopa. Similarly, Synagile Corporation is seeking to develop an ester form of levodopa for continuous subcutaneous administration. If such products are approved and successfully improve the bioavailability of LD/CD or an alternative drug, the demand for our Parkinson's disease product candidates may be significantly reduced.

Companies may also develop products that address other aspects of Parkinson's disease, such as Civitas Therapeutics, Inc., which is developing a rescue, or on demand, levodopa product to address acute "off" episodes commonly associated with levodopa therapy. While such products would not directly compete with our Parkinson's' product candidates, as they address specific effects of Parkinson's disease, such treatment may reduce the demand of our Parkinson's disease product candidates.

Moreover, if one of our Parkinson's disease product candidates obtains approval in the future, we believe that we would compete with traditional surgery and existing drug treatments of Parkinson's disease, including the "gold standard" of treatment for the past 30 years, oral administration of levodopa. Additionally, we may directly compete with DBS and AbbVie Inc.'s product, Duodopa, a LD/CD drug solution that comes in a gel form and is approved in several jurisdictions including Europe, Canada and Australia, and is undergoing clinical trials in the United States. Additionally, Duodopa, which is currently seeking marketing approval in the United States under the name Duopa, has received orphan drug designation in the United States for the treatment of severe stage Parkinson's disease. Accordingly, if Duopa receives marketing authorization as an orphan drug in the United States, we may not be permitted to market a product that competes with Duopa for such indications until the expiration of its orphan drug market exclusivity period, which will occur seven years after such approval. In cases where Parkinson's disease patients have already undergone surgery for insertion of the tubing necessary to administer Duodopa and where patients seek a similar but less obstructive product to Duodopa, we hope to offer ND0680 as a product that is conceptually interchangeable with Duodopa, while offering continuous 24-hour treatment through a smaller device.

In addition, if approved, our apomorphine-based product candidate, ND0701, would directly compete with other non-LD/CD treatments. For example, in Europe Britannia Pharmaceuticals Limited (part of the STADA Arzneimittel AG group of companies) currently markets a Parkinson's disease therapy that administers apomorphine, Apo-Go, via a belt pump. However, patients that use Apo-Go may suffer from painful local reactions at the injection site, necessitating auxiliary treatments.

Based on our clinical trials, we believe that our Parkinson's disease product candidates will have a sustainable competitive advantage over non-surgical alternatives and a clear advantage over surgery. See "— Parkinson's Disease Product Candidates" for the results of our clinical trials.

Other Cognitive Disorders

Similarly, although we are in the clinical phase of ND0801 for the treatment of other cognitive disorders, such as ADD/ADHD, if ND0801 obtains approval in the future, we would compete with current treatments. For example, we are aware that a number of existing treatments for ADD/ADHD are currently on the market and are marketed by pharmaceutical companies that may be far larger and more experienced than us. Current competitor drugs to ND0801 for the treatment of ADD/ADHD include stimulants such as Ritalin and Adderall, as well as the non-stimulant drugs Strattera, Intuniv and Kapvay. Further, we recognize that patients and doctors are often unwilling to change medications, and this factor may make it difficult for ND0801 to penetrate the market, even if it receives FDA approval. However, based on our clinical trials, we believe that ND0801 will have a sustainable competitive advantage over the current alternatives, and at the very least offer an alternative mode of administration. See "— Cognition and our ND0801 Product Candidate" for the results of our clinical trials.

98


Table of Contents

Government Regulation

Our business is subject to extensive government regulation. Regulation by governmental authorities in the United States, the European Union and other jurisdictions is a significant factor in the development, manufacture and marketing of our product candidates and in ongoing research and development activities. On April 10, 2012, we held a pre-IND meeting with the DNP. In this meeting, the DNP stated that ND0612L would be eligible for the submission of a 505(b)(2) regulatory pathway application, which allows expedited approval with reduced clinical trials, see — "United States — Section 505(b)(2) NDAs." The DNP also provided a clinical trials framework that would allow for a 505(b)(2) submission. We therefore seek to submit an NDA pursuant to section 505(b)(2) of the FDCA in the first half of 2017. On May 22, 2014, the EMA confirmed that our product candidate, ND0612H, was eligible for a European Union marketing authorization application via a centralized procedure, which allows ND0612H to be able to benefit from more streamlined access to the EU market.

United States

Review and Approval of Drug Products

In the United States, the FDA regulates drugs under the FDCA and related regulations and other laws. Drug products require the submission of a NDA and approval by the FDA prior to being marketed in the United States. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant to a variety of administrative or judicial sanctions, and enforcement actions brought by the FDA, the Department of Justice or other governmental entities. Possible sanctions may include the FDA's refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties.

The process required by the FDA prior to marketing and distributing a drug product 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 IND, which must become effective before clinical trials may begin;

      approval by an 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 each indication;

      preparation and submission to the FDA of a NDA or supplemental NDA;

      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 the product's identity, strength, quality and purity; and

      payment of user fees and FDA review and approval of the NDA.

Preclinical Studies

Preclinical studies include laboratory evaluation, as well as animal studies to assess the potential safety and efficacy of the product candidate. Preclinical safety tests must be conducted in compliance with FDA regulations regarding good laboratory practices. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND, which must become effective before clinical trials may be commenced.

99


Table of Contents

Clinical Trials in Support of an NDA

Clinical trials involve the administration of an investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA, unless, before 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 sponsor and 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 it commences 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 FDA regulations. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for public dissemination on their ClinicalTrials.gov website.

Clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

      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 effectiveness and to determine optimal dosage.

      Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate 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, in well-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.

Section 505(b)(2) NDAs

NDAs for most new drug products are based on two full clinical studies, which must contain substantial evidence of the safety and efficacy of the proposed new product. These applications are submitted under Section 505(b)(1) of the FDCA. However, the FDA is authorized to approve an alternative type of NDA under Section 505(b)(2) of the FDCA. This type of application allows the applicant to rely, in part, on the FDA's previous findings of safety and efficacy for a similar product, or published literature. Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to show whether or not the drug is safe for use and effective in use and relied upon by the applicant for approval of the application "were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted."

Thus, Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the applicant. NDAs filed under Section 505(b)(2) may provide an alternate and potentially more expeditious pathway to FDA approval for new or improved formulations or new uses of previously approved products. If the 505(b)(2) applicant can establish that reliance on the FDA's previous approval is scientifically appropriate, the applicant may eliminate the need to conduct certain preclinical or clinical studies of the new product. The FDA may also require companies to perform additional studies or measurements to support the change from the approved product. The FDA may then approve the new drug candidate for all or some of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.

100


Table of Contents

As our Parkinson's disease product candidates are based on reformulations of FDA-approved drugs, levodopa and carbidopa, we intend to submit an NDA under Section 505(b)(2), which may result in an expedited FDA approval.

Submission of an NDA to the FDA

In the United States, we intend to initiate a Phase II pivotal study to support a Section 505(b)(2) NDA submission to the FDA. The results of the preclinical studies and clinical trials, together with other detailed information, including information on the manufacture, control and composition of the product, are submitted to the FDA as part of an NDA requesting approval to market the product candidate for a proposed indication. Under federal law, the submission of most NDAs is additionally subject to an application user fee, currently exceeding $2.1 million, and the sponsor of an approved NDA is also subject to annual product and establishment user fees, currently exceeding $104,000 per product and $554,600 per establishment. These fees are typically increased annually. Each NDA submitted to the FDA for approval is typically reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application. If found complete, the FDA will "file" the NDA, thus triggering a full review of the application. The FDA may refuse to file any NDA that it deems incomplete or not properly reviewable at the time of submission. The FDA's established goal is to review 90% of NDA applications and original efficacy supplements given "Priority" status within six months and 90% of applications and original efficacy supplements given "Standard" status within ten months, whereupon a review decision is to be made. The FDA, however, may not approve a drug within these established 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 an actual approval but rather an "action letter" that describes additional work that must be completed before the application can be approved.

Before approving a NDA, the FDA generally inspects the facilities at which the product is manufactured or facilities that are significantly involved in the product development and distribution process, and will not approve the product unless cGMP compliance is satisfactory. The FDA may deny approval of a NDA 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 the indicated uses for which the product may be marketed, may require that warning statements be included in the product labeling, may require that additional studies be conducted following approval as a condition of the approval, may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan, or may impose other limitations.

Once a product is approved, marketing the product for other indicated uses or making certain manufacturing or other changes requires FDA review and approval of a supplemental NDA or a new NDA, which may require additional clinical data. In addition, further post-marketing testing and surveillance to monitor the safety or efficacy of a product may be required. Also, product approvals may be withdrawn if compliance with regulatory standards is not maintained or if safety or manufacturing problems occur following initial marketing. In addition, new government requirements may be established that could delay or prevent regulatory approval of our product candidates under development.

Post-Approval Requirements

Any drug product for which we receive FDA approvals is subject to continuing regulation by the FDA. Certain requirements include, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information on an annual basis or more frequently for specific events, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements. These promotion and advertising requirements include, among others, standards for direct-to-consumer advertising, prohibitions against promoting drugs for uses or in patient populations that are not described in the drug's approved labeling, known as "off-label use," and other promotional activities, such as those considered to be false or misleading. Failure to comply with FDA requirements can have negative

101


Table of Contents

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 may also lead to scrutiny and enforcement by other government and regulatory bodies. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not encourage, market or promote such off-label uses. As a result, "off-label promotion" has formed the basis for litigation under the federal False Claims Act, violations of which are subject to significant civil fines and penalties.

The manufacturing of our product candidates is and will be required to comply with applicable FDA manufacturing requirements contained in the FDA's cGMP regulations. Our product candidates are manufactured at third-party facilities, which are cGMP certified. The FDA's cGMP regulations require, among other things, quality control and quality assurance, as well as the corresponding maintenance of comprehensive records and documentation. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are also required to register their establishments and list any products they make with the FDA and to comply with related requirements in certain states. These entities are further subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in serious and extensive restrictions on a product, manufacturer or holder of an approved NDA, as well as lead to potential market disruptions. These restrictions may include recalls, suspension of a product until the FDA is assured that quality standards can be met, and continuing oversight of manufacturing by the FDA under a "consent decree," which frequently includes the imposition 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, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

The FDA also may require post-marketing testing, or Phase IV testing, as well as risk minimization action plans and surveillance to monitor the effects of an approved product or place conditions on an approval that could otherwise restrict the distribution or use of any of our product candidates.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may designate a drug product as 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 for treatment of the disease or condition will be recovered from sales of the product). A company must request orphan product designation before submitting a NDA. 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 to seven years of market exclusivity following drug product approval, but does not convey any advantage in or shorten the duration of the regulatory 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 be entitled to orphan product exclusivity. Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same indication for seven years, except in certain limited circumstances. Competitors may receive approval of different products for the indication for which the orphan 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 orphan product ultimately receives marketing approval for an indication broader than that designated in its orphan product application, it may not be entitled to exclusivity.

102


Table of Contents

Abbreviated New Drug Applications for Generic Drugs

In 1984, with passage of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the "Hatch-Waxman Act," Congress authorized the FDA to approve generic drugs that are the same as drugs previously approved by the FDA under the NDA provisions of the statute. To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency. In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously conducted for a drug product previously approved under a NDA, known as the reference listed drug, or RLD.

Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the generic drug is "bioequivalent" to the innovator drug. Under the statute, a generic drug is bioequivalent to a RLD if "the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug. . . .".

Upon approval of an ANDA, the FDA indicates that the generic product is "therapeutically equivalent" to the RLD and it assigns a therapeutic equivalence rating to the approved generic drug in its publication "Approved Drug Products with Therapeutic Equivalence Evaluations," also referred to as the "Orange Book." Physicians and pharmacists consider an "AB" therapeutic equivalence rating to mean that a generic drug is fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA's designation of an "AB" rating often results in substitution of the generic drug without the knowledge or consent of either the prescribing physician or patient.

The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity. In cases where such exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four years following the original product approval. The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant and are essential to the approval of the application. This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication.

Hatch-Waxman Patent Certification and the 30-Month Stay

Upon approval of a NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant's product or an approved method of using the product. Each of the patents listed by the NDA sponsor is published in the Orange Book. When an ANDA applicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.

Specifically, the applicant must certify with respect to each patent that:

      the required patent information has not been filed;

      the listed patent has expired;

      the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or

      the listed patent is invalid, unenforceable or will not be infringed by the new product.

103


Table of Contents

A certification that the new product will not infringe the already approved product's listed patents or that such patents are invalid or unenforceable is called a Paragraph IV certification. If the applicant does not challenge the listed patents or indicate that it is not seeking approval of a patented method of use, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months after the receipt of the Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable to the ANDA applicant.

Patent Term Restoration and Extension

A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-Waxman Act, which permits a patent restoration of up to five years for the patent term lost during product development and the FDA regulatory review. The restoration period granted is typically one-half the time between the effective date of an IND and the submission date of a NDA, plus the time between the submission date of a NDA and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product's approval date. Only one patent applicable to an approved drug product is 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 covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation with the FDA.

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 EU GLP or GMP regulations;

      submission to the relevant national authorities of a clinical trial application, or CTA, which must be approved before human clinical trials may begin;

      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, or MAA, which includes the data supporting preclinical and clinical safety and efficacy as well as detailed information on the manufacture and composition and control of the product development 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) at which 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 and controls, as well as studies to evaluate toxicity and pharmacological effects in animal studies. The conduct of the preclinical tests and formulation of the compounds for testing must comply with the relevant EU regulations and requirements. The results of such tests, together with relevant manufacturing control information and analytical data, are submitted as part of the CTA.

104


Table of Contents

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 been implemented through national legislation of the member states. Under this system, approval must be obtained from the competent national authority of a EU member state in which a study is planned to be conducted. To this end, a CTA is submitted, which must be supported by an investigational medicinal product dossier and further 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 CTA in that country.

Clinical drug development is often described as consisting of four temporal phases (Phase I- IV), see for example EMA's note for guidance on general considerations for clinical trials (CPMP/ICH/291/95).

      Phase I (Most typical kind of study: Human Pharmacology);

      Phase II (Most typical kind of study: Therapeutic Exploratory);

      Phase III (Most typical kind of study: Therapeutic Confirmatory); and

      Phase IV (Variety of Studies: Therapeutic Use).

Studies in Phase IV are all studies (other than routine surveillance) performed after drug approval and are related to the approved indication.

The phase of development provides an inadequate basis for classification of clinical trials because one type of trial may occur in several phases. The phase 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 development plan the typical sequence will not be appropriate or necessary.

Marketing authorization

Authorization to market a product in the EU member states proceeds under one of four procedures: a centralized authorization procedure, a mutual recognition procedure, a decentralized procedure or a national procedure. A marketing authorization may be granted only to an applicant established in the European Union.

The centralized procedure provides for the grant of a single marketing authorization that is valid for all EU member states, plus by extension the European Economic Area, or EEA, member states, Norway, Iceland and Liechtenstein. The centralized procedure is compulsory for medicines produced by certain biotechnological processes, products designated as orphan medicinal products, and products with a new active substance indicated for the treatment of certain diseases. The centralized procedure is optional for those products that are highly innovative or for which a centralized process is in the interest of patients. Products that have received orphan drug designation in the European Union will qualify for this centralized procedure, under which each product's marketing authorization application is submitted to the EMA. Under the centralized procedure in the European Union, the maximum time frame for the evaluation of a marketing authorization application is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee of Medicinal Products for Human Use). On May 22, 2014, the EMA confirmed that our product candidate, ND0612H, was eligible for a European Union marketing authorization application via a centralized procedure, which allows ND0612H to be able to benefit from a more streamlined access to the EU market.

In general, if the centralized procedure is not followed, there are three alternative procedures where applications are filed with one or more member state 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 be made for mutual recognition in one or more other member states, or the Concerned Member State(s).

105


Table of Contents

      Decentralized procedure. The decentralized procedure may be used to obtain a marketing authorization in several European member states when 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 single member state. Furthermore, this marketing authorization is not based on recognition of another marketing authorization for the same product awarded by an assessment authority of another member state. If marketing authorization in only one member state is preferred, an application can be filed with the national competent authority of a member state. The national procedure can also serve as the first phase of a mutual recognition 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 centralized authorization procedure is compulsory, that procedure must be followed. In addition, the national procedure is not available in the case of medicinal product dossiers where the same applicant has already obtained marketing authorization in one of the other EU member states or has already submitted an application for marketing authorization in one of the other member states and the application is under consideration. In the latter case, applicants must follow a mutual recognition 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 extreme cases, the authorization may be revoked, resulting in withdrawal of the product from sale.

Cross-referral to innovator's data

Articles 10(1) and 10(2)(b) of Directive 2001/83/EC provide the legal basis for an applicant to seek a marketing authorization on the basis that its product is a generic medicinal product (a copy) of a reference medicinal product that has already been authorized, in accordance with EU provisions. A reference product is, in principle, an original product granted an authorization on the basis of a full dossier of particulars and information. This is the main exemption used by generic manufacturers for o