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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS COLLPLANT HOLDINGS LTD.

Table of Contents

As filed with the Securities and Exchange Commission on October 20, 2016

Registration No. 333-                


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

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CollPlant Holdings Ltd.
(Exact name of registrant as specified in its charter)

State of Israel
(State or other jurisdiction of
incorporation or organization)
  3842
(Primary Standard Industrial
Classification Code Number)
  Not applicable
(I.R.S. Employer
Identification No.)

3 Sapir Street, Weizmann Science Park
Ness-Ziona 74140, Israel
Tel: +972 73 232 5600
(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
+1 302 738 6680
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Mark S. Selinger, Esq.
Gary M. Emmanuel, Esq.
McDermott Will & Emery LLP
340 Madison Avenue
New York, NY 10173
+1 212 547 5400
  Perry Wildes, Adv.
Adva Bitan, Adv.
Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
One Azrieli Center, Round Building
Tel Aviv 6701101, Israel
+972 3 607 4520
  Ivan K. Blumenthal, Esq.
Merav Gershtenman, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
666 Third Avenue
New York, NY 10017
+1 212 935 3000

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

          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)(3)(4)

  Amount of
registration fee(5)

 

Ordinary Shares, par value NIS 0.01 per share, represented by American Depositary Shares(1)

  $25,000,000   $2,897.50
 

Total Registration Fee

  $25,000,000   $2,897.50

 

(1)
The ordinary shares will be represented by American Depositary Shares, or ADS, which have been registered under a separate registration statement on Form F-6 and are issuable upon deposit of the ordinary shares registered hereby. Each ADS represents 100 ordinary shares.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(3)
Includes ordinary shares that the underwriters have the option to purchase to cover over-allotments, if any.

(4)
Pursuant to Rule 416 under the Securities Act, the ordinary shares registered hereby also include an indeterminate number of additional ordinary shares as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.

(5)
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

          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 of 1933, as amended, 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.

   


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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission has declared this registration statement effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

PRELIMINARY PROSPECTUS                   SUBJECT TO COMPLETION                   DATED OCTOBER 20, 2016

CollPlant Holdings Ltd.

GRAPHIC

AMERICAN DEPOSITARY SHARES
EACH REPRESENTING 100 ORDINARY SHARES



        This is our initial public offering in the United States. We are offering        American Depositary Shares, or ADSs. Each ADS represents 100 of our ordinary shares, par value NIS 0.01 per share.

        We have applied to list the ADSs on the NASDAQ Capital Market, under the symbol "CLGN." Our ordinary shares currently trade on the Tel Aviv Stock Exchange, or TASE, under the symbol "CLPT," and the ADSs are currently quoted on the OTCQX marketplace, or OTCQX, under the symbol "CQPTY." On October 19, 2016, the closing price of our ordinary shares on the TASE was NIS 0.30, or $0.08 per share (based on the exchange rate reported by the Bank of Israel on such date), and equivalent to a price of $7.96 per ADS. The closing price of the ADSs on OTCQX, on June 10, 2016, was $11.93 per ADS, which was the last reported closing price of the ADSs on OTCQX. Assuming that the ADSs are listed for trading on the NASDAQ Capital Market, the quoting of the ADSs on OTCQX will be discontinued prior to the completion of this offering.

        We are an emerging growth company, as defined in the U.S. Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and, as such, have elected to comply with certain reduced public company reporting requirements.

        Investing in the ADSs involves a high degree of risk. See "Risk Factors" beginning on page 14 of this prospectus.

       
 
 
  Per ADS
  Total
 

Initial public offering price

  $               $            
 

Underwriting discounts and commissions(1)

  $               $            
 

Proceeds to us (before expenses)

  $               $            

 

(1)
See "Underwriting" beginning on page 177 for additional information regarding underwriting compensation.

        The underwriters have an option to purchase up to      additional ADSs from us at the initial public offering price, less the underwriting discounts and commissions payable by us, for 30 days after the date of this prospectus to cover over-allotments, if any.

        None of the United States Securities and Exchange Commission, the Israel Securities Authority, or any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the ADSs to the purchasers in this offering on or about                    , 2016.



Book-Running Manager

Ladenburg Thalmann

Lead Manager

Roth Capital Partners

The date of this prospectus is                    , 2016.


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TABLE OF CONTENTS

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    14  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

    59  

EXCHANGE RATE INFORMATION

    60  

PRICE RANGE OF OUR ORDINARY SHARES

    60  

USE OF PROCEEDS

    62  

DIVIDEND POLICY

    63  

CAPITALIZATION

    64  

DILUTION

    66  

SELECTED CONSOLIDATED FINANCIAL DATA

    68  

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

    69  

BUSINESS

    84  

MANAGEMENT

    115  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    142  

PRINCIPAL SHAREHOLDERS

    145  

DESCRIPTION OF OUR ORDINARY SHARES

    148  

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

    155  

SHARES ELIGIBLE FOR FUTURE SALE

    163  

TAXATION

    165  

UNDERWRITING

    177  

EXPENSES RELATED TO THIS OFFERING

    185  

LEGAL MATTERS

    185  

ENFORCEABILITY OF CIVIL LIABILITIES

    185  

EXPERTS

    186  

WHERE YOU CAN FIND MORE INFORMATION

    186  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

    F-1  

        Until and including                    , 2016 (25 days after the date of this prospectus), all dealers that buy, sell, or trade the ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

        You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you. We have not, and the underwriters have not, authorized any person to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this

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prospectus or of any sale of the securities offered hereby. Our business, financial condition, results of operations, and prospects may have changed since that date. Neither we nor the underwriters take any responsibility for, nor do we provide any 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 the ADSs means that information contained in this prospectus is correct after the date of this prospectus.

        Market data and certain industry data and forecasts used throughout this prospectus were obtained from sources we believe to be reliable, including market research databases, publicly available information, reports of governmental agencies, and industry publications and surveys. We have relied on certain data from third-party sources, including internal surveys, industry forecasts, and market research, which we believe to be reliable based on our management's knowledge of the industry. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" and elsewhere in this prospectus.

        Our financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our historical results do not necessarily indicate our expected results for any future periods.

        Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

        Unless derived from our financial statements or otherwise noted, the terms "shekels," "Israeli shekels," and "NIS" refer to New Israeli Shekels, the lawful currency of the State of Israel, and the terms "dollar," "U.S. dollar," "US$," "USD," and "$" refer to U.S. dollars, the lawful currency of the United States.

        We own various trademark registrations, trademark applications, unregistered trademarks, and trade names, including, among others: "collage" and "Vergenix." All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names in this prospectus may be referred to without the symbols ® and TM, but such references should not be construed as any indication that their respective owners will not assert, to the fullest extent under applicable law, their rights to those trademarks or trade names.

Notice to Prospective Investors in Israel

        This document does not constitute a public offering or selling or a solicitation of an offer to sell any kind of securities under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israeli Securities Authority. Any public offering in Israel requires a pre-approved permit by the Israeli Securities Authority and/or the Tel Aviv Stock Exchange or an exemption thereof. In Israel, this prospectus is being distributed only to, and is directed only at the types of, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of a fund for joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters purchasing for their own account or for clients which are types of investor listed in the Addendum, or controlling shareholder, chief executive officer, or director of CollPlant, or, subject to Israeli Securities Authority's approval, an entity incorporated outside of Israel, venture capital funds, entities with equity in excess of NIS 50.0 million, and "qualified individuals," each as defined in the Addendum (as it may be amended from time to time) and each as assessed by the registrant, collectively referred to as qualified investors. Qualified investors may be required to submit written confirmation that they fall within the scope of the Addendum.

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PROSPECTUS SUMMARY

        This summary highlights selected information about us and the ADSs that we are offering. This summary does not contain all of the information you should consider before investing in the ADSs. Before making an investment in the ADSs, you should read the entire prospectus carefully for a more complete understanding of our business and this offering, including our consolidated financial statements and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this prospectus. Unless the context requires otherwise, the terms "CollPlant," "we," "us," "our," "the Company," and similar designations refer to CollPlant Holdings Ltd. and its wholly owned subsidiary CollPlant Ltd. Unless derived from our financial statements or otherwise indicated, U.S. dollar translations of NIS amounts presented in this prospectus are translated using the rate of NIS 3.846 to one U.S. dollar, the exchange rate reported by the Bank of Israel for June 30, 2016.

Overview

        We are a clinical-stage regenerative medicine company focused on developing and commercializing tissue repair products, initially for the orthobiologics and advanced wound care markets. Our product candidates are based on our rhCollagen, a form of human collagen produced with our proprietary plant-based genetic engineering technology. We believe our technology is the only commercially viable technology available for the production of genetically engineered, or recombinant, human collagen. We believe that our rhCollagen, which is identical to the type I collagen produced by the human body, has significant advantages compared to currently marketed tissue-derived collagens, including improved biofunctionality, superior homogeneity, and reduced risk of immune response. We believe the attributes of our rhCollagen make it suitable for numerous tissue repair applications in orthobiologics and advanced wound care throughout the human body. Orthobiologics use cell-based therapies and biomaterials to promote healing. Advanced wound care is composed of biocompatible products that are intended to actively promote wound healing by interacting either directly or indirectly with wound tissues. We believe that the annual market opportunity for our current product candidates utilizing our rhCollagen within the orthobiologics and advanced wound care markets exceeds $5 billion. We have not generated any material revenue from product sales to date. We have incurred losses in each year since our inception in 2004, and have an accumulated deficit of $37.8 million as of June 30, 2016. Our recurring net losses and negative cash flows from operations have raised substantial doubt about our ability to continue as a going concern, and as a result, our independent registered public accounting firm has noted this in the opinion they issued on our consolidated financial statements for the year ended December 31, 2015. We anticipate that we will continue to incur losses for the foreseeable future and we may never be profitable.

        Our VergenixSTR product candidate is a soft tissue repair matrix which combines cross-linked rhCollagen with platelet-rich plasma, or PRP, and is intended to accelerate healing in the treatment of tendinopathy. In August 2016, we completed an open label, single arm, multi-center clinical trial of VergenixSTR in Israel. In October 2016, we received CE marking certification for VergenixSTR, which is required for a product to be marketed in the European Union. We are now in the process of identifying distributors in Europe.

        Our VergenixFG product candidate is a wound-filling flowable gel made from our rhCollagen intended to enhance the quality and speed of closure of deep surgical incisions and wounds, including diabetic ulcers, burns, bedsores, and other chronic wounds. We completed an open label, single arm, multi-center clinical trial of VergenixFG in Israel to support CE marking certification. In February 2016, we received CE marking certification for VergenixFG, and in July 2016, we supplied our first order in Europe. To bring our initial two product candidates to market, we intend to first commercialize the product candidates in Europe and expect to pursue U.S. Food and Drug Administration, or FDA, approval, under the pre-market approval, or PMA regulatory pathway, for our rhCollagen-based products.

 

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        We are developing a bone graft surgical matrix, which we refer to as the CollPlant Surgical Matrix, in collaboration with Bioventus LLC, or Bioventus, a global leader in active orthopedic healing. The CollPlant Surgical Matrix is a novel resorbable carrier composed of rhCollagen and synthetic minerals which is intended to be charged with a bone morphogenic protein, or BMP, developed by Bioventus for use as a bone graft substitute in bone repair indications such as spinal fusion and trauma. The CollPlant Surgical Matrix charged with a BMP, which we refer to as the Bioventus product candidate, is intended to stimulate the recruitment and differentiation of bone-forming cells, which can heal existing bone and produce new natural bone. We are party to a non-binding term sheet entered into on July 9, 2015 with Bioventus for the license and supply of the CollPlant Surgical Matrix. In anticipation of filing an Investigational New Drug application, or IND, Bioventus is undertaking preclinical animal studies comparing the Collplant Surgical Matrix to other active comparators. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

        Our rhCollagen has superior biological function when compared to any tissue-derived collagens, whether from animal or human tissues, according to data published in peer-reviewed scientific publications. Our rhCollagen can be fabricated in different forms, shapes, and viscosities including gels, pastes, sponges, sheets, membranes, fibers, and thin coats, all of which have been tested in vitro and in animal models and proven superior to tissue-derived products. These different forms of our rhCollagen broaden the potential applications of our products. For example, collagen gels made of our rhCollagen are more homogenous and less viscous compared to tissue-derived collagens, making the rhCollagen gels ideal for any injectable product. We have demonstrated that, due to its homogeneity, rhCollagen can produce fibers and membranes with high molecular order, meaning all the molecules are oriented in the same direction, which enables the formation of tissue repair products with distinctive physical properties, including improved tensile strength due to the alignment of the collagen fibers, higher levels of transparency, and the ability to achieve high concentrations of collagen at low viscosities. The unique properties of our rhCollagen make it an ideal building block for many products such as BioInks for 3-D printing, artificial tendons, and transparent ophthalmic products that we believe cannot currently be produced using tissue-derived collagens.

        The production of our rhCollagen begins when five human genes essential for the production of collagen are introduced into a tobacco plant. The genetically engineered tobacco plantlets are distributed to qualified greenhouses across Israel, where they are grown to maturity, which takes about eight weeks. The tobacco leaves are then harvested and processed to an extract, which undergoes purification until the final rhCollagen product is produced. Cost-effective production, the abundant supply of raw materials, and the resulting product, pristine human collagen, are the most important features of plant-based production. We are advancing a new production process that we believe will result in higher yields and labor cost reductions, assuring adequate supply as demand for rhCollagen increases.

Advantages of Our rhCollagen and rhCollagen-based Products

        Collagen is the main component of connective tissue, comprising approximately 30% of the protein found in the human body. Type I collagen is the most abundant form of collagen and serves as the primary scaffold in tissue or organ repair processes, making it a logical choice for regenerative medicine products. We estimate the size of the total market for human collagen-based tissue repair products for use in orthobiologics and advanced wound care applications is approximately $20 billion. Currently, collagen for medical use is primarily derived from bovine (cow) and porcine (pig) sources, as well as from human cadavers. It is extracted from the tissues using mechanical processes and chemical treatments. All of our product candidates are based on our proprietary recombinant type I human

 

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collagen, rhCollagen. Our rhCollagen has many advantages over tissue-derived collagens, as outlined below:

Tissue-Derived Collagens   rhCollagen

Defects in the protein structure, resulting in significant damage to binding sites for progenitor cells, which are cells that, when activated by binding to the scaffold, proliferate, or multiply, and differentiate into appropriate tissue.

 

A pristine triple helix structure identical to native collagen, resulting in optimal binding sites for progenitor cells supporting endothelial, fibroblast, and keratinocyte cell attachment and proliferation.


Advantage:    In all cell types tested in vitro, cell proliferation was significantly better in scaffolds made of rhCollagen than in commercially available scaffolds made of bovine collagen. The accelerated cell proliferation achieved with rhCollagen results in faster wound healing, less scarring, and overall high-quality tissue regeneration.

High proportions of cross-linked, or bonded, collagen molecules, leading to collagen building blocks with high and varying molecular weights, which can impair the collagen's ability to self-assemble homogenous scaffolds and impede its rate of degradation.

 

Allows for the precise control over the degree of cross-linked collagen due to the homogeneity of rhCollagen, enabling consistent and reproducible products with a controlled degradation rate.


Advantage:    Precise control over the proportion of cross-linked collagen allows us to optimize the degradation rate of rhCollagen to the targeted indication. Achieving the same level of engineered performance would be difficult, if not impossible, with tissue-derived collagens that varies from batch to batch.

Tissue-derived collagens, in many cases, contain residual contaminant proteins, growth factors, and cytokines, or signaling proteins, and carries a risk of disease transmission. As a result, scaffolds made of tissue-derived collagens may provoke inflammation, as well as undesirable immune and foreign body responses that may cause adverse effects and unpredictable biological outcomes.

 

Our rhCollagen is composed of pure molecules that are identical to type I human collagen. It has no residues of growth factors which can lead to potential side effects, does not induce an immune response, and carries no risk of transmitting diseases and pathogens.


Advantage:    In vitro studies performed under an academic collaboration have demonstrated that rhCollagen incubated with activated THP1-macrophages produces significantly lower levels of inflammatory cytokines when compared with bovine collagen, demonstrating that animal-derived collagen can provoke a foreign body response not seen with rhCollagen. This foreign body response delays healing and increases scarring.

        The advantages of our rhCollagen outlined above have been demonstrated through in vitro testing and in preclinical animal studies, and are based on the performance of rhCollagen alone. The performance demonstrated in these studies is not necessarily indicative of the performance of our product candidates which contain rhCollagen. We cannot assure you that the same advantages of rhCollagen will be observed in clinical testing of our product candidates containing rhCollagen.

 

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Our Strategy

        We plan to exploit the unique characteristics of our rhCollagen to develop and commercialize an extensive portfolio of regenerative medicine products. The key elements of our strategy include the following:

    Position our rhCollagen as the "gold standard" platform technology for collagen-based products in a broad range of markets. We believe that our rhCollagen represents a significant advance in collagen technology, demonstrated by its improved biological function, superior homogeneity, and reduced risk of immune response. We also believe that our platform technology, and the knowledge and expertise we have gained in its development, will enable the development, both independently and with collaborators, of differentiated products in emerging industries such as bio-printing which we believe cannot be adequately addressed with currently available collagen technologies.

    Establish a regulatory process for rhCollagen-based end products using VergenixSTR and VergenixFG as precedent. We have obtained marketing clearance of our initial product candidates, VergenixSTR and VergenixFG, through CE marking in Europe. Following adoption by key opinion leaders and establishment of sales in Europe, we plan to pursue FDA approval for marketing our rhCollagen-based products in the United States. We will need substantial additional capital in order to pursue FDA approval of any of our product candidates. We believe that this strategy will allow us to gain earlier market access and thereby more rapid industry acceptance for our rhCollagen-based end products, since the timeline to achieve CE marking is generally shorter than the FDA approval route. Utilizing this strategy is expected to result in more physicians gaining exposure to rhCollagen-based products like VergenixSTR and VergenixFG sooner.

    Utilize collaborative partners and distributors to develop and commercialize our technology and products. We believe the market-leading characteristics of our rhCollagen will create attractive collaboration opportunities for our product candidates. We intend to selectively establish collaborations and strategic partnerships with well-established companies whose distribution networks are deeply entrenched, as well as with local and regional distributors in certain markets.

    Expand our manufacturing capacity to support commercialization of rhCollagen-based end products. We intend to utilize a portion of the proceeds from this offering to construct a manufacturing facility in Israel that will enable us to manufacture commercial quantities of our rhCollagen and rhCollagen-based end products in a cost-competitive manner for application in both the premium and commodity markets.

    Expand our pipeline through ongoing development of new products.  We plan to develop additional rhCollagen-based products, both independently and with strategic collaborators, initially in the orthobiologics and advanced wound care markets and subsequently in other high value markets.

    Advance our leadership position in recombinant protein production through our plant-based technology. As tissue engineering and regenerative medicine continue to evolve and expand, we expect that the demand for high-quality biomaterials will grow. In response to this demand, we may expand the use of our proprietary plant-based protein production know-how to other recombinant proteins.

 

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Our Product Candidates

VergenixSTR—Tendinopathy Treatment

        VergenixSTR is a soft tissue repair matrix composed of our rhCollagen and platelet-rich plasma, or PRP, extracted from a patient's blood. VergenixSTR is intended for the treatment of tendinopathy, such as in the elbow tendon (for treatment of "tennis elbow"), rotator cuff, patellar tendon, Achilles tendon, and hand tendons. VergenixSTR is injected into the affected area, and forms a viscous gel matrix which serves as a scaffold in the vicinity of a tendon injury site, inducing the platelet concentrate to remain in place at the injured area, enabling optimal healing. In a preclinical study of 54 rats based on an established model of tendinopathy induced in rats, VergenixSTR resulted in lower initial inflammatory mononuclear cell levels, which correlates with a reduction in pain. This effect, along with observations on the appearance of mature fibrosis and elimination of early granulated tissue, suggests that VergenixSTR may accelerate the healing of tendons in comparison with the control treatment of PRP alone.

        In August 2016, we completed an open label, single arm, multi-center clinical trial of VergenixSTR of 40 patients in Israel intended to demonstrate safety and to evaluate the performance of VergenixSTR in patients suffering from tennis elbow or lateral epicondylitis, an inflammation of the tendons that join the forearm muscles on the outside of the elbow. The trial, which commenced in January 2015, initially enrolled 20 patients and was expanded to enroll an additional 20 patients. Patients enrolled in the trial received a one-time injection of VergenixSTR and are monitored for the level of pain, tendon healing, and recovery of hand movement at three and six months after treatment.

        Results of the trial indicated that VergenixSTR was found to be safe for use on human subjects. At the three-month and six-month follow ups, patients treated with VergenixSTR reported an average 51% and 59% reduction in pain and improvement in motion, respectively, as measured by score improvement over the baseline on the Patient-Rated Tennis Elbow Evaluation, or PRTEE, questionnaire. The PRTEE questionnaire is designed to measure reduction in pain and recovery of motion for patients with tennis elbow.

        Furthermore, at three-month and six-month follow ups, 74% and 86%, respectively, of patients treated with VergenixSTR showed at least a 25% reduction in pain and improvement in motion as measured by PRTEE. In contrast, a study of the standard-of-care for tennis elbow therapies published in 2010 in the American Journal of Sports Medicine, or AJSM, reported that, at three and six months, 48% and 36%, respectively, of steroid patients showed at least a 25% reduction in pain and improvement in motion as measured by PRTEE. Also at the three-month and six-month follow ups, 62% and 64%, respectively, of patients treated with VergenixSTR showed at least a 50% reduction in pain and improvement in motion as measured by PRTEE, whereas the 2010 AJSM study showed 33% and 17% reductions at three and six months, respectively, for this same measurement.

        In October 2016, we received CE marking certification for VergenixSTR. We are now in the process of identifying distributors in Europe. Following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue FDA approval for VergenixSTR in the United States under the PMA regulatory pathway.

VergenixFG—Wound Filler

        VergenixFG is an advanced wound care product candidate intended for the treatment of deep surgical incisions and wounds, including diabetic ulcers, burns, bedsores, and other chronic wounds that are difficult to heal. The VergenixFG formulation provides a scaffold of pure human collagen that fills the wound bed and is engineered to create maximal contact with the surrounding tissue, which is believed to enhance healing. In a cutaneous full-thickness wound pig model, 95% wound closure was observed with VergenixFG at day 21 compared to 68% closure in wounds treated with the benchmark

 

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product. The researchers concluded that VergenixFG is effective in animal wound models, and it is expected to be capable of reducing the healing time of human wounds.

        We have completed an open label, single arm, multi-center clinical trial of VergenixFG of 20 patients in Israel intended to demonstrate safety and to evaluate the performance of VergenixFG in patients with hard-to-heal chronic wounds of the lower limbs. Patients enrolled in the trial received a single treatment of VergenixFG followed by a four-week follow up. Product performance was examined according to several measures, the main one being the percentage of wound closure achieved.

        In November 2015, we announced final results of the trial, which indicated that VergenixFG is safe for use on human subjects. An analysis of the final results found average wound closure rates of 80% within four weeks of treatment, with 9 of the 20 patients treated (45%) achieving full wound closure in that time period. In contrast, according to a scientific study published in 2014 in the International Wound Journal treatment with the current standard-of-care resulted in complete wound closure after 12 weeks of treatment in just 24% of patients for wounds comparable in their severity to the wounds treated in our VergenixFG trial.

        In February 2016, we received CE marking certification for VergenixFG. In June 2016, we entered into our first distribution agreement with an Italian company to distribute VergenixFG in Italy, and in July 2016, we supplied our first order. Subsequently, in August 2016, we entered into our second distribution agreement with a Swiss company to distribute VergenixFG in Switzerland. We intend to enter into additional distribution agreements in Europe, and following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue regulatory approval for VergenixFG in the United States under the PMA regulatory pathway.

CollPlant Surgical Matrix

        The CollPlant Surgical Matrix is a novel resorbable carrier composed of rhCollagen and synthetic minerals which is intended to be charged with a BMP developed by Bioventus for use as a bone graft substitute in bone repair indications such as spinal fusion and trauma. The CollPlant Surgical Matrix is being developed in collaboration with Bioventus, a global leader in active orthopedic healing. We are party to a non-binding term sheet entered into on July 9, 2015 with Bioventus for the license and supply of the CollPlant Surgical Matrix. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

        The CollPlant Surgical Matrix charged with a BMP, which we refer to as the Bioventus product candidate, is intended to induce cell infiltration and proliferation, healing existing bone and producing new natural bone, with a dose far below that of the current market-leading bone graft, which is expected to address safety concerns associated with that product, while offering at least equivalent efficacy. The Bioventus product candidate was tested in different animal models to verify its performance in bone healing. In these preclinical studies, the Bioventus product candidate demonstrated at least equivalent efficacy to the current market leading product, while requiring only one-tenth of the BMP dosage. In anticipation of filing an IND, Bioventus is undertaking preclinical animal studies comparing the CollPlant Surgical Matrix to other active comparators. These preclinical studies are based on animal models, including non-human primate studies, which may not be indicative of results in clinical trials with human subjects.

Future Product Candidates

        We have several additional projects which are in different stages of development. We currently have in-house research and development projects related to the use of VergenixSTR for tendon rupture and the use of VergenixFG for surgical wounds, and are actively seeking collaborators in these indications. We are also developing BioInks consisting of our rhCollagen suitable for 3-D printing. Our

 

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researchers have chemically modified the gelling behavior of the collagen to adapt the biological molecules for application in printing. In addition, we are researching the production of other extracellular proteins through our plant-based production system.

Our Market Opportunity

        We are initially focused on the orthobiologics and advanced wound care markets. In 2014, GlobalData estimated that the major segments of the orthobiologics market, including bone allograft, bone graft substitutes, and viscosupplementation, comprised an annual $6.7 billion worldwide market. The overall increase in prevalence of musculoskeletal disorders combined with technological advancements in the orthobiologics field are fueling the growth of this market, resulting in a compound annual growth rate, or CAGR, of 7.7% in the North American market from 2014 to 2019, as predicted by MicroMarket Monitor. The advanced wound care market, which includes device-based wound care, moist wound care products, and biologics, was estimated by Espicom to be $6.2 billion in 2013, representing a growth rate of approximately 5% since 2012.

        We believe the market opportunity for our current product candidates utilizing our rhCollagen platform technology exceeds $5 billion. VergenixSTR is an orthobiologic addressing indications within the soft tissue repair market. There are over 4.4 million procedures for the treatment of tendinopathy per year in the United States alone. We estimate the size of the target market for VergenixSTR for treating tendinopathy is three million procedures per year, or approximately $2.0 billion.

        The Bioventus product candidate, which incorporates the CollPlant Surgical Matrix, is an orthobiologic which addresses indications within the bone repair market. It is intended to be used as a bone void filler, initially targeting trauma. We believe this product candidate will have wide applicability in skeletal procedures, and we expect that it will be used in multiple markets, including spinal fusion. Bioventus has estimated that the size of the target market for the Bioventus product candidate incorporating the CollPlant Surgical Matrix is approximately 300,000 procedures per year in the United States and Europe, representing a market size of approximately $1.2 billion, and is projected to grow to 360,000 procedures per year, representing a market size of $1.4 billion by 2019.

        VergenixFG addresses indications within the advanced wound care market, and is intended for the treatment of deep surgical wounds and chronic wounds. The National Center for Health Statistics reported a total of 51.4 million inpatient surgical procedures took place in the United States in 2010, and we believe at least half of those resulted in a major surgical wound that could benefit from an advanced wound closure product such as VergenixFG to facilitate healing. In 2013, Medscape reported that chronic wounds affect 5.7 million patients annually in the United States alone. We estimate the size of the target market for VergenixFG in diabetic foot ulcers to be 300,000 patients and $500 million annually. Diabetic foot ulcers represent about one quarter of the total chronic wound market, indicating that our initial target market is several magnitudes greater than this market alone.

Risk Factors

        Our business is subject to numerous risks, as more fully described in the section titled "Risk Factors" immediately following this prospectus summary. You should read and carefully consider these risks and all of the other information in this prospectus, including the financial statements and the related notes included elsewhere in this prospectus, before deciding whether to invest in the ADSs. In particular, such risks include, but are not limited to, the following:

    We are a clinical-stage regenerative medicine company, and we have not yet reported any revenue from product sales. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our audited financial statements for the year ended December 31, 2015 which raises substantial doubt about our ability to continue as a going concern without additional financing.

 

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    We have product candidates in the clinical trial or preclinical study phase. Clinical trials are expensive and complex to structure and run, and failure can occur at any stage of clinical development, including a failure to receive approval for the conduct of clinical trials from governmental regulatory authorities such as the FDA.

    We cannot commercialize a product until the appropriate regulatory authorities, including European regulatory authorities and the FDA, have reviewed and approved the product.

    If we fail to identify or enter into economically viable collaboration agreements for certain of our product candidates, we may be unable to commercialize them effectively or at all.

    We have limited experience in manufacturing products, and we must expand our capacity to do so.

    Our product candidates are subject to extensive regulation and will remain subject to ongoing regulatory requirements even if they receive marketing approval.

    We have no experience in marketing or distributing our products, and we need to establish our distribution channels.

    If we, or the parties from whom we license intellectual property, fail to adequately protect, enforce, or secure rights to the patents which we own or may own in the future or that were licensed to us, the value of our intellectual property rights would diminish and our business and competitive position would suffer.

    We face significant competition, and if we cannot successfully compete with new or existing products from our competitors, our product candidates may be rendered non-competitive or obsolete.

Implications of Our Emerging Growth Company and Foreign Private Issuer Status

        As a company with less than $1.0 billion in revenue for our year ending December 31, 2015, we qualify as an "emerging growth company" under Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of certain exemptions from reporting requirements that generally apply to public companies, including the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, compliance with new standards adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or auditor discussion and analysis, exemption from say-on-pay, say-on-frequency, and say-on-golden parachute voting requirements, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have elected not to avail ourselves of an exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards. This election is irrevocable.

        We will remain an emerging growth company until the earliest of: (i) the last day of our fiscal year during which we have total annual gross revenue of at least $1.0 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act.

        Upon completion of this offering, we will also be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are applicable to "foreign private issuers," and under those requirements we will file reports with the Securities and Exchange

 

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Commission, or SEC. As a foreign private issuer we are exempt from certain rules and regulations under the Exchange Act, that are applicable to other public companies that are not foreign private issuers. For example, although we intend to report our financial results on a quarterly basis, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual report with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. We may also present financial statements pursuant to International Financial Reporting Standards, or IFRS, instead of pursuant to U.S. generally accepted accounting principles, or U.S. GAAP. Furthermore, although the members of our senior management and directors will be required to notify the Israel Securities Authority of certain transactions they may undertake, including with respect to our ordinary shares, our senior management, directors, and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we will also not be subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.

        With respect to home country corporate governance practices under the listing rules of the NASDAQ Capital Market, or NASDAQ Listing Rules, we intend to follow home country practice in Israel with regard to, among other things, director nomination procedures and approval of compensation for officers. In addition, we may follow our home country law instead of the NASDAQ Listing Rules that require shareholder approval for certain dilutive events, such as the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or greater interest in the company, and certain acquisitions of the stock or assets of another company, amending our compensation policy from time to time, and the approval of certain interested-parties transactions.

        We may choose to take advantage of any, some, or all of the exemptions available to us as an emerging growth company or as a foreign private issuer. We have taken advantage of reduced reporting requirements in this prospectus.

        Accordingly, the information contained in this prospectus may be different from the information you receive from other public companies in which you hold stock. Please see the section of this prospectus titled "Risk Factors—Risks Related to the Offering and Ownership of the ADSs" for a description of exemptions that apply to emerging growth companies and foreign private issuers.

Corporate Information

        We were incorporated under the laws of the State of Israel in 1981. CollPlant Ltd., our wholly owned subsidiary, was incorporated under the laws of the State of Israel in 2004 and merged with us (by way of transfer of shares) in 2010. Our principal executive office is located at 3 Sapir Street, Weizmann Science Park, Ness-Ziona 74140, Israel, and our telephone number is +972 (0) 73 2325600. Our website address is www.collplant.com. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on or accessible through our website a part of this prospectus.

 

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THE OFFERING

ADSs offered by us

          ADSs

ADSs to be outstanding immediately after this offering

 

        ADSs (or        ADSs if the underwriters exercise in full their option to purchase additional ADSs).

Ordinary shares to be outstanding immediately after this offering

 

            ordinary shares (or            ordinary shares if the underwriters exercise in full their option to purchase            additional ADSs).

Over-allotment option

 

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to        additional ADSs from us to cover over-allotments, if any.

The ADSs

 

Each ADS represents 100 ordinary shares, par value NIS 0.01 per share. You will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary, and all holders and beneficial owners of ADSs issued thereunder. To better understand the terms of the ADSs, you should carefully read the section in this prospectus titled "Description of American Depositary Shares." We also encourage you to read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Depositary

 

The Bank of New York Mellon

Use of proceeds

 

We intend to use the proceeds from this offering to continue the development of our product candidates, to conduct research and development activities, to scale up our manufacturing capabilities, to establish our sales and marketing capabilities, and for working capital and general corporate purposes. See the section of this prospectus titled "Use of Proceeds."

Risk factors

 

You should read the "Risk Factors" section starting on page 14 of this prospectus for a discussion of factors to consider carefully before deciding to invest in the ADSs.

Proposed NASDAQ Capital Market symbol

 

CLGN

Tel Aviv Stock Exchange symbol

 

CLPT

OTCQX symbol

 

CQPTY

        Assuming that the ADSs are listed for trading on the NASDAQ Capital Market, the quoting of the ADSs on OTCQX will be discontinued prior to the completion of this offering.

        Unless otherwise stated, the number of ordinary shares to be outstanding after this offering is based on 318,182,848 ordinary shares outstanding as of September 30, 2016, excluding, as of such date:

    2,761,384 ordinary shares held in treasury;

 

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    36,509,016 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of NIS 0.66 ($0.17) per share;

    88,337,260 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.70 ($0.18) per share;

    23,041,309 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.80 ($0.21) per share;

    4,152,764 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.8478 ($0.22) per share;

    36,531,500 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.6 ($0.16) per share; and

    3,203,747 ordinary shares issuable pursuant to a lease agreement into which we entered on July 28, 2016.

        Unless otherwise indicated, all information in this prospectus:

    assumes an initial public offering price of $            per ADS;

    assumes no exercise by the underwriters of their option to purchase up to an additional        ADSs from us; and

    no exercise of the outstanding options or warrants described above.

 

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SUMMARY FINANCIAL DATA

        The following summary financial information should be read together with our audited financial statements and accompanying notes, as well as the information under the section of this prospectus titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of results that may be expected in the future.

        We have derived the following summary statements of operations data for the years ended December 31, 2014 and December 31, 2015, from our audited financial statements, and the selected financial data for the three- and six-month periods ended June 30, 2015 and 2016, from unaudited financial statements, which have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, included elsewhere in this prospectus. Results from interim periods are not necessarily indicative of results that may be expected for the entire year.

        Our historical results are not necessarily indicative of the results that may be expected in the future.

        We prepare our financial statements in NIS. This prospectus contains conversions of NIS amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, for the purposes of the presentation of financial data as of December 31, 2015, and for the year then ended, and of the financial data as of June 30, 2016, and for the three- and six-month periods ended on that date, all conversions from NIS to U.S. dollars and from U.S. dollars to NIS were made at a rate of 3.846 NIS to 1.00 U.S. dollar, the daily representative rate in effect as of June 30, 2016 as reported by the Bank of Israel. The dollar amounts presented in this prospectus should not be construed as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated.

 
  Year ended December 31,   Six months ended June 30,   Three months ended June 30,  
 
  2014   2015   2015   2015   2016   2016   2015   2016   2016  
 
  (NIS in thousands except per
share data)

  (Convenience
translation
into USD
in thousands
except per
share data(1))

  (NIS in thousands
except per
share data)

  (Convenience
translation
into USD
in thousands
except per
share data(1))

  (NIS in thousands
except per
share data)

  (Convenience
translation
into USD
in thousands
except per
share data(1))

 

Statement of comprehensive loss data:

                                                       

Research and development expenses

    14,879     22,919     5,959     9,082     15,892     4,132     5,053     7,573     1,969  

Participation in research and development expenses

    (5,145 )   (11,055 )   (2,874 )   (4,363 )   (6,244 )   (1,623 )   (2,813 )   (3,329 )   (865 )

Research and development expenses, net

    9,734     11,864     3,085     4,719     9,648     2,509     2,240     4,244     1,104  

General, administrative and marketing expenses

    3,906     6,950     1,807     2,545     4,202     1,093     1,431     2,167     564  

Operating loss

    13,640     18,814     4,892     7,264     13,850     3,602     3,671     6,411     1,668  

Financial income

   
(642

)
 
(215

)
 
(56

)
 
(148

)
 
(39

)
 
(10

)
 
(3

)
 
(36

)
 
(9

)

Financial expenses

    25     51     13     210     204     53     191     13     3  

Financial expenses (income), net

    (617 )   (164 )   (43 )   62     165     43     188     (23 )   (6 )

Loss

    13,023     18,650     4,849     7,326     14,015     3,645     3,859     6,388     1,662  

Loss per ordinary share, basic and diluted

   
0.05
   
0.07
   
0.02
   
0.03
   
0.05
   
0.01
   
0.02
   
0.02
   
0.01
 

Weighted average ordinary shares outstanding, basic and diluted

   
241,280,958
   
254,018,556
         
241,395,403
   
284,743,897
         
241,398,421
   
291,560,590
       

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016, at the rate of one U.S. dollar per NIS 3.846.

 

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  June 30,  
 
  December 31,  
 
   
   
  2016
As adjusted(2)
 
 
  2014   2015   2015   2016   2016  
 
  (NIS in
thousands)

  (Convenience
translation into USD
in thousands(1))

   
  (Convenience
translation into USD
in thousands(1))

   
 

Statement of financial position data:

                                     

Cash and cash equivalents

    11,062     5,317     1,382     11,118     2,891        

Total assets

    16,958     13,529     3,517     21,201     5,512        

Total liabilities

    2,647     3,750     975     4,820     1,253        

Total equity

    14,311     9,779     2,542     16,381     4,259        

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

(2)
The as adjusted data gives effect to the issuance of ADSs in this offering, at an assumed public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE immediately prior to the date of this prospectus, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting underwriting discounts and commissions and estimated offering expenses.

 

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RISK FACTORS

        Investing in the ADSs involves a high degree of risk. You should carefully consider the risks we describe below, along with all of the other information set forth in this prospectus, including the section entitled "Cautionary Note Regarding Forward-Looking Statements" and our financial statements and the related notes beginning on page F-1, before deciding to purchase our securities. The risks and uncertainties described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment in our securities. If any of these risks materialize, our business, results of operations or financial condition could suffer, the price of the ADSs could decline substantially and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us and adversely affect your investment in the ADSs.

Risks Related to Our Financial Condition and Capital Requirements

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

        We are a clinical-stage regenerative medicine company, and we have not yet reported any revenue from product sales. We have incurred losses in each year since our inception in 2004, including a net loss of $4.8 million and $3.6 million for the year ended December 31, 2015 and for the six-month period ended June 30, 2016, respectively. As of June 30, 2016, we had an accumulated deficit of $37.8 million.

        We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, we have financed our operations primarily through the sale of equity securities, grants from government authorities and proceeds from strategic collaborators. The amount of our future net losses will depend, in part, on the rate of our future expenditures. If and when we obtain regulatory approval to market any of our product candidates, our future revenues will depend upon the size of any markets in which our product candidates have received approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for our product candidates in those markets.

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

    continue our research and preclinical and clinical development of our product candidates;

    initiate additional preclinical, clinical, or other studies for our product candidates;

    seek marketing approvals for any of our product candidates that successfully complete clinical trials;

    further develop and expand the manufacturing process for our product candidates;

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

    seek to identify and validate additional product candidates;

    maintain, protect, and expand our intellectual property portfolio;

    attract and retain skilled personnel;

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

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

        The net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our

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future performance. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our share price to decline.

Even if this offering is successful, we will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain additional capital when needed may force us to delay, limit, or terminate our product development efforts or other operations.

        We are conducting clinical and preclinical development of our product candidates and we intend to continue advancing their development. Developing medical products is expensive, and we expect our research and development expenses to continue to be a material part of our expenses, and may increase substantially in connection with our ongoing activities, particularly as we advance our product candidates in clinical trials.

        As of June 30, 2016, our cash and cash equivalents were $2.9 million. We estimate that the net proceeds from this offering will be approximately $            , assuming an initial public offering price of $            per ADS after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We estimate that these net proceeds, together with our existing cash and cash equivalents, will be sufficient to fund our operations for at least the next three years. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements, and other collaborations, strategic alliances, and licensing arrangements, or a combination of these approaches. While we believe that the proceeds from this offering will be sufficient to enable us to obtain CE marking certification, additional capital will be required for us to seek and obtain FDA approval. We will require additional capital to commercialize any product that receives regulatory approval. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

        Any additional fundraising efforts may divert our management from their day-to-day activities, which may compromise our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our ordinary shares or ADSs to decline. The sale of additional equity or convertible securities would dilute all of our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us.

        If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay, or discontinue one or more of our research or development programs or the commercialization of any product candidates, and we may be unable to expand our operations or otherwise capitalize on our business opportunities, as desired.

The report of our independent registered public accounting firm on our 2015 audited consolidated financial statements contains an explanatory paragraph regarding our ability to continue as a going concern.

        Our recurring losses from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern without additional debt or equity financing. As a result, our independent registered public accounting firm included an explanatory paragraph in its

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report on our audited consolidated financial statements for 2015 with respect to this uncertainty. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our ordinary shares or ADSs and make it more difficult for us to obtain financing. If we are unable to obtain sufficient capital in this offering, our business, financial condition, and results of operations will be materially and adversely affected, and we will need to obtain alternative financing or significantly modify our operational plans to continue as a going concern. Further, if we successfully complete and receive the net proceeds from this offering, given our planned expenditures for the next several years, including without limitation, expenditures in connection with our planned clinical trials of our product candidates, our independent registered public accounting firm may conclude, in connection with the preparation of our financial statements for 2016 or any subsequent period that there continues to be substantial doubt regarding our ability to continue as a going concern.

        We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

We have received and may continue to receive Israeli governmental grants to assist in the funding of our research and development activities. If we lose our funding from these research and development grants, we may encounter difficulties in the funding of future research and development projects and implementing technological improvements, which would harm our operating results.

        Through June 30, 2016 we had received an aggregate of $7.2 million in the form of grants from the National Authority for Technological Innovation, or NATI (formerly known as the Office of the Chief Scientist of the Ministry of Economy and Industry, or the OCS). The requirements and restrictions for such grants are found in the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984, or the Innovation Law. Under the Innovation Law, royalties of 3% to 5% on the revenues derived from sales of products and income generated from and related services developed in whole or in part under OCS programs are payable to the OCS, up to the total amount of grants received, linked to the U.S. dollar and bearing interest at an annual rate of LIBOR applicable to U.S. dollar deposits, as published on the first business day of each calendar year. We developed our platform technologies, at least in part, with funds from these grants, and accordingly we are obligated to pay these royalties on sales of any of our products that achieve regulatory approval. As of June 30, 2016, the maximum royalty amount that would be payable by us, excluding interest, is $7.1 million. As of June 30, 2016, we paid non-material amounts in royalties to the OCS, relating mainly to the participation of strategic collaborators in product development. For the year ended December 31, 2015, we recorded grants totaling $1.2 million from the OCS. The grants represented 20% of our gross research and development expenditures for the year ended December 31, 2015. Following the full payment of such royalties and interest, there is generally no further liability for royalty payments; however, other restrictions under the Innovation Law, described below under "The OCS grants we have received for research and development expenditures restrict our ability to manufacture products and transfer know-how outside of Israel and require us to satisfy specified conditions", will continue to apply even after we have repaid the full amount of royalties on the grants.

        As part of funding our current and planned product development activities, we have received a follow-up grant approval of approximately $1.5 million for fiscal year 2016.

        These grants have funded some of our personnel, development activities with subcontractors, and other research and development costs and expenses. However, if these grants are not funded in their entirety or if new grants are not awarded in the future, due to, for example, OCS budget constraints or governmental policy decisions, our ability to fund future research and development and implement

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technological improvements would be impaired, which would negatively impact our ability to develop our product candidates.

The OCS grants we have received for research and development expenditures restrict our ability to manufacture products and transfer know-how outside of Israel and require us to satisfy specified conditions.

        Our research and development efforts have been financed, in part, through the grants that we have received from the OCS. We, therefore, must comply with the requirements of the Innovation Law.

        Under the Innovation Law, we are generally prohibited from manufacturing products developed under OCS funding outside of the State of Israel without the prior approval of the OCS. We may not receive the required approvals for any proposed transfer of manufacturing activities. In general, in addition to the requirement of obtaining approval to manufacture products developed with OCS grants outside of Israel, we would be required to pay increased royalties, between 120% and 300% of the grants, depending on the manufacturing volume that is performed outside of Israel. This restriction may impair our ability to outsource manufacturing rights abroad. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Overview—Research and Development Expenses" for additional information.

        Additionally, under the Innovation Law, we are prohibited from transferring, including by way of license, the OCS-funded know-how and related intellectual property rights outside of the State of Israel, except under limited circumstances and only with the approval of the OCS committee. We may not receive the required approvals for any proposed transfer, and even if received, we may be required to pay the OCS a redemption fee, which may result in significant amounts, depending upon the value of the transferred know-how, our research and development expenses, the amount of OCS support, the time of completion of the OCS-supported research project and other factors, while the redemption fee will not exceed 600% of the grant amounts plus interest.

        Approval of the transfer of know-how to an Israeli company is required, and may be granted if the recipient abides by the provisions of applicable laws, including the restrictions on the transfer of know-how and the manufacturing rights outside of Israel and the obligation to pay royalties. No assurance can be given that approval to any such transfer, if requested, will be granted.

        These restrictions may impair our ability to sell our technology assets or to perform or outsource manufacturing outside of Israel, or otherwise transfer our know-how outside of Israel. It may also require us to obtain the approval of the OCS for certain actions and transactions and pay additional royalties and other amounts to the OCS. Furthermore, the consideration available to our shareholders in a transaction involving the transfer outside of Israel of know-how developed with OCS funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the OCS.

        If we fail to comply with the requirements of the Innovation Law, we may be required to refund certain grants previously received along with interest and penalties, and we may become subject to criminal proceedings. In addition, the Government of Israel may from time to time audit sales of products which it claims incorporate technology funded via OCS programs and this may lead to additional royalties being payable on additional products.

        The OCS is in the process of adopting regulations which deal with granting of licenses to use know-how developed as a result of research financed by the OCS. Such regulations may have an effect on us, with respect to the amount of payments to the OCS for the grant of sub-licenses to third parties. In addition, pursuant to Amendment Number 7, NATI, a statutory corporation, was established on January 1, 2016 and has replaced the OCS. Pursuant to Amendment Number 7, the current restrictions under the Innovation Law will be replaced by new set of arrangements in connection with ownership obligations of know-how (including with respect to restrictions on transfer of know-how and manufacturing activities outside of Israel), as well as royalties obligations associated with approved

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programs, which will be promulgated by NATI. NATI should be fully constituted no later than August 10, 2018, and in the meantime, until new arrangements are adopted by NATI, the Innovation Law as existed prior to the amendment continues to be in effect until the earlier of: one year following the date of appointment of all members of the NATI council (no later than August 10, 2019) or as otherwise resolved by the NATI council. We are presently unable to assess the effect, if any, of the adoption of those regulations and arrangements.

We may not be able to correctly estimate or control our future operating expenses, which could lead to cash shortfalls.

        Our operating expenses may fluctuate significantly in the future for various reasons, many of which are outside of our control. These reasons may include:

    the time, resources, and expenses required to conduct clinical trials of, seek regulatory approvals for, manufacture, market, and sell our current product candidates and any additional product candidates we may develop;

    the time, resources, and expenses required to research and develop, conduct clinical trials of, and seek regulatory approvals for additional indications of our current product candidates;

    the costs of preparing, filing, prosecuting, defending, and enforcing patent claims and other patent-related costs, including litigation costs or the results of such litigation;

    any product liability or other lawsuits related to our product candidates and the costs associated with defending them or the results of such lawsuits;

    the costs to attract and retain personnel with the skills required for effective operations; and

    the costs associated with being a public company in the United States.

It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably.

        Because we do not yet have an established commercial operating history, and because the market for our product candidates may rapidly evolve, it is hard for us to predict our future performance. A number of factors, many of which are outside of our control, may contribute to fluctuations in our financial results assuming that we receive marketing authorizations and begin selling our product candidates. These factors may include variations in:

    market demand for, and acceptance of, our product candidates;

    our ability to obtain or maintain regulatory approvals;

    our sales and marketing operations, or the effectiveness of these operations;

    performance of our third-party contractors;

    the availability of procedures or products that compete with our product candidates;

    media coverage of our technologies, the procedures or products of our competitors or our industry; and

    general economic and political conditions, including changes in general consumer confidence.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of the ADSs.

        Effective internal controls over financial reporting are necessary for us to provide reliable financial reports. Together with adequate disclosure controls and procedures, effective internal controls are

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designed to prevent fraud. Any failure to implement required new or improved controls or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, may require prospective or retroactive changes to our financial statements, or may identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of the ADSs.

        We are required to disclose changes made in our internal controls and procedures on an annual basis and our management is required to assess the effectiveness of these controls annually. However, for as long as we are an "emerging growth company" under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management's assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

Risks Related to the Clinical Development and Regulatory Approval of Our Product Candidates

We currently depend heavily on the future success of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix. Any failure to successfully develop, obtain regulatory approval for, and commercialize these product candidates, independently or in cooperation with a third party collaborator such as Bioventus, or the experience of significant delays in doing so, would compromise our ability to generate revenue and become profitable.

        We have invested a significant portion of our efforts and financial resources in the development of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix. Our ability to generate product revenue from our product candidates depends heavily on the successful development, approval, and commercialization of our product candidates, which, in turn, depend on several factors, including the following:

    our ability to continue and support our rhCollagen platform technology and programs;

    successfully completing our ongoing and future clinical trials and other studies required for our product candidates;

    demonstrating and maintaining the safety and efficacy of our product candidates at a sufficient level of statistical or clinical significance and otherwise obtaining marketing approvals from regulatory authorities;

    establishing successful sales and marketing arrangements for our product candidates VergenixSTR and VergenixFG in the jurisdictions where they may be approved;

    the availability of coverage and reimbursement by healthcare payors for our product candidates in the jurisdictions where they may be approved;

    establishing successful manufacturing arrangements with third-party manufacturers that are compliant with current good manufacturing practices, or cGMP, and which will ensure the development of a large scale manufacturing process and adequate facilities or being able to conduct such manufacturing ourselves;

    establishing a large scale facility as a second source for the manufacture of commercial quantities of our product candidates, if approved; and

    other risks described in this "Risk Factors" section.

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Our product candidates are based on novel technology, which makes it difficult to predict the time and cost of product development and potential regulatory approval.

        We have concentrated our product research and development efforts on our novel rhCollagen technology. The FDA has approved very few plant-expressed products, and has not yet approved a medical device which incorporates plant-produced materials. We may experience development challenges in the future related to our technology, which could cause significant delays or unanticipated costs, and we may not be able to solve such development challenges. We may also experience delays in developing a sustainable, reproducible, and scalable manufacturing process or transferring that process to commercial partners, if we decide to do so, which may prevent us from completing our clinical trials or commercializing our product candidates on a timely or profitable basis, if at all.

        In addition, the clinical trial requirements of European regulatory authorities, the FDA, and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product vary substantially according to the type, complexity, novelty, and intended use and market of the potential product candidates. The regulatory approval process for novel products such as ours can be more expensive and take longer than for other, better known or extensively studied medical devices or other products. Our product candidates may also be designated by the FDA or other regulatory authorities as Combination Products, which are products composed of two or more regulated components, such as a drug and a medical device, and then may be regulated as drug or biologic product, resulting in a longer regulatory approval process than the regulatory approval process for a medical device. Approvals by any regulatory authorities may not be indicative of what the FDA or other regulatory agencies may require for approval, and vice versa.

        Regulatory requirements governing medical devices and other products for medical use have changed frequently and may continue to change in the future. Also, before a clinical trial can begin, an institutional review board, or IRB, at each institution at which a clinical trial will be performed must review the proposed clinical trial to assess the safety of the trial. In addition, adverse developments in clinical trials of medical devices and products conducted by others may cause European regulatory authorities, the FDA, or other regulatory authorities to change the requirements for approval of any of our product candidates.

        These regulatory agencies and additional or new requirements may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates, or lead to significant approval and post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult with these regulatory authorities, and comply with applicable requirements. If we fail to do so, we may be required to delay or discontinue development of our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could impair our ability to generate product revenue and to become profitable.

We may find it difficult to enroll patients in our clinical trials, and patients could discontinue their participation in our clinical trials, which could delay or prevent clinical trials of our product candidates.

        Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on our ability to recruit patients to participate in our clinical trials. We may experience delays in patient enrollment in the future. If patients are unwilling to participate in our clinical trials because of negative publicity from adverse events in the biotechnology, pharmaceutical or medical technology industries, or for other reasons, including competitive clinical trials for similar patient populations, the timeline for recruiting patients, conducting trials, and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology, or termination of the clinical trials altogether.

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        We may not be able to identify, recruit, and enroll a sufficient number of patients, or those with required or desired characteristics to achieve diversity in a trial, to complete our clinical trials in a timely manner. Patient enrollment is affected by factors including:

    design of the trial protocol;

    size of the patient population;

    eligibility criteria for the trial in question;

    severity of the disease/wounds under investigation;

    perceived risks and benefits of the product under study;

    proximity and availability of clinical trial sites for prospective patients;

    availability of competing therapies, product candidates, and clinical trials;

    efforts to facilitate timely enrollment in clinical trials;

    patient referral practices of physicians; and

    ability to monitor patients adequately during and after treatment.

        We are currently conducting clinical trials in Israel and intend to seek marketing approval in Europe, China and the United States. We may not be able to initiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by European regulatory authorities, the FDA, or other regulatory authorities.

        In addition, patients enrolled in our clinical trials may discontinue their participation at any time during the trial as a result of a number of factors, including withdrawing their consent or experiencing adverse clinical events, which may or may not be related to our product candidates under evaluation. The discontinuation of patients in any one of our trials may cause us to delay or abandon such clinical trial, or cause the results from that trial not to be positive or sufficient to support a filing for regulatory approval of the applicable product.

Our clinical trials may not be successful or may be delayed.

        Before obtaining marketing approval from regulatory authorities for the sale of our product candidates or any future product, we must conduct clinical trials to demonstrate the safety in humans for European CE marking certification, and the safety and efficacy of our products in humans for other regulatory authorities such as China and the United States. From time to time, we work with contract research organizations, or CROs, which assist us in overseeing and implementing our clinical trials. Clinical trials are expensive, time consuming, and uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. We may not receive FDA regulatory approval for the conduct of any particular clinical trial in the United States or regulatory approval for conduct of such clinical trial in other countries. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

    delays in reaching a consensus with regulatory agencies on trial design;

    delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;

    delays in obtaining required IRB approval at each clinical trial site;

    delays in recruiting suitable patients to participate in our clinical trials;

    imposition of a clinical hold by regulatory agencies, including after an inspection of our clinical trial operations or trial sites;

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    failure by our CROs, other third parties or us to perform in accordance with clinical trial requirements or the FDA's good clinical practices, or GCP, or applicable regulatory requirements in other countries;

    delays in the testing, validation, manufacturing, and delivery of our product candidates to the clinical sites;

    delays in having patients complete participation in a trial or return for post-treatment follow-up;

    clinical trial sites or patients dropping out of a trial;

    occurrence of serious adverse events associated with the product candidates that are viewed to outweigh their potential benefits; or

    changes in regulatory requirements and guidance that require amending or submitting new clinical trial protocols.

        Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue from product sales. In addition, if we make manufacturing or design changes to our product candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates.

        If the results of our clinical trials are inconclusive or if there are safety concerns or adverse events associated with our product candidates, we may:

    fail to obtain, or be delayed in obtaining, marketing approval for our product candidates;

    obtain approval for indications or patient populations that are not as broad as intended or desired;

    obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

    be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;

    have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution;

    be subject to the addition of labeling statements, such as warnings or contraindications;

    be sued; or

    experience damage to our reputation.

        Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our product candidates.

Success in early clinical trials may not be indicative of results obtained in later trials.

        There is a high failure rate for medical devices, drugs, and biologics proceeding through clinical trials. A number of companies in the pharmaceutical, biotechnology, and medical technology industries have suffered significant setbacks in later stage clinical trials even after achieving promising results in earlier stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit, or prevent regulatory approval. In addition, regulatory delays or rejections may be encountered as a result of many factors, including the novelty of the product and changes in regulatory policy during the period of product development.

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Even if we complete the necessary preclinical studies and clinical trials, we cannot predict when or if we will obtain regulatory approval to commercialize a product, or the approval may be for a more narrow indication than we expect.

        We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product. Even if our product candidates demonstrate safety and efficacy in clinical trials, the regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials, and the review process. Regulatory agencies also may approve a treatment for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our treatment.

Side effects may occur following treatment with our product candidates which could make it more difficult for our product candidates to receive regulatory approval.

        Treatment with our product candidates may cause side effects or other adverse events. In addition, since our product candidates may in the future be administered in combination with other therapies, patients, or clinical trial participants may experience side effects or other adverse events that are unrelated to our product, but may still impact the success of our clinical trials. Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted. The experience of side effects and adverse events in our clinical trials could make it more difficult to achieve regulatory approval of our product candidates or, if approved, could negatively impact the market acceptance of such product candidates.

Even if we obtain regulatory approval for a product, our product candidates will remain subject to regulatory scrutiny.

        Even if we obtain regulatory approval in a jurisdiction, the regulatory authority may still impose significant restrictions on the indicated uses or marketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. Advertising and promotional materials must comply with FDA, Federal Trade Commission, or FTC, and European and other countries' regulatory requirements and are subject to review by the FDA, FTC or other governmental authorities, in addition to other potentially applicable federal and state laws.

        The laws that may affect our operations in the United States include:

    the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

    federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

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    HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security, and transmission of individually identifiable health information;

    the federal physician sunshine requirements under The Patient Protection and Affordable Care Act, or ACA, which requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members; and

    foreign and state law equivalents of each of the above federal laws, such as the U.S. Foreign Corrupt Practices Act, or FCPA, anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, thus complicating compliance efforts.

        The scope of these laws and our lack of experience in establishing the compliance programs necessary to comply with this complex and evolving regulatory environment increase the risks that we may violate the applicable laws and regulations.

        In addition, product manufacturers and their facilities are subject to continual review and periodic inspections by the European regulatory authorities, the FDA, and other regulatory authorities for compliance with cGMP or any applicable European or other governmental regulations. If we or a regulatory agency discover previously unknown problems with a product such as adverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

        If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, one or more regulatory authorities could:

    issue a warning letter asserting that we are in violation of the law;

    seek an injunction or impose civil or criminal penalties or monetary fines;

    suspend or withdraw regulatory approval;

    suspend any ongoing clinical trials;

    seize our product; or

    refuse to allow us to enter into supply contracts, including government contracts.

        Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity and potentially lead to private litigation. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues.

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We have only limited experience in regulatory affairs and intend to rely on consultants and other third parties for regulatory matters, which may affect our ability or the time we require to obtain necessary regulatory approvals.

        Between 2010 and 2012, we had limited interactions with the FDA for a predecessor wound healing product candidate and have not had any discussions with the FDA regarding our current product candidates. We have limited experience in preparing and filing the applications necessary to gain regulatory approvals for our product candidates. Moreover, the products that are likely to result from our development programs are based on new technologies that have not been extensively used in humans. The regulatory requirements governing these types of product may be less well defined or more rigorous than for conventional products. As a result, we may experience a longer regulatory review process in connection with obtaining regulatory approvals, if any, of products that we develop. We intend to rely on independent consultants for regulatory services and compliance and product development and filings in Europe, the United States and elsewhere. Any failure by our consultants to properly advise us regarding, or properly perform tasks related to, regulatory submission and other requirements could compromise our ability to develop and obtain regulatory approval of our product candidates.

We are subject to stringent regulation and any adverse regulatory action may materially adversely affect our financial condition and business operations.

        Our product candidates, development activities, and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including European regulatory authorities, the FDA, and other regulatory authorities. To varying degrees, each of these agencies monitors and enforces our compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of our products. The process of obtaining marketing approval or clearance in Europe, the United States, and other countries for new products or enhancements or modifications to existing products, could

    take a significant amount of time;

    require the expenditure of substantial resources;

    involve rigorous and expensive preclinical and clinical testing, as well as increased post-market surveillance;

    involve modifications, repairs, or replacements of our product candidates; and

    result in limitations on the indicated uses of our product candidates.

        We cannot be certain that we will receive required approval or clearance from European regulatory authorities, the FDA, or other regulatory authorities for new products or modifications to existing products on a timely basis. The failure to receive approval or clearance for significant new products or modifications to existing products on a timely basis could have a material adverse effect on our financial condition and results of operations.

        Both before and after a product is commercially released, we have ongoing responsibilities under FDA regulations. For example, we are required to comply with the FDA's Quality System Regulation, or QSR, which are the good manufacturing requirements that the FDA applies to medical devices, and which mandates that manufacturers of medical devices adhere to certain requirements pertaining to, among other things, development of our products, validation of manufacturing processes, controls for purchasing product components, and documentation practices. As another example, FDA regulations require us to provide information to the FDA whenever there is evidence that reasonably suggests that a product may have caused or contributed to a death or serious injury, or that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously

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through, among other things, periodic inspections by the FDA, which may result in observations on Form 483 that require corrective action, and in some cases warning letters. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize such medical devices, order a recall, repair, replacement, or refund of such devices, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.

        The FDA has been increasing its scrutiny of the medical device, drugs, and biologics industries, and regulatory agencies are expected to continue to scrutinize the industry closely with inspections, with possible enforcement actions by the FDA or other agencies. Additionally, the FDA may restrict manufacturing and impose other operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices, and assess civil or criminal penalties against our officers, employees, or us. The FDA may also recommend prosecution to the Department of Justice. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing, and selling our product candidates. In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on our financial condition and results of operations.

        Finally, the FDA issued regulations regarding "Current Good Manufacturing Practice Requirements for Combination Products" on January 22, 2013. These regulations may apply to some of our product candidates if they are designated by the FDA as Combination Products, which are products composed of two or more regulated components, such as a drug and a medical device. There have been and will be additional costs associated with compliance with the FDA Good Manufacturing Practice Requirements regulations for Combination Products.

        Governmental regulations have become increasingly stringent and more common, and we may become subject to even more rigorous regulation by governmental authorities in various countries in the future. Penalties for a company's non-compliance with governmental regulation could be severe, including revocation or suspension of a company's business license and criminal sanctions.

The impact of healthcare reform and other changes in the healthcare industry and in healthcare spending is currently unknown, and may adversely affect our business model.

        The commercial potential for our approved product candidates, if any, could be affected by changes in healthcare spending and policy in Europe, in the United States, and in other countries. We operate in a highly regulated industry and new laws, regulations, or judicial decisions, or new interpretations of existing laws, regulations, or decisions, related to healthcare availability, the method of delivery, or payment for healthcare products and services could negatively impact our business, operations, and financial condition.

In addition to the level of commercial success of our product candidates, if approved, our future prospects are also dependent on our ability to successfully develop a pipeline of additional products, and we may not be successful in our efforts in using our platform technologies to identify or discover additional products.

        The success of our business depends primarily upon our ability to identify, develop, and commercialize products based on our platform technology. Although we have three product candidates at various stages of development, our research programs may fail to identify other potential products for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential products or our potential products may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

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        If any of these events occur, we may be forced to abandon our development efforts for a program or programs. Research programs to identify new products require substantial technical, financial, and human resources. We may focus our efforts and resources on potential programs or products that ultimately prove to be unsuccessful.

Risks Related to Our Reliance on Third Parties

We expect to rely on third parties to conduct some or all aspects of our product manufacturing, protocol development, research, and preclinical and clinical testing, and these third parties may not perform satisfactorily.

        We do not expect to independently conduct all aspects of our product manufacturing, protocol development, research, and preclinical and clinical testing. We currently rely, and expect to continue to rely, on third parties with respect to parts of these items.

        Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it could delay our product development activities. Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibility to ensure compliance with all required regulations and study protocols.

        If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct our studies in accordance with regulatory requirements or our stated study plans and protocols, we will not be able to complete, or may be delayed in completing, the preclinical studies and clinical trials required to support future FDA, European, or other approvals of our product candidates.

        Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the products ourselves, including:

    the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;

    reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities;

    termination or non-renewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; and

    disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier.

        Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize future products. Some of these events could be the basis of action from European regulatory authorities, the FDA, or other regulatory authorities, including injunction, recall, seizure, or total or partial suspension of production.

If we or our third-party manufacturers on which we rely cannot manufacture our product candidates at sufficient yields, we may experience delays in development, regulatory approval, and commercialization.

        Completion of our clinical trials and commercialization of our product candidates require access to, or development of, facilities to manufacture our product candidates at sufficient yields and at commercial scale. We have limited experience in large scale manufacturing, or managing third parties in manufacturing any of our product candidates in the volumes that are expected to be necessary to support large-scale clinical trials and sales. Our efforts to establish these capabilities may not meet our requirements as to scale-up, yield, cost, potency, or quality in compliance with cGMP. Our clinical trials

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should be conducted with product produced under applicable cGMP regulations. Failure to comply with these regulations would delay the regulatory approval process. Even an experienced third-party manufacturer may encounter difficulties in production, including:

    costs and challenges associated with scale-up and attaining sufficient manufacturing yields;

    supply chain issues, including the timely availability and shelf life requirements of raw materials and supplies;

    quality control and assurance;

    shortages of qualified personnel and capital required to manufacture large quantities of product;

    compliance with regulatory requirements that vary in each country where a product might be sold;

    capacity limitations and scheduling availability in contracted facilities; and

    natural disasters that affect facilities and possibly limit production.

        Any delay or interruption in the supply of our product candidates could have a material adverse effect on our business and operations.

        The regulatory authorities also may, at any time following approval of a product for sale, audit our manufacturing facilities or those of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or our product specifications or if a violation of applicable regulations, including a failure to comply with the product specifications, occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly or time consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility.

        If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or the European authorities can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new product or revocation of a pre-existing approval.

        Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

        These factors could cause the delay of clinical trials, regulatory submissions, required approvals, or commercialization of our product candidates; cause us to incur higher costs; and prevent us from commercializing our product candidates successfully. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue.

We expect to rely on third parties to conduct, supervise, and monitor our clinical trials, and if these third parties perform in an unsatisfactory manner, it may harm our business.

        We rely heavily on hospitals, clinic centers, and other institutions and third parties, including the principal investigators and their staff, to carry out our clinical trials in accordance with our clinical protocols and designs. We also rely on a number of CROs to assist in undertaking, managing, monitoring, and executing our ongoing clinical trials. We expect to continue to rely on CROs, clinical data management organizations, medical institutions, and clinical investigators to conduct our development efforts in the future. We compete with many other companies for the resources of these third parties, and large pharmaceutical and medical device companies often have significantly more extensive agreements and relationships with such third-party providers, and such third-party providers

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may prioritize the requirements of such large pharmaceutical and medical device companies over ours. The third parties on whom we rely may terminate their engagements with us at any time, which may cause delay in the development and commercialization of our product candidates. If any such third party terminates its engagement with us or fails to perform as agreed, we may be required to enter into alternative arrangements, which would result in significant cost and delay to our product development program. Moreover, our agreements with such third parties generally do not provide assurances regarding employee turnover and availability, which may cause interruptions in the research on our product candidates by such third parties.

        Moreover, while our reliance on these third parties for certain development and management activities will reduce our control over these activities, it will not relieve us of our responsibilities. For example, European regulatory authorities, the FDA, and other regulatory authorities require compliance with regulations and standards, including GCP requirements, for designing, conducting, monitoring, recording, analyzing, and reporting the results of clinical trials to ensure that the data and results from trials are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. Although we rely on third parties to conduct our clinical trials, we are responsible for ensuring that each of these clinical trials is conducted in accordance with its general investigational plan and protocol under legal and regulatory requirements. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable, and European regulatory authorities, the FDA, or other regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements.

        If CROs and other third parties do not successfully carry out their duties under their agreements with us, if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to trial protocols or to regulatory requirements, or if they otherwise fail to comply with regulations and trial protocols or meet expected standards or deadlines, the trials of our product candidates may not meet regulatory requirements. If trials do not meet regulatory requirements or if these third parties need to be replaced, the development of our product candidates may be delayed, suspended, or terminated, or the results may not be acceptable. If any of these events occur, we may not be able to obtain regulatory approval of our product candidates on a timely basis, at a reasonable cost, or at all.

Our reliance on third parties may require us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

        Because we rely on third parties to manufacture our product candidates, and because we collaborate with various organizations and academic institutions on the advancement of our technology, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements, or other similar agreements with our collaborators, advisors, employees, and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite these contractual provisions, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by potential competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, discovery by a third party of our trade secrets or other unauthorized use or disclosure would impair our intellectual property rights and protections in our product candidates.

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        In addition, these agreements typically restrict the ability of our collaborators, advisors, employees, and consultants to publish data potentially relating to our trade secrets. Our academic collaborators typically have rights to publish data, provided that we are notified in advance and may delay publication for a specified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively by us, although in some cases we may share these rights with other parties. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of these agreements, independent development, or publication of information including our trade secrets in cases where we do not have proprietary or otherwise protected rights at the time of publication.

It could be difficult to replace some of our suppliers and equipment vendors.

        Outside vendors provide key components, raw materials, and equipment used in the manufacture of our product candidates. An uncorrected defect or supplier's variation in a component or raw material, either unknown to us or incompatible with our manufacturing process, could harm our ability to manufacture product candidates. We may not be able to find a sufficient alternative supplier in a reasonable time period, or on commercially reasonable terms, if at all, and our ability to produce and supply our product candidates could be impaired.

        If we were suddenly unable to purchase from one or more of these companies, we would need a significant period of time to qualify a replacement, and the production of any affected product candidates could be disrupted. While it is our policy to maintain sufficient inventory of components so that our production will not be significantly disrupted even if a particular component or material is not available for a period of time, we remain at risk that we will not be able to qualify new components or materials quickly enough to prevent a disruption if one or more of our suppliers ceases production of important components or materials, or if we are unable to quickly procure replacement equipment.

If we fail to identify or enter into economically viable collaboration agreements for certain of our product candidates, we may be unable to commercialize them effectively or at all. However, there are risks associated with entering into any collaboration agreement.

        To successfully develop and commercialize our product candidates, we will need substantial financial resources as well as expertise and physical resources and systems. We may elect to develop some or all of these physical resources and systems and expertise ourselves, or we may seek to collaborate with another company that can provide some or all of such physical resources and systems as well as financial resources and expertise. In particular, we are party to a non-binding term sheet entered into on July 9, 2015 with Bioventus for the license and supply of the CollPlant Surgical Matrix. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus. If a definitive agreement is entered into, it is expected to be subject to the OCS's approval which may impose on us certain obligations under the Innovation Law. If we are not able to enter into a definitive agreement or otherwise are unable to enter into other collaborations for one or more of our product candidates on acceptable terms, we might elect to delay or scale back the development and commercialization of the product candidate in order to preserve our financial resources or to allow us adequate time to develop the required physical resources and systems and expertise ourselves.

        The risks in a collaboration agreement include the following:

    the collaborator may not apply the expected financial resources, efforts, or required expertise in developing the physical resources and systems necessary to successfully develop and commercialize a product candidate;

    the collaborator may not invest in the development of a sales and marketing force and the related infrastructure at levels that ensure that sales of the product candidate reach their full potential;

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    we may be required to undertake the expenditure of substantial operational, financial, and management resources;

    we may be required to issue equity securities that would dilute our existing shareholders' percentage ownership;

    we may be required to assume substantial actual or contingent liabilities;

    we may not receive requisite regulatory approvals;

    strategic partners could decide to move forward with a competing product developed either independently or in collaboration with others, including our competitors—for example, in anticipation of filing an IND, Bioventus is undertaking preclinical animal studies comparing the Collplant Surgical Matrix to other active comparators;

    disputes may arise between us and a collaborator that delay the development or commercialization or adversely affect the sales or profitability of the product candidate; or

    the collaborator may independently develop, or develop with third parties, products that could compete with our product candidates.

        In addition, a collaborator for one or more of our product candidates may have the right to terminate the collaboration at its discretion. Any termination may require us to seek a new collaborator, which we may not be able to do on a timely basis, if at all, or require us to delay or scale back our development and commercialization efforts. The occurrence of any of these events could adversely affect the development and commercialization of our product candidates and materially harm our business and stock price by delaying the development of our product candidates, and the sale of any products that may be approved by the FDA or other regulatory agencies, by slowing the growth of such sales, by reducing the profitability of the product and/or by adversely affecting the reputation of the product.

We expect to depend upon third-party distributors and resellers for a significant portion of our sales.

        We expect to rely primarily upon sales through independent distributors and resellers. While we are highly dependent upon acceptance of our product candidates and solutions by such third parties and their active marketing and sales efforts relating to our product candidates and solutions, most of our distributors and resellers will not be obligated to deal with us exclusively and are not contractually subject to minimum purchase requirements. In addition, some of our distributors and resellers may sell competing products or solutions. As a result, our distributors and resellers may give higher priority to products or services of our competitors, thereby reducing their efforts in selling our product candidates and services.

        There can be no assurance that such distributors and resellers will act as effective sales agents for us, that they will remain our partners, or that, if we terminate or lose any of them, we will be successful in replacing them. Any such disruption in our distribution channels could adversely affect our business, operating results, and financial condition.

Risks Related to Commercialization of Our Product Candidates

We have limited experience in producing our core components and product candidates, and if we are unable to manufacture our core components and products in high-quality commercial quantities successfully and consistently to meet demand, our growth will be limited.

        We have experience manufacturing only limited quantities of rhCollagen, the recombinant human type I collagen used in our product candidates. Our manufacturing capabilities will need to be further improved to meet the standard requirements for future clinical studies and for commercialization of

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our product candidates. To manufacture our rhCollagen in quantities that we believe will be sufficient to produce our end products and meet anticipated market demand, we will need to increase manufacturing capacity, which will involve significant challenges. In addition, the development of commercial-scale, regulation-compliant manufacturing capabilities will require us to invest substantial additional funds and hire and retain the technical personnel who have the necessary manufacturing experience. We may not successfully complete any required increase to existing manufacturing processes in a timely manner, or at all. Our costs will be higher, and our challenges greater, if we decide to develop internal manufacturing capabilities to produce our end products.

        If there is a disruption to our internal manufacturing operations, we will have no other means of production for the components and products from such operations until we restore the affected facilities or develop alternative manufacturing facilities, which would delay our clinical trials or cause us to be unable to meet commercial demand for our product candidates. In such case, we may need to arrange for third-party manufacturing of our components and product candidates, which would be expensive and time consuming, assuming we can identify an appropriate third party manufacturer. Additionally, any damage to or destruction of our facilities or equipment may significantly impair our ability to manufacture our components and products on a timely basis.

        If we are unable to produce our product candidates in sufficient quantities to meet anticipated customer demand, our revenues, business, and financial prospects would be harmed. The lack of experience we have in producing commercial quantities of our components and product candidates may also result in quality issues and product recalls. Any product recall could be expensive and generate negative publicity, which could impair our ability to market our product candidates and further affect our results of operations. Manufacturing delays related to quality control could negatively impact our ability to bring our technologies to market, harm our reputation, and decrease our revenues.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell any of our product candidates that obtain regulatory approval, we may be unable to generate any revenue.

        We have no experience selling and marketing our product candidates or any other products. To successfully commercialize our product candidates we will need to develop these capabilities, either on our own or with others. We are seeking to enter into commercial alliances with third-party collaborators and distributors to utilize their marketing and distribution capabilities, but we may be unable to do so on favorable terms, if at all. If any future collaboration or distribution partners do not commit sufficient resources to commercialize our future product candidates, and if we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies or successfully commercialize any of our product candidates.

We face competition and rapid technological change and the possibility that our competitors may develop therapies/product candidates that are more advanced or effective than ours, which could impair our ability to successfully commercialize our product candidates.

        We operate in the regenerative medicine field, which is rapidly changing. We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies, medical technology companies, and universities and other research institutions.

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        Many of our potential competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our potential competitors may succeed in developing, acquiring, or licensing on an exclusive basis, products that are more effective or less costly than any products that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization, and market penetration than us. Additionally, technologies developed by others may render our potential products uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.

        We are not aware of any competitors that produce collagen from plants or that produce recombinant type I human collagen. However, our collagen-based product candidates will compete with alternative solutions; for example, our VergenixSTR product candidate will compete with companies that sell PRP kits. Our VergenixFG product candidate will compete with companies that produce and market animal collagen-based products and collagen products produced from skin donations. The Bioventus product candidate will compete with products that combine a recombinant bone growth protein and bovine-based collagen and with allograft products.

The commercial success of any current or future product, if approved, will depend upon the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community.

        Even if we obtain the requisite regulatory approvals, the commercial success of our product candidates will depend in part on the medical community, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe. Any product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors, and others in the medical community. If these product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of these product candidates, if approved for commercial sale, will depend on a number of factors, including:

    the cost, safety, efficacy, and convenience of our product candidates in relation to alternative treatments and products;

    the ability of third parties to enter into relationships with us without violating their existing agreements;

    the effectiveness of our sales and marketing efforts;

    the prevalence and severity of any side effects, including any limitations or warnings contained in a product's approved labeling;

    the prevalence and severity of any side effects resulting from the procedure by which our product candidates are administered;

    the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

    the strength of marketing and distribution support for, and timing of market introduction of, competing products;

    publicity concerning our product candidates or competing products and treatments; and

    sufficient third-party insurance coverage or reimbursement.

        Even if a potential product displays a favorable safety and efficacy profile in clinical trials, market acceptance of the product will not be known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the products may require significant

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resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by conventional technologies.

A variety of risks associated with international operations could harm our business.

        If any of our product candidates are approved for commercialization, it is our current intention to market them on a regional or worldwide basis in the jurisdictions where they may be approved, either alone or in collaboration with third parties. In addition, we may conduct development activities in various jurisdictions throughout the world. We expect that we will be subject to additional risks related to engaging in international operations, including:

    different regulatory requirements for product approval in foreign countries;

    reduced protection for intellectual property rights;

    unexpected changes in tariffs, trade barriers, and regulatory requirements;

    economic weakness, including inflation, or political instability in particular foreign economies and markets;

    compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;

    foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

    workforce uncertainty in countries where labor unrest is more common than in the United States and Israel;

    production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

    business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods, and fires.

The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for any of our product candidates that are approved could limit our ability to market those product candidates and compromise our ability to generate revenue.

        The availability of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments. Sales of our product candidates will depend substantially, both in Europe and in the United States, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers, and other third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if we obtain coverage for our product candidates, third-party payors may not establish adequate reimbursement amounts, which may reduce the demand for, or the price of, our product candidates. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize certain of our product candidates.

        Furthermore, publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our product candidates is unavailable or limited in scope or amount, or if pricing is set at unacceptable levels, we or our partner may elect not to commercialize our product candidates in such countries, and our business and financial condition could be adversely affected.

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Promotion of off-label uses of our product candidates by physicians could adversely affect our business.

        Any regulatory approval of our product candidates is limited to those specific indications for which our product candidates have been deemed safe and effective by the regulatory authorities. In addition, any new indication for an approved product also requires regulatory approval. If we produce an approved product, we will rely on physicians to use and administer it as we have directed and for the indications described on the labeling. It is not, however, uncommon for physicians to use in unapproved, or "off-label," uses or in a manner that is inconsistent with the manufacturer's directions. To the extent such off-label uses and departures from our administration directions become pervasive and produce results such as reduced efficacy or other adverse effects, the reputation of our product candidates in the marketplace may suffer. In addition, off-label uses may cause a decline in our revenue or potential revenue, to the extent that there is a difference between the prices of our product for different indications.

        Furthermore, while physicians may choose to use our product candidates for off-label uses, our ability to promote the products is limited to those indications that are specifically approved by the regulators. Although regulatory authorities generally do not regulate the behavior of physicians, they do restrict communications by companies with respect to 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 addition, failure to follow regulation authorities' rules and guidelines relating to promotion and advertising can result in the regulation authorities' 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.

Risks Related to Our Business Operations

Our future success depends on our ability to retain key employees, consultants, and advisors and to attract, retain, and motivate qualified personnel.

        We are dependent on principal members of our executive team listed under "Management" in this prospectus, the loss of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each member of our senior management, any of them could leave our employment at any time, as all of our employees are "at will" employees. Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled executives in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous medical device companies for individuals with similar skill sets. In addition, failure to succeed in clinical trials may make it more challenging to recruit and retain qualified personnel. The inability to recruit or loss of the services of any executive, key employee, consultant, or advisor may impede the progress of our research, development, and commercialization objectives.

Our collaborations with outside scientists and consultants may be subject to restriction and change.

        We work with medical experts, chemists, biologists, and other scientists at academic and other institutions, and consultants who assist us in our research, development, and regulatory efforts, including the members of our scientific advisory board. In addition, these scientists and consultants have provided, and we expect that they will continue to provide, valuable advice regarding our programs and regulatory approval processes. These scientists and consultants are not our employees and may have other commitments that would limit their future availability to us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. In addition, we are limited in our ability to prevent them from establishing competing businesses or

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developing competing products. For example, if a key scientist acting as a principal investigator in any of our clinical trials identifies a potential product that is more scientifically interesting to his or her professional interests, his or her availability to remain involved in our clinical trials could be restricted or eliminated.

We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.

        As of September 30, 2016, we had 37 employees. As we mature and undertake the activities required to advance our product candidates into later stage clinical development and to operate as a public company in the United States, we expect to expand our full-time employee base and to hire more consultants and contractors. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational setbacks, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate or grow revenue could be compromised, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Our employees, principal investigators, consultants, and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

        We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants, and commercial partners. Misconduct by these parties could include intentional failures to comply with regulations, provide accurate information to European regulatory authorities, the FDA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations, report financial information or data accurately, or disclose unauthorized activities to us. In particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

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We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our product candidates harms patients, or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.

        The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, healthcare providers, medical device companies, or others that sell or otherwise come into contact with our product candidates. There is a risk that our product candidates may induce adverse events. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:

    impairment of our business reputation;

    withdrawal of clinical trial participants;

    costs due to related litigation;

    distraction of management's attention from our primary business;

    substantial monetary awards to patients or other claimants;

    the inability to commercialize our product candidates;

    decreased demand for our product candidates, if approved for commercial sale; and

    impairment of our ability to obtain product liability insurance coverage.

        We currently carry human clinical trials liability insurance of $3,000,000 for VergenixFG and product liability insurance of $3,000,000 for sales in Europe of VergenixFG. We will acquire product liability insurance before commercializing any of our other product candidates. We believe our clinical trials liability insurance coverage is sufficient in light of our current clinical programs; however, we may not be able to obtain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to product liability. If we obtain marketing approval for any of our product candidates, we intend to obtain insurance coverage to include the sale of commercial products, but we may not be able to obtain product liability insurance on commercially reasonable terms or in adequate amounts. On occasion, large judgments have been awarded in class action lawsuits based on medical treatments that had unanticipated adverse effects. A product liability claim or series of claims brought against us could cause our ADS or ordinary share price to decline and, if judgments exceed our insurance coverage, could materially and adversely affect our financial position.

Our development of rhCollagen relies upon the continued availability of tobacco plants, and any interruption in availability or supply of tobacco plants may delay production and adversely affect commercial utilization of our rhCollagen-based product candidates, if any such product candidates are approved and marketed in the future.

        Our product candidates are all based on our recombinant human collagen extracted from tobacco plants. Any disruption to the supply of tobacco plants or any change in its availability for use would delay our production of collagen and adversely affect commercial utilization of our product candidates, if any such product candidates are approved and marketed in the future.

        The occurrence of severe adverse weather conditions or crop diseases may have a potentially devastating impact upon our tobacco production. The effect of severe adverse weather conditions or the occurrence and effect of crop disease may reduce yields in our plants or require higher levels of investment to maintain yields, even when only a portion of the crop is damaged. We cannot assure you that severe future adverse weather conditions will not adversely impact our operating results and financial condition. Although some crop diseases are treatable, the cost of treatment is high, and we cannot assure that such events in the future will not adversely affect our operating results and financial condition.

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If our existing rhCollagen production site is damaged or destroyed, or production at this facility is otherwise interrupted, our business and prospects would be negatively affected.

        We currently have a single, small-scale production site in Israel where we manufacture rhCollagen. If our existing production facility, or the equipment in it, is damaged or destroyed, we likely would not be able to quickly or inexpensively replace our production capacity. Any new facility needed to replace our existing production facility would need to comply with the necessary regulatory requirements and be tailored to our production requirements and processes. We would need regulatory approval before using any products manufactured at a new facility in clinical trials or selling any products that are ultimately approved. Such an event could delay our clinical trials or, if any of our product candidates are approved by the regulator, reduce or eliminate our product sales.

If we fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse impact on the success of our business.

        We are subject to numerous environmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials and wastes. Our operations involve the use of hazardous materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

        Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions.

We may use our financial and human resources to pursue a particular research program or product and fail to capitalize on programs or products that may be more profitable or for which there is a greater likelihood of success.

        Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or products or for indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs for products may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product, we may relinquish valuable rights to that product through strategic collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product, or we may allocate internal resources to a product in a therapeutic area in which it would have been more advantageous to enter into a collaboration arrangement.

We are subject to foreign currency exchange risk, and fluctuations between the U.S. dollar and the NIS, the Euro, and other non-U.S. currencies may adversely affect our earnings and results of operations.

        We currently operate in two different currencies. While the NIS is our functional and reporting currency and investments in our share capital have been denominated in NIS, our financial results may

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be adversely affected by fluctuations in currency exchange rates as a significant portion of our operating expenses, including development and manufacturing expenses, are denominated in U.S. dollars.

        We are exposed to the risks that the U.S. dollar may appreciate relative to the NIS, In such event, the 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 NIS against the dollar. For example, the average exchange rate of the dollar against the NIS increased in the years 2014 and 2015, and decreased in 2013. Market volatility and currency fluctuations may limit our ability to cost-effectively hedge against our foreign currency exposure. Hedging strategies may not eliminate our exposure to foreign exchange rate fluctuations and may involve costs and risks of their own, such as devotion of management time, external costs to implement the strategies, and potential accounting implications. Foreign currency fluctuations, independent of the performance of our underlying business, could lead to materially adverse results or could lead to positive results that are not repeated in future periods.

Risks Related to Our Intellectual Property

We have an extensive worldwide patent portfolio. The cost of maintaining our patent protection is high and maintaining our patent protection requires continuous review and compliance in order to maintain worldwide patent protection. We may not be able to effectively maintain our intellectual property position throughout the major markets of the world.

        The U.S. Patent and Trademark Office, or U.S. PTO, and foreign patent authorities require maintenance fees and payments as well as continued compliance with a number of procedural and documentary requirements. Non-compliance may result in abandonment or lapse of the subject patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance may result in reduced royalty payments for lack of patent coverage in a particular jurisdiction from our collaboration partners or may result in competition, either of which could have a material adverse effect on our business.

        We have made, and will continue to make, certain strategic decisions in balancing costs and the potential protection afforded by the patent laws of certain countries. As a result, we may not be able to prevent third parties from practicing our inventions in all countries throughout the world, or from selling or importing products made using our inventions in and into the United States or other countries. Third parties may use our technologies in territories in which we have not obtained patent protection to develop their own products and, further, may infringe our patents in territories which provide inadequate enforcement mechanisms, even if we have patent protection. Such third-party products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to obtain exclusivity for our product candidates or prevent others from developing similar competitive products.

        We rely upon a combination of granted patents, pending patent applications, trade secret protection, and confidentiality agreements to protect the intellectual property related to our product candidates. The strength of patents in the field of regenerative medicine involves complex legal and scientific questions and can be uncertain. The patent applications that we own may fail to result in issued patents with claims that cover our product candidates in the United States or in other countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may result

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in the patent claims being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates, or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties.

        Our ability to attract third parties to collaborate with us to develop products and our ability to commercialize future products may be adversely affected if the patent applications we hold with respect to our techniques or product candidates fail to issue, if the breadth or strength of our patent protection is threatened, or if our patent portfolio fails to provide meaningful exclusivity for our product candidates. Third parties may challenge their validity or enforceability of our patents or patents that issue in the future from our patent applications, which may result in such patents being narrowed, invalidated, or held unenforceable. Even if our patents and patent applications are not challenged by third parties, they may not prevent others from designing around our claims and may not otherwise adequately protect our product candidates. If the breadth or strength of protection provided by the patents and patent applications we hold with respect to our product candidates is threatened, our ability to commercialize our product candidates may be adversely effected.

        Discoveries are generally published in the scientific literature well after their actual development, and patent applications in the United States and other countries are typically not published until 18 months after filing and in some cases are never published. Therefore, we cannot be certain that we were the first to make the inventions claimed in our owned granted patents or patent applications, or that we were the first to file for patent protection covering such inventions. Subject to meeting other requirements for patentability, for United States patent applications filed prior to March 16, 2013, the first to invent the claimed invention is entitled to receive patent protection for that invention while, outside the United States, the first to file a patent application encompassing the invention is entitled to patent protection for the invention. In addition, patents have a limited lifespan. In the United States, the expiration of a patent is generally 20 years from the earliest non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Once the patent life has expired for a product, we may be open to competition from third party products, including products that are copies of our products. This risk is material in light of the length of the development process of our product candidates and lifespan of our current patent portfolio.

        In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect our proprietary know-how and other proprietary information that is not patentable or that we elect not to patent. For example, many of our discovery, development, and manufacturing processes involve proprietary know-how, information, or technology that is not covered by patents. We seek to protect our trade secrets and proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. Security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors, and any third parties who have access to our proprietary know-how, information, or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed, that our trade secrets and other confidential proprietary information will not be disclosed, or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover our

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trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA's disclosure policies may change in the future, if at all.

        Further, the laws of some countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and in other countries. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

        Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and inter partes review proceedings before the U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development technologies. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

        Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may be accused of infringing. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

        The patent landscape in competitive product areas is highly complex and there may be patents of third parties of which we are unaware that may result in claims of infringement. Accordingly, there can be no assurance that our product candidates do not infringe proprietary rights of third parties. Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of such claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of financial and employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products, or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

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        We intend, if necessary, to vigorously enforce our intellectual property in order to protect the proprietary position of our product candidates. Active efforts to enforce our patents may include litigation, post-grant patent challenges, administrative proceedings, or all of the foregoing, depending on the potential benefits that might be available from those actions and the costs associated with undertaking those efforts against third parties. We review and monitor publicly available information regarding products that may be competitive with our product candidates and intend to assert our intellectual property rights where appropriate.

We may enter into license agreements with third parties, and if we fail to comply with our obligations in such agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

        We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected products.

We may be involved in lawsuits or administrative proceedings to obtain, protect or enforce our patents, which could be expensive, time consuming, and unsuccessful.

        Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file an infringement suit, which can be expensive and time consuming. In addition, in an infringement proceeding, the defendant may file a countersuit, challenging the validity or enforceability of our patent. In that case, a court may decide that a patent of ours is not valid, is unenforceable, or is not infringed, or it may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

        We may not be able to prevent misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights.

        We may be involved in interference proceedings in the U.S. PTO that are provoked by third parties or provoked by us when there appears to be the same subject matter claimed in our patents or patent applications and the third parties' patents or patent applications, in order to determine the priority of inventions. An unfavorable outcome could require us to cease using the related technology, to lose our patent claims partially or in entirety, or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.

        Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the trading price of our ordinary shares or ADSs.

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Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

        On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law, including provisions that affect the way patent applications are prosecuted and also affect patent litigation. The United States Patent and Trademark Office, or U.S. PTO, has developed regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions which were enacted March 16, 2013. However, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. We may become involved in post-grant proceedings challenging our patents or the patents of others, and the outcome of any such proceedings are highly uncertain. An unfavorable outcome in any such proceedings could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology and compete directly with us, or result in our inability to manufacture, develop, or commercialize our product candidates without infringing the patent rights of others.

We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or, that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

        Certain of our employees and personnel were previously employed at universities, medical institutions, or other biotechnology or pharmaceutical companies. Although we try to ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee's former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Furthermore, universities or medical institutions who employ some of our key employees and personnel in parallel to their engagement by us may claim that intellectual property developed by such person is owned by the respective academic or medical institution under the respective institution intellectual property policy or applicable law.

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

        A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Section 134 of the Israeli Patents Law, 5727-1967, or the Patents Law, grants employees the right to receive consideration for service inventions unless otherwise provided in an agreement between the parties. According to a decision by the special Committee for Compensations and Royalties formed under the Patents Law, or the Committee, an employee's right to receive consideration for service inventions is a personal right and is entirely separate from the proprietary rights in such invention. Therefore, this right must be explicitly waived by the employee. A decision in May 2014 by the Committee clarifies that the right to receive consideration under Section 134 can be waived and that in certain circumstances, such waiver does not necessarily have to be explicit. However, the Committee has the authority to examine, on a case by case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract

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laws. Although such decision seems to alleviate the requirement to obtain explicit waiver under Section 134 of the Patents Law, to the extent that there is no explicit waiver in the employment agreements, the existence of such waiver will be subject to the interpretation of the Committee Further, the Committee has not yet determined one specific formula for calculating this remuneration (but rather uses the criteria specified in the Patents Law) nor the criteria or circumstances under which an employee's waiver of his right to remuneration will be disregarded. We generally enter into assignment-of-invention agreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us. 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 or former employees, or be forced to litigate such claims, which could negatively affect our business.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

        We may be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patents or other intellectual property. Ownership disputes may arise in the future, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining our patent protection require compliance with various procedural, document submissions, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and applications are and will be due to be paid to the U.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and applications. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or in administrative proceedings.

        If we initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant may contend that the patent covering our product is invalid, unenforceable, or fails to cover the product or the infringing product. In patent litigation in the United States, defendants commonly allege that asserted patent claims are invalid and unenforceable. Grounds for a validity challenge could be an alleged failure to meet one or more of several statutory requirements, including lack of novelty, obviousness, lack of written description, indefiniteness, and non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such

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mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions, such as opposition proceedings. Such proceedings could result in revocation, amendments to our patent claims, or statements being made on the record such that our claims may no longer be construed to cover our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity, unenforceability, or non-infringement, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Even if resolved in our favor, litigation, or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. As further described below, we previously prevailed in an administrative challenge initiated by Fibrogen, Inc., a major biopharmaceutical company regarding our intellectual property rights, maintaining our intellectual property in all relevant scope, and will continue to protect and enforce our intellectual property rights. Moreover, third parties may continue to initiate new proceedings in the United States and foreign jurisdictions to challenge our patents from time to time.

        In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the market price of our ordinary shares or ADSs. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities.

Two issued patents covering our product were administratively challenged by Fibrogen Inc., and the outcome of the challenge may result in our patent being revoked or amended.

        Our European Patent No. 1 809 751 entitled "Collagen Producing Plants and Methods of Generating and Using Same," was granted by the European Patent Office, or EPO, on September 1, 2010. On June 1, 2011, Fibrogen, Inc. initiated an opposition proceeding with the EPO, seeking revocation of the patent in its entirety on the grounds that the claims were not supported by the contents of the patent, were not novel, and were not inventive. On January 22, 2013, the EPO issued its decision to maintain the patent in amended form with claims that cover genetically modified plants that produce collagen.

        On June 3, 2013, Fibrogen, Inc. appealed the decision. On August 1, 2013, we filed an appeal, seeking to expand the scope of the patent. Oral hearings on these appeals are scheduled for July 2017.

        Our European Patent No. 2 357 241 entitled "Collagen Producing Plants and Methods of Generating and Using Same," a divisional of European Patent No. 1 809 751, was granted by the EPO, on March 4, 2015. On December 10, 2015, Fibrogen, Inc. initiated an opposition proceeding with the EPO, seeking revocation of the patent in its entirety on the grounds that the claims were not supported by the contents of the patent, were not novel, and were not inventive. On August 16, 2016, we filed a response thereto.

        The ultimate outcome of these proceedings remains uncertain, and final resolution of the proceeding may take a number of years and result in substantial costs to us.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

        As is the case with other companies in our industry, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore is costly, time consuming, and inherently uncertain. In addition, in recent years the United States enacted and implemented

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wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in some situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents that had already been granted. The patent laws and regulations may changes in unpredictable ways through actions of the U.S. Congress, the federal courts, and the U.S. PTO, in the future, and any changes may adversely affect our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world.

        Filing, prosecuting, and defending patents on products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Potential competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as in the United States. These products may compete with our product candidates, if approved, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in 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 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.

Intellectual property rights do not address all potential threats to any competitive advantage we may have.

        The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and intellectual property rights may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:

    Others may be able to make products that are the same as or similar to our current or future products but that are not covered by the claims of the patents that we own or have exclusively licensed.

    We or any of our licensors or strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed.

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    We or any of our licensors or strategic partners might not have been the first to file patent applications covering certain of our inventions.

    Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights.

    The prosecution of our pending patent applications may not result in granted patents.

    Granted patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors.

    Patent protection on our product candidates may expire before we are able to develop and commercialize the product, or before we are able to recover our investment in the product.

    Our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for such activities, as well as in countries in which we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in markets where we intend to market our product candidates.

Our agreement with Yissum with respect to our rhCollagen contains certain rights which may be exercised by Yissum.

        Pursuant to our agreement dated July 13, 2004 with, among others, Yissum Research Development Company of the Hebrew University of Jerusalem Ltd., or Yissum, and Prof. Oded Shoseyov, our chief scientific officer and a director, Yissum and Professor Shoseyov assigned to us all intellectual property rights owned by them in connection with the development of the method for production of quality human rhCollagen in plants. Pursuant to this agreement, in the event of (i) the appointment of a receiver or liquidator for all or substantially all of our assets, which appointment is not removed within sixty days, (ii) our passing a resolution for a voluntary winding up, or a winding up application being made against us and not set aside within sixty days, or (iii) our making an assignment of rights or other assets for the benefit of our creditors, all rights in such patents and trade secrets will revert to Yissum. In connection with this reversion right, we agreed that all intellectual property rights that can be registered in connection with such project would be registered with a 1% ownership interest in Yissum's name, solely in order to protect Yissum's reversion right. However, to date, all of our patents regarding rhCollagen have been registered (or are proposed to be registered) with our wholly owned subsidiary, CollPlant Ltd., as 100% owner, without reflecting Yissum's 1% interest. Accordingly, Yissum may claim that such intellectual property rights should be registered in accordance with the terms of the agreement. In addition, in the event that we seek to obtain financing secured by our assets, Yissum's consent to subordinate its interests in such patent rights to the interests of such potential financing source would likely be required.

Risks Related to the Offering and Ownership of the ADSs

The market price of the ADSs may be highly volatile, and you may not be able to resell your ADSs at or above the initial public offering price.

        Prior to this offering, there has not been a public market in the United States for our ordinary shares, and an active market has not developed for the ADSs, which have been quoted on the OTCQX since March 2015. The initial public offering price of the ADSs in this offering will be based, in part, on the price of our ordinary shares on the Tel Aviv Stock Exchange, or the TASE, and on the price of the ADSs on the OTCQX, as well as on negotiations between us and the representative of the underwriters, which may not be indicative of prices that will prevail in the trading market. An active

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trading market for the ADSs may not develop following this offering. You may not be able to sell your ADSs quickly or at the market price if trading in the ADSs is not active.

        The market price of the ADSs is likely to be volatile. Our ADS price could be subject to wide fluctuations in response to a variety of factors, including the following:

    adverse results or delays in preclinical studies or clinical trials;

    reports of adverse events in other similar products or clinical trials of such products;

    inability to obtain additional funding;

    any delay in filing a regulatory submission for any of our product candidates and any adverse development or perceived adverse development with respect to the FDA's review or European authorities' review of that regulatory submission;

    failure to develop successfully and commercialize our product candidates and future products;

    failure to enter into strategic collaborations;

    failure by us or strategic collaboration partners to prosecute, maintain, or enforce our intellectual property rights;

    changes in laws or regulations applicable to future products;

    inability to scale up our manufacturing capabilities (including in Israel), inability to obtain adequate product supply for our product candidates, or the inability to do so at acceptable prices;

    adverse regulatory decisions, including by the OCS under the Innovation Law;

    introduction of new products, services, or technologies by our competitors;

    failure to meet or exceed financial projections we may provide to the public;

    failure to meet or exceed the financial expectations of the investment community;

    the perception of the biotechnology industry by the public, legislatures, regulators, and the investment community;

    announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors;

    disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;

    additions or departures of key scientific or management personnel;

    significant lawsuits, including patent or shareholder litigation;

    changes in the market valuations of similar companies;

    sales of our ordinary shares or ADSs by us or our shareholders in the future; and

    trading volumes of our ordinary shares and ADSs.

        In addition, companies trading in the stock market in general, and medical device companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our ordinary shares, regardless of our actual operating performance.

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As a new investor, you will experience immediate dilution in the book value of any ADSs you purchase.

        Because the initial public offering price per ADS being offered is substantially higher than our net tangible book value per ADS, you will suffer immediate and substantial dilution in the net tangible book value of any ADSs you purchase in this offering. Consequently, if you purchase ADSs in this offering at an initial public offering price of $            per ADS, you will incur immediate dilution of $            per ADS. In addition, you may experience further dilution to the extent that additional ordinary shares are issued upon exercise of outstanding options and warrants. If the underwriters exercise their over-allotment option, you may experience additional dilution. For further information regarding the dilution resulting from this offering, please see the section entitled "Dilution" in this prospectus.

We will incur additional significant costs as a result of the listing of the ADSs for trading on the NASDAQ Capital Market and thereby becoming a public company subject to SEC reporting requirements in the United States, and our management will be required to devote substantial additional time to new compliance initiatives as well as to compliance with ongoing United States and Israeli reporting requirements.

        In addition to the costs associated with being an Israeli public company, upon the successful completion of this offering and the listing of the ADSs on the NASDAQ Capital Market, we will become a publicly reporting company in the United States. As a U.S. public reporting company, we will incur additional significant accounting, legal, and other expenses that we did not incur before the offering. We also anticipate that we will incur costs associated with corporate governance requirements of the SEC and the NASDAQ Capital Market. We expect these rules and regulations to increase our legal and financial compliance costs, introduce new costs such as investor relations, stock exchange listing fees and shareholder reporting, and to make some activities more time consuming and costly. Our management and other personnel will need to devote substantial time to these compliance requirements; in addition, the implementation of such compliance processes and systems may require us to hire outside consultants and incur other significant costs. Any future changes in the laws and regulations affecting public companies in the United States and the rules and regulations adopted by the SEC and the NASDAQ Capital Market, for so long as they apply to us, will result in increased costs to us as we respond to such changes. These laws, rules, 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, on our board committees, if any, or as senior management.

Our securities will be traded on more than one market or exchange and this may result in price variations.

        Our ordinary shares have been trading on the TASE since May 2010, and the ADSs have been quoted on the OTCQX since March 2015. In conjunction with this offering, we have applied to list the ADSs on the NASDAQ Capital Market. Trading in ordinary shares and ADSs, as applicable, on these markets will take place in different currencies (U.S. dollars on the NASDAQ Capital Market and NIS on the TASE), and at different times (resulting from different time zones, trading days, and public holidays in the United States and Israel). The trading prices of our shares on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on the TASE could cause a decrease in the trading price of the ADSs on the NASDAQ Capital Market.

Our principal shareholders and management beneficially own a significant percentage of our ordinary shares and will be able to exert significant control over matters subject to shareholder approval.

        As of September 30, 2016, our senior management, directors, and five percent or more shareholders and their affiliates beneficially owned approximately 46.9% of our ordinary shares and,

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upon closing of this offering, that same group will beneficially own approximately        % of our outstanding ordinary shares. These shareholders will have the ability to control us through their ownership positions. These shareholders may be able to determine all matters requiring shareholder approval. For example, these shareholders, if they were to act together, may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our ordinary shares that you may believe are in your best interest as one of our shareholders.

We are an "emerging growth company" and a "foreign private issuer," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and foreign private issuers will make the ADSs less attractive to investors.

        We are an "emerging growth company," as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements, extended transition periods for adopting new or revised accounting standards, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately.

        Furthermore, as a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Securities Exchange Act of 1934, or the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue proxy statements that comply with the requirements applicable to U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors, and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. These exemptions and leniencies, along with other corporate governance exemptions resulting from our ability to rely on home country rules, will reduce the frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic reporting companies. See "Management—Corporate Governance Practices" for more information.

        We cannot predict if investors will find the ADSs less attractive because we may rely on these reduced requirements. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and our share price may be more volatile.

Sales of a substantial number of our ordinary shares or ADSs in the public market could cause our share price to fall.

        If our existing shareholders sell, indicate an intention to sell, or the market perceives that they intend to sell, substantial amounts of our securities, either on the TASE or on the NASDAQ Capital Market after this offering, the market price of our securities could decline significantly. On an

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as-converted basis as of                        , 2016, upon the closing of this offering, we will have outstanding a total of            ordinary shares, all of which are registered and available for sale in Israel, assuming no exercise of the underwriters' option to purchase additional shares. As of the date of this prospectus, the            ADSs being sold in this offering, plus any ADSs sold upon exercise of the underwriters' option to purchase additional shares, will be freely tradable, without restriction, on the NASDAQ Capital Market immediately following this offering, assuming that current shareholders do not purchase ADSs in this offering.            publicly held ordinary shares are freely tradable as of the date of this prospectus, and substantially all of the ordinary shares will be available for sale on the TASE beginning 180 days from the date of this prospectus following the expiration of lock-up agreements between our senior management, directors, and certain shareholders and the underwriters. Ladenburg Thalmann & Co. Inc., as representative of the underwriters in this offering, may, however, in their discretion, permit our senior management, directors, and other shareholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

        After the lock-up agreements expire, based upon the number of ordinary shares, on an as-converted basis, outstanding as of                        up to an additional            ordinary shares will be eligible for sale in the public market,            of which shares are held by directors, senior management, and other affiliates and will be subject to Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.

        In addition, as of                        , an aggregate of                    ordinary shares that are either subject to outstanding options or subject to outstanding warrants will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. If these additional ordinary shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our ordinary shares could decline.

Future sales and issuances of our securities or rights to purchase securities, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our shareholders and could cause the prices of our securities to fall.

        Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution. We may sell ordinary shares, ADSs, convertible securities, or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell ordinary shares, ADSs, convertible securities, or other equity securities in one or more transactions, existing investors may be materially diluted by subsequent sales, and new investors could gain rights superior to our existing shareholders.

        Pursuant to our Share Ownership and Option Plan (2010), our management is authorized to grant share options and other equity-based awards to our employees, directors, and consultants. As of September 30, 2016, our employees, officers, and consultants hold 36,509,016 options. If our board of directors elects to increase the number of shares available for future grant by the maximum amount each year, our shareholders may experience additional dilution, which could cause our share price to fall.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled "Use of Proceeds," and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in investment-grade, interest-bearing securities. These investments may not yield a favorable return to our shareholders.

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We do not intend to pay dividends on our securities, so any returns will be limited to the value of our shares.

        We have never declared or paid any cash dividends on our share capital. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to shareholders will therefore be limited to the appreciation of their shares. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes. As a result, investors in the ADSs or ordinary shares will not be able to benefit from owning these securities unless their market price becomes greater than the price paid by such investors and they are able to sell such securities. We cannot assure you that you will ever be able to resell our securities at a price in excess of the price paid.

In the event we make distributions or dividends, you may not receive the same distributions or dividends as those we make to the holders of our ordinary shares, and, in some limited circumstances, you may not receive dividends or other distributions, or receive any value for them, if it is illegal or impractical to make them available to you.

        The depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying the ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed under an applicable exemption from registration. In addition, conversion into U.S. dollars from foreign currency that was part of a dividend made with respect to deposited ordinary shares may require the approval or license of, or a filing with, any government or agency thereof, which may be unobtainable. In these cases, the depositary may determine not to distribute such property and hold it as "deposited securities" or may seek to effect a substitute dividend or distribution, including net cash proceeds from the sale of the dividends that the depositary deems an equitable and practicable substitute. We have no obligation to register under U.S. securities laws any ordinary shares, rights, or other securities made available through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights, or anything else to holders of ADSs. In addition, the depositary may withhold from such dividends or distributions its fees and an amount on account of taxes or other governmental charges to the extent the depositary believes it is required to make such withholding. This means that you may not receive the same distributions or dividends as those we make to the holders of our ordinary shares, and, in some limited circumstances, you may not receive any value for such distributions or dividends if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of the ADSs.

Holders of ADSs must act through the depositary to exercise their rights.

        Holders of the ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement for the ADSs. In general, under Israeli law, the minimum notice period required to convene a shareholders' meeting is no less than 35 or 21 calendar days, depending on the proposals on the agenda for the shareholders' meeting. When a shareholders' meeting is convened, holders of the ADSs may not receive sufficient notice of a shareholders' meeting to permit them to withdraw their ordinary shares to allow them to cast their vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting materials to holders of the ADSs or carry out their voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to holders of the ADSs in a timely manner, but we cannot assure holders that

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they will receive the voting materials in time to ensure that they can instruct the depositary to vote their ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of the ADSs may not be able to exercise their right to vote, and they may lack recourse if their ADSs are not voted as they requested. In addition, in the capacity as a holder of ADSs, they will not be able to call a shareholders' meeting.

You may be subject to limitations on transfer of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body or for any other reason in accordance with the terms of the deposit agreement. See the section of this prospectus titled "Description of American Depositary Shares."

Your percentage ownership in us may be diluted by future issuances of share capital, which could reduce your influence over matters on which shareholders vote.

        Following the completion of this offering, our board of directors will have the authority, in most cases without action or vote of our shareholders, to issue all or any part of our authorized but unissued shares, including ordinary shares issuable upon the exercise of outstanding options and warrants. Issuances of additional shares would reduce your influence over matters on which our shareholders vote.

If equity research analysts do not publish research reports about our business or if they issue unfavorable commentary or downgrade the ADSs, the price of the ADSs could decline.

        The trading market for the ADSs will rely in part on the research and reports that equity research analysts publish about us and our business. The price of the ADSs could decline if we do not obtain research analyst coverage or if one or more securities analysts downgrade the ADSs, issue other unfavorable commentary, or cease publishing reports about us or our business.

Risks Related to Our Incorporation and Operations in Israel

We are a "foreign private issuer" and intend to follow certain home country corporate governance practices, and our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NASDAQ corporate governance requirements.

        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 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, 5759-1999, or the Companies Law, our articles of association 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. We may in the future (or may be required to) elect to follow home country practices in Israel (and consequently avoid the requirements that would otherwise apply to a U.S. company listed on the NASDAQ Capital Market) with regard to other matters, as well, such as the formation of compensation, nominating, and 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

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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), amending our compensation policy from time to time, and the approval of certain interested-parties transactions. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the NASDAQ Capital Market may provide less protection to you than what is accorded to investors under the NASDAQ Stock Market rules applicable to domestic U.S. issuers. See "Management—Corporate Governance Practices" for more information.

        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, including the requirement for an emerging growth company to disclose the compensation of the chief executive officer and other two highest compensated executive officers on an individual, rather than aggregate, basis. As long as our securities are traded on the TASE and to the extent that we will adopt U.S. reporting duties, we will not be required to report in Israel under Israeli reporting regulations pursuant to the Israeli Securities Law. Under the Israeli Companies Law, we will be required to disclose in the notice for our annual meetings of shareholders, the annual compensation of our five most highly compensated officers on an individual basis, rather than aggregate. However, this disclosure will not be as extensive as the disclosure required by a U.S. domestic issuer.

        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 foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic reporting company 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 reporting company 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 accepted governance practices associated with U.S. domestic reporting companies. 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.

Potential political, economic, and military instability in the State of Israel, where the majority of our senior management and our research and development facilities are located, may adversely impact our results of operations.

        We are incorporated under Israeli law and our offices and operations are located in the State of Israel. In addition, our employees, officers, and all but two of our directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel directly affect our business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could adversely impact our operations. Since October 2000, there have been increasing occurrences of terrorist violence. Ongoing and revived hostilities or other Israeli political or economic factors could harm our operations, product development and results of operations.

        Although Israel has entered into various agreements with Egypt, Jordan, and the Palestinian Authority, there has been an increase in unrest and terrorist activity, which began in October 2000 and has continued with varying levels of severity. The establishment in 2006 of a government in the Gaza Strip by representatives of the Hamas militant group has created additional unrest and uncertainty in the region. In 2006, a conflict between Israel and the Hezbollah in Lebanon resulted in thousands of rockets being fired from Lebanon up to 50 miles into Israel. Starting in December 2008, for

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approximately three weeks, Israel engaged in an armed conflict with Hamas in the Gaza Strip, which involved missile strikes against civilian targets in various parts of Israel and negatively affected business conditions in Israel. In November 2012, for approximately one week, Israel experienced a similar armed conflict, resulting in hundreds of rockets being fired from the Gaza Strip and disrupting most day-to-day civilian activity in southern Israel. Most recently, in July 2014, Israel yet again experienced rocket strikes against civilian targets in various parts of Israel, as part of an armed conflict commenced between Israel and Hamas. If continued or resumed, these hostilities may negatively affect business conditions in Israel in general and our business in particular. Our insurance policies do not cover us for the damages incurred in connection with these conflicts or for any resulting disruption in our operations. The Israeli government, as a matter of law, provides coverage for the reinstatement value of direct damages that are caused by terrorist attacks or acts of war; however, the government may cease providing such coverage or the coverage might not be enough to cover potential damages. In the event that hostilities disrupt the ongoing operation of our facilities or the airports and seaports on which we depend to import and export our supplies and product candidates, our operations may be materially adversely affected.

        In addition, since the end of 2010, numerous acts of protest and civil unrest have taken place in several countries in the Middle East and North Africa, many of which involved significant violence. The civil unrest in Egypt, which borders Israel, resulted in the resignation of its president Hosni Mubarak, and to significant changes to the country's government. In Syria, also bordering Israel, a civil war is continuing to take place. The ultimate effect of these developments on the political and security situation in the Middle East and on Israel's position within the region is not clear at this time. Such instability may lead to deterioration in the political and trade relationships that exist between the State of Israel and certain other countries.

        Popular uprisings in various countries in the Middle East and North Africa are affecting the political stability of those countries. Such instability may lead to deterioration in the political and trade relationships that exist between the State of Israel and these countries. Several countries, principally in the Middle East, still 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 Israel or political instability in the region continues or increases. Any hostilities involving Israel, interruption or curtailment of trade between Israel and its present trading partners, or significant downturns in the economic or financial condition of Israel could adversely affect our operations and product development and adversely affect our share price. Similarly, Israeli companies are limited in conducting business with entities from several countries. For instance, in 2008, the Israeli legislature passed a law forbidding any investments in entities that transact business with Iran.

        In addition, Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, and various rebel militia groups in Syria. Additionally, a violent jihadist group named Islamic State of Iraq and Levant (ISIL) is involved in hostilities in Iraq and Syria and has been growing in influence. Although ISIL's activities have not directly affected the political and economic conditions in Israel, ISIL's stated purpose is to take control of the Middle East, including Israel. These situations may potentially escalate in the future to more violent events which may affect Israel and us. Any armed conflicts, terrorist activities, or political instability in the region could adversely affect business conditions and could harm our results of operations and could make it more difficult for us to raise capital. Parties with whom we do business may decline to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements. Further, in the past, the State of Israel and Israeli companies

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have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition, or the expansion of our business.

Our operations may be disrupted by the obligations of personnel to perform military service.

        As of September 30, 2016, we had 37 employees, all of whom were based in Israel. Some of our employees may be called upon to perform up to 36 days (and in some cases more) of annual military reserve duty until they reach the age of 40 (and in some cases, up to 45 or older) and, in emergency circumstances, could be called to immediate and unlimited active duty. In the event of severe unrest or other conflict, individuals could be required to serve in the military for extended periods of time. Since September 2000, in response to increased tension and hostilities, there have been occasional call-ups of military reservists, including in connection with the 2006 conflict in Lebanon, and the December 2008, November 2012 and July 2014 conflicts with Hamas, and it is possible that there will be additional call-ups in the future. Our operations could be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods of one or more of our key employees for military service. Such disruption could materially adversely affect our business and results of operations. Additionally, the absence of a significant number of the employees of our Israeli suppliers and contractors related to military service or the absence for extended periods of one or more of their key employees for military service may disrupt their operations.

The tax benefits that are available to us if and when we generate taxable income require us to meet various conditions and may be prevented or reduced in the future, which could increase our costs and taxes.

        If and when we generate taxable income, we may be eligible for certain tax benefits provided to "Preferred Enterprises" under the Israeli Law for the Encouragement of Capital Investments, 5719-1959, as amended, or the Investment Law. The benefits that may be available to us under the Investment Law are subject to the fulfillment of conditions stipulated in the Investment Law. Further, in the future these tax benefits may be reduced or discontinued. If these tax benefits are reduced, cancelled, or discontinued, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies is currently 25%. Additionally, if we increase our activities outside of Israel through acquisitions, for example, our expanded activities might not be eligible for inclusion in future Israeli tax benefit programs. See "Taxation and Government Programs—Israeli Tax Considerations and Government Programs—Law for the Encouragement of Capital Investments, 5719-1959."

It may be difficult to enforce a U.S. judgment against us, our officers and directors, and the Israeli experts named in this prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.

        We were incorporated in Israel, and our corporate headquarters and substantially all of our operations are located in Israel. All of our senior management and all but two of our directors, and the Israeli experts named in this prospectus, are located in Israel. All of our assets are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Israeli court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, 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 against us or our officers and directors on the grounds that Israel is not the most appropriate forum in which to bring such a claim. Even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a

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fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. See "Enforceability of Civil Liabilities."

Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

        Because we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders of U.S. 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 the general meeting of shareholders on certain matters, such as an amendment to the company's articles of association, an increase of the company's authorized share capital, a merger of the company, and approval of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of an officer of the company has a duty to act in fairness towards the company with regard to such vote or appointment. However, Israeli law does not define the substance of this duty of fairness. 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 our shareholders that are not typically imposed on shareholders of U.S. corporations. See "Management—Approval of Related Party Transactions under Israeli Law—Shareholders' Duties."

Provisions of Israeli law and our amended and restated articles of association could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our shareholders.

        Israeli law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for 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, or a Full Tender Offer, can only be completed if the acquirer receives approval of the holders of at least 95% of the issued share capital. Completion of the Full 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 Full 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. In case the Full Tender Offer has not been accepted by the required threshold, the offeror is limited to acquire shares that will confer on the offeror a holding of not more than 90% of the issued share capital of the company. See "Description of Our Ordinary Shares—Acquisitions under Israeli Law" for additional information.

        Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. 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

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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.

        We have received Israeli government grants for certain research and development expenditures. The terms of these grants and loans may require us to satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel.

We expect to be classified as a passive foreign investment company for U.S. federal income tax purposes, and our U.S. shareholders may suffer adverse tax consequences as a result.

        Generally, if, for any taxable year, either, at least 75% of our gross income is passive income (including our pro-rata share of the gross income of our 25% or more-owned corporate subsidiaries), or at least 50% of the average value of our assets (including our pro-rata share of the assets of our 25% or more-owned corporate subsidiaries) is attributable to assets that produce passive income or are held for the production of passive income, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. Passive income generally includes dividends, interest, and gains from disposition of passive assets and rents and royalties.

        If we are characterized as a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder (as defined below) of our securities, our U.S. shareholders may suffer adverse tax consequences, including increased U.S. federal income tax liability upon a sale or other disposition of our securities or the receipt of certain excess distributions from the loss of the preferential rate applicable to dividends received on our ordinary shares, interest charges that apply to distributions by us, and additional reporting requirements. See "Taxation—Material U.S. Federal Income Tax Consequences—Passive Foreign Investment Company Consequences."

        Our status as a PFIC may also depend, in part, on how quickly we utilize the cash proceeds from this offering in our business. Since PFIC status depends on the composition of our income and the composition and value of our assets (which, assuming we are not a CFC for the year being tested, may be determined in large part by reference to the market value of our ordinary shares, which may be volatile) from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. However, because we had no revenue-producing operations to date, we believe that we were a PFIC for our 2015 taxable year. Unless and until we generate sufficient revenue from sales and other non-passive sources and otherwise satisfy the asset test above, we expect to be treated as a PFIC.

        U.S. investors are urged to consult their own tax advisors regarding the possible application of the PFIC rules. For more information, see "Taxation—Material U.S. Federal Income Tax Consequences—Passive Foreign Investment Company Consequences."

Our facilities in Israel are subject to local Business Licensing and Planning and Zoning regulations and we may be subject to fines if not complied with.

        Under the Israeli Licensing of Businesses Law, to which our production site and offices and laboratories are subject, operating a business without a license or temporary permit is a criminal offense. We have a business license for our laboratories and offices, in effect until December 31, 2019. We also have a temporary business license for our plant growth and production site at Yessod Hama'ala, in effect until November 5, 2016. We expect to receive a permanent business license for this site; however, there is no assurance that a permanent business license will be issued on a timely basis or at all. In addition, our production sites and laboratories are subject to the Israeli Planning and Zoning Law, which sets provisions and obligations, inter alia, regarding the licensing process for a new building, including building permits, non-conforming use and easements, the supervision over its construction, and the required occupancy permits. According to the Planning and Building Law, work or use of land without a permit, where such permit is required, a deviation from the permit granted, or use of agricultural land in violation of the law constitute criminal offenses.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Some of the statements made under "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "project," "anticipates," "believes," "estimates," "predicts," "potential," "intends," or "continue," or the negative of these terms or other comparable terminology.

        These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans, and strategies; statements that contain projections of results of operations or of financial condition; statements relating to the research, development, and use of our products; and all statements (other than statements of historical facts) that address activities, events, or developments that we intend, expect, project, believe, or anticipate will or may occur in the future.

        Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate.

        Important factors that could cause actual results, developments, and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

    the overall global economic environment;

    the impact of competition and new technologies;

    general market, political, and economic conditions in the countries in which we operate;

    projected capital expenditures and liquidity;

    changes in our strategy;

    our ability to cooperate with third party collaborators;

    government regulations and approvals;

    litigation and regulatory proceedings; and

    those factors referred to in "Risk Factors," "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as in this prospectus generally.

        These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus in greater detail under the heading "Risk Factors" and elsewhere 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 future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

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EXCHANGE RATE INFORMATION

        The following table sets forth information regarding the exchange rates of U.S. dollars per NIS for the periods indicated. Average rates are calculated by using the daily representative rates as reported by the Bank of Israel on the last day of each month during the periods presented.

 
  NIS per U.S. dollar  
Year Ended December 31,
  High   Low   Average   Period End  

2015

    4.053     3.761     3.888     3.902  

2014

    3.994     3.402     3.592     3.889  

2013

    3.791     3.471     3.600     3.471  

2012

    4.084     3.700     3.843     3.733  

2011

    3.821     3.363     3.581     3.821  

        The following table sets forth the high and low daily representative rates for the NIS as reported by the Bank of Israel for each of the prior six months.

 
  NIS per U.S. dollar  
Month Ended
  High   Low   Average   Period End  

September 2016

    3.786     3.746     3.766     3.758  

August 2016

    3.829     3.754     3.796     3.786  

July 2016

    3.895     3.828     3.857     3.828  

June 2016

    3.900     3.818     3.857     3.846  

May 2016

    3.879     3.746     3.813     3.850  

April 2016

    3.819     3.758     3.778     3.761  

        On October 19, 2016, the closing representative rate was $1.00 to NIS 3.819, as reported by the Bank of Israel.


PRICE RANGE OF OUR ORDINARY SHARES

        Our ordinary shares have traded on the TASE under the symbol "CLPT" since May 2010. As of October 19, 2016, we had 318,182,848 ordinary shares outstanding.

        The initial offering price will be determined based primarily upon the closing price of our ordinary shares on the TASE immediately prior to the pricing of the offering. The average daily trading volume of our ordinary shares on the TASE during the nine months ended September 30, 2016 was 1.1 million ordinary shares, or 0.3% of our total outstanding ordinary shares as of September 30, 2016, and the total trading volume for the nine months ended September 30, 2016 was in excess of 199 million shares.

        The following table shows the annual, quarterly, and monthly ranges of the high and low per share sale price for our ordinary shares as reported by the TASE in NIS and U.S. dollars. U.S. dollar

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amounts per ordinary share are provided using the U.S. dollar representative rate of exchange on the date to which the high or low market price is applicable, as reported by the Bank of Israel.

 
  NIS Price
Per Ordinary
Share
  U.S. Dollar
Price Per
Ordinary
Share
 
 
  High   Low   High   Low  

Annual:

                         

2015

    0.85     0.22     0.22     0.06  

2014

    0.30     0.15     0.08     0.04  

2013

    0.41     0.20     0.12     0.05  

2012

    0.61     0.36     0.16     0.09  

2011

    1.31     0.43     0.37     0.12  

Quarterly:

                         

Fourth Quarter 2016 (through October 19)

    0.32     0.30     0.09     0.08  

Third Quarter 2016

    0.35     0.30     0.09     0.08  

Second Quarter 2016

    0.45     0.31     0.12     0.08  

First Quarter 2016

    0.52     0.40     0.13     0.10  

Fourth Quarter 2015

    0.67     0.46     0.17     0.12  

Third Quarter 2015

    0.85     0.44     0.22     0.11  

Second Quarter 2015

    0.74     0.36     0.19     0.09  

First Quarter 2015

    0.52     0.22     0.13     0.06  

Fourth Quarter 2014

    0.23     0.15     0.06     0.04  

Third Quarter 2014

    0.26     0.22     0.08     0.06  

Second Quarter 2014

    0.28     0.24     0.08     0.07  

First Quarter 2014

    0.30     0.25     0.08     0.07  

Most Recent Six Months:

                         

September 2016

    0.33     0.31     0.09     0.08  

August 2016

    0.33     0.30     0.09     0.08  

July 2016

    0.35     0.30     0.09     0.08  

June 2016

    0.37     0.31     0.10     0.08  

May 2016

    0.43     0.39     0.11     0.10  

April 2016

    0.45     0.41     0.12     0.11  

        Since March 2015, the ADSs have been quoted on OTCQX under the symbol "CQPTY." On October 19, 2016, the closing price of our ordinary shares on the TASE was NIS 0.30, or $0.08 per share (based on the exchange rate reported by the Bank of Israel on such date), and equivalent to a price of $7.96 per ADS. The closing price of the ADSs on OTCQX, on June 10, 2016, was $11.93 per ADS, which was the last reported closing price of the ADSs on OTCQX. Assuming that the ADSs are listed for trading on the NASDAQ Capital Market, the quoting of the ADSs on OTCQX will be discontinued prior to the completion of this offering.

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USE OF PROCEEDS

        We estimate that the net proceeds to us from our issuance and sale of        of the ADSs in this offering will be approximately $        , based on an assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on        , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters' option to purchase additional ADSs in this offering is exercised in full, we estimate that the net proceeds from this offering will be approximately $        , based on an assumed offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on        , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        We currently expect to use the net proceeds from this offering for:

    conducting research and development activities in order to expand our pipeline of product candidates and pursue additional indications for our existing product candidates, estimated at approximately $        ;

    the scale-up of our manufacturing capabilities, estimated at approximately $        ;

    the establishment of sales and marketing capabilities for the European market, estimated at approximately $        ; and

    the remainder for working capital and general corporate purposes, including funding the costs of operating as a public company in the United States and Israel.

        These expected uses of net proceeds from this offering represent 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 and will depend upon numerous factors, including the progress of our development and commercialization efforts, the status of and results from our clinical trials and preclinical studies, whether or not we enter into strategic collaborations or partnerships, the amount of cash available from other sources, and our operating costs and expenditures. Accordingly, our management will have significant flexibility and broad discretion in applying the net proceeds of this offering.

        We expect proceeds from this offering to meet our capital requirements for at least the next three years. The proceeds of this offering will not be sufficient to achieve any additional marketing approval of our product candidates. We will need substantial additional capital in order to independently pursue FDA or other regulatory approvals of any of our product candidates. The ability to pursue further regulatory approvals of our product candidates will be dependent upon, among other things, our ability to enter into partnerships and collaborations, to execute additional financings, and to generate net income from our operations.

        Pending these uses, we intend to invest the net proceeds in low-risk, high-quality, investment-grade instruments, certificates of deposit, or direct or guaranteed obligations of the U.S. government or other governments, or hold as cash.

        We have no current commitments or binding agreements with respect to any material acquisition of or investment in any technologies, products, or companies other than our own plans and business.

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DIVIDEND POLICY

        Since our merger in 2010 with CollPlant Ltd., we have not declared or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, for use in the operation of our business and to fund future growth. Payment of cash dividends, if any, in the future will depend on our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.

        If we do decide to declare or pay any cash dividend, the depositary has agreed to pay the ADS holders the dividends it receives, after deducting its fees and expenses. See "Description of American Depositary Shares—Dividends and Other Distributions."

        The Israeli Companies Law imposes further restrictions on our ability to declare and pay dividends. See "Description of Our Ordinary Shares—Dividend and Liquidation Rights" for additional information.

        Payment of dividends may be subject to Israeli withholding taxes. See "Taxation—Israeli Tax Considerations" for additional information.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2016 (unless stated otherwise):

    on an actual basis; and

    on an as adjusted basis, to reflect the issuance and sale of        ADSs in this offering at an assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on October     , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us as if the sale of ADSs had occurred on June 30, 2016.

        The as adjusted column below is illustrative only. Our cash and cash equivalents and capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at the pricing of this offering. You should read the following table in conjunction with the sections titled "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of Our Ordinary Shares," "Description of American Depositary Shares," and our financial statements and related notes included elsewhere in this prospectus.

 
  Actual, as of
June 30,
2016 (NIS in
thousands)
  As adjusted, as of
June 30,
2016 (NIS in
thousands)
  Actual, as of
June 30,
2016 (Convenience
translation into
USD in
thousands(1))
  As adjusted,
as of
June 30,
2016 (Convenience
translation into
USD in
thousands(1))

Cash and cash equivalents

    11,118         2,891    

Total liabilities

    4,820         1,253    

Shareholders' equity:

                   

Ordinary shares, par value NIS 0.01 per
share—1,500,000,000 shares authorized
at June 30, 2016;                
shares issued and outstanding at
June 30, 2016

    3,175         826    

Additional paid-in capital

    158,699         41,264    

Accumulated deficit

    (145,493 )       (37,831 )  

Total shareholders' equity

    16,381         4,259    

Total liabilities and equity

    21,201         5,512    

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

        The outstanding share information in the table above is based on 317,476,607 ordinary shares outstanding as of June 30, 2016, excluding the following as of such date:

    44,370,786 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of NIS 0.59 ($0.15) per share;

    88,337,260 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.70 ($0.18) per share;

    23,041,309 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.80 ($0.21) per share;

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    4,152,764 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.8478 ($0.22) per share;

    8,618,855 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.575 ($0.15) per share, which expired subsequent to June 30, 2016;

    36,531,500 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.60 ($0.16) per share; and

    3,203,747 ordinary shares issuable pursuant to a lease agreement into which we entered on July 28, 2016.

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on         , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, 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 $         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. Similarly, an increase (decrease) of 100,000 in the number of ADSs 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 $         million, assuming the assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on        , 2016, after giving effect to a share-to-ADS ratio of 100-to-1, as set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

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DILUTION

        If you invest in the ADSs, you will experience immediate and substantial dilution to the extent of the difference between the initial public offering price of the ADSs and the as adjusted net tangible book value per share of the ADSs immediately after this offering. Dilution results from the fact that the per initial public offering price per ADS is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

        Our historical net tangible book value per share or per ADS is determined by dividing our total tangible assets, less total liabilities, by the actual number of outstanding ordinary shares or the total number of ADSs that would represent such actual number of shares based on a share-to-ADS ratio of 100-to-1. Our historical net tangible book value as of June 30, 2016, was $3.8 million representing $0.012 per ordinary share or $        per ADS (using the ratio of 100 ordinary shares to one ADS).

        Our as adjusted net tangible book value as of June 30, 2016 was $        , representing $        per ordinary share or $        per ADS (using the ratio of 100 ordinary shares to one ADS). The as adjusted net tangible book value gives effect to the sale of ADSs in this offering at an assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on        , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The as adjusted net tangible book value per share after the offering is calculated by dividing the as adjusted net tangible book value of $        , by        , which is equal to outstanding ordinary shares. The difference between the initial public offering price per ADS and the as adjusted net tangible book value per ADS represents an immediate dilution of $        per ADS to new investors purchasing ADSs in this offering.

        The following table illustrates this dilution on a per ADS basis to new investors:

Assumed initial public offering price per ADS

                 $             

Historical net tangible book value per ADS before this offering, as of June 30, 2016

  $                   

Increase in net tangible book value per ADS attributable to new investors participating in this offering

  $                   

As adjusted net tangible book value per ADS after this offering

        $             

Dilution per ADS to new investors participating in this offering

        $             

Percentage of dilution in net tangible book value per ADS for new investors participating in this offering

                     %

        If the underwriters' over-allotment option to purchase additional ADSs from us is exercised in full, and based on an assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on        , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, the as adjusted net tangible book value per ADS after this offering would be approximately $        per ADS, the increase in the as adjusted net tangible book value per ADS attributable to new investors would be approximately $        per ADS, and the dilution to new investors purchasing ADSs in this offering would be approximately $        per ADS.

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our ordinary shares on the TASE on         , 2016, after giving effect to a share-to-ADS ratio of 100-to-1 and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, would increase (decrease) our as adjusted net tangible book value per ADS after this offering by $        and the dilution per ADS to new investors by $        , assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of ADSs

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we are offering. Similarly, each increase (decrease) of 1,000,000 shares in the number of ADSs offered would increase (decrease) the dilution to new investors by $        per share or $        per share, respectively, assuming the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

        The table below summarizes as of June 30, 2016, on the as adjusted basis described above, the number of ordinary shares we issued and sold (treating each ADS as 100 ordinary shares), the total consideration we received and the average price per ordinary share (i) paid by our existing shareholders, and (ii) to be paid by new investors purchasing the ADSs in this offering at the initial public offering price of $        per ADS (treating each ADS as 100 ordinary shares), before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Ordinary Shares   Total
Consideration
  Average
Price
 
 
  Number   Percent   Amount   Percent   Per Share  

Existing shareholders

                   % $                           % $             

New investors (treating each ADS as ordinary shares)

                   % $                           % $             

Total

        100.0 % $                100.0 % $             

        If the underwriters' over-allotment option is exercised in full, the percentage of ordinary shares held by existing shareholders will be reduced to        % of the total number of shares of our ordinary shares outstanding after this offering, and the number of shares held by new investors (treating each ADS as 100 ordinary shares) will increase to            shares, or         % of the total number of ordinary shares outstanding after this offering.

        The outstanding share information in the table above is based on 317,476,607 ordinary shares outstanding as of June 30, 2016, excluding the following as of such date:

    44,370,786 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of NIS 0.59 ($0.15) per share;

    88,337,260 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.70 ($0.18) per share;

    23,041,309 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.80 ($0.21) per share;

    4,152,764 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.8478 ($0.22) per share;

    8,618,855 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.575 ($0.15) per share, which expired subsequent to June 30, 2016;

    36,531,500 ordinary shares issuable upon the exercise of outstanding warrants at an exercise price of NIS 0.60 ($0.16) per share; and

    3,203,747 ordinary shares issuable pursuant to a lease agreement into which we entered on July 28, 2016.

        To the extent that options or warrants are exercised, new options or other share-based awards are issued, or we issue additional ordinary shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders and ADS holders.

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SELECTED CONSOLIDATED FINANCIAL DATA

        You should read the following selected financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements, related notes and other financial information included elsewhere in this prospectus.

        The statement of comprehensive loss data for the years ended December 31, 2014 and 2015 and the statement of financial position data as of December 31, 2014 and 2015 are derived from our audited financial statements included elsewhere in this prospectus. The statement of comprehensive loss data for the three- and six-month periods ended June 30, 2015 and 2016 and the statement of financial position data as of June 30, 2016 are derived from our unaudited financial statements included elsewhere in this prospectus, Our historical results are not necessarily indicative of the results that should be expected in the future. Our financial statements have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board.

 
  Year ended December 31,   Six months ended June 30,   Three months ended June 30,  
 
  2014   2015   2015   2015   2016   2016   2015   2016   2016  
 
  (NIS in thousands except
per share data)

  (Convenience
translation
into USD
in thousands
except per
share data(1))

  (NIS in thousands except
per share data)

  (Convenience
translation
into USD
in thousands
except per
share data(1))

  (NIS in thousands except per share data)
  (Convenience
translation
into USD in
thousands
except per
share data(1))

 

Statement of comprehensive loss data:

                                                       

Research and development expenses

    14,879     22,919     5,959     9,082     15,892     4,132     5,053     7,573     1,969  

Participation in research and development expenses

    (5,145 )   (11,055 )   (2,874 )   (4,363 )   (6,244 )   (1,623 )   (2,813 )   (3,329 )   (865 )

Research and development expenses, net

    9,734     11,864     3,085     4,719     9,648     2,509     2,240     4,244     1,104  

General, administrative and marketing expenses

    3,906     6,950     1,807     2,545     4,202     1,093     1,431     2,167     564  

Operating loss

   
13,640
   
18,814
   
4,892
   
7,264
   
13,850
   
3,602
   
3,671
   
6,411
   
1,668
 

Financial income

   
(642

)
 
(215

)
 
(56

)
 
(148

)
 
(39

)
 
(10

)
 
(3

)
 
(36

)
 
(9

)

Financial expenses

    25     51     13     210     204     53     191     13     3  

Financial expenses (income), net

    (617 )   (164 )   (43 )   62     165     43     188     (23 )   (6 )

Loss

   
13,023
   
18,650
   
4,849
   
7,326
   
14,015
   
3,645
   
3,859
   
6,388
   
1,662
 

Loss per ordinary share, basic and diluted

   
0.05
   
0.07
   
0.02
   
0.03
   
0.05
   
0.01
   
0.02
   
0.02
   
0.01
 

Weighted average ordinary shares outstanding, basic and diluted

   
241,280,958
   
254,018,556
         
241,395,403
   
284,743,897
         
241,398,421
   
291,560,590
   
 
 

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016, at the rate of one U.S. dollar per NIS 3.846.

 
  December 31,   June 30,  
 
  2014   2015   2015   2016   2016  
 
  (NIS in
thousands)

  (Convenience
translation into
USD in
thousands(1))

   
  (Convenience
translation into
USD in
thousands(1))

 

Statement of financial position data:

                               

Cash and cash equivalents

    11,062     5,317     1,382     11,118     2,891  

Total assets

    16,958     13,529     3,517     21,201     5,512  

Total liabilities

    2,647     3,750     975     4,820     1,253  

Total equity

    14,311     9,779     2,542     16,381     4,259  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

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

        You should read the following discussion and analysis of our financial condition and results of operations together with the section titled "Selected Consolidated Financial Data" and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of this prospectus contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled "Risk Factors."

Overview

        We are a clinical-stage regenerative medicine company focused on developing and commercializing tissue repair products, initially for the orthobiologics and advanced wound care markets. Our product candidates are based on our rhCollagen, a form of human collagen produced with our proprietary plant-based genetic engineering technology. We believe our technology is the only commercially viable technology available for the production of genetically engineered, or recombinant, human collagen. We believe that our rhCollagen, which is identical to the type I collagen produced by the human body, has significant advantages compared to currently available tissue-derived collagens, including improved biofuntionality, superior homogeneity, and reduced risk of immune response. We believe the attributes of our rhCollagen make it suitable for numerous tissue repair applications throughout the human body. We believe that the annual market opportunity for our current product candidates utilizing our rhCollagen within the orthobiologics and advanced wound care markets exceeds $5 billion.

        Our first rhCollagen-based product candidate is VergenixSTR, a soft tissue repair matrix which combines cross-linked rhCollagen with platelet-rich plasma, or PRP, a concentrated blood plasma that contains high levels of platelets, and is intended for the treatment of tendinopathy. In August 2016, we completed an open label, single arm, multi-center clinical trial of VergenixSTR of 40 patients in Israel to demonstrate safety and to evaluate the performance of VergenixSTR in patients suffering from tennis elbow or lateral epicondylitis, an inflammation of the tendons that join the forearm muscles on the outside of the elbow. In October 2016, we received CE marking for VergenixSTR, which is required for a product to be marketed in the European Union.

        Our VergenixFG product candidate is a wound-filling flowable gel made from our rhCollagen intended for treatment of deep surgical incisions and wounds, including diabetic ulcers, burns, bedsores, and other chronic wounds. We completed an open label, single arm, multi-center clinical trial of VergenixFG of 20 patients in Israel to demonstrate safety and to evaluate the performance of VergenixFG in patients with hard-to-heal chronic wounds of the lower limbs. In February 2016, we received CE marking certification for VergenixFG, and in July 2016, we supplied our first order in Europe. To bring our initial two product candidates to market, we intend to first commercialize the products in Europe and then pursue U.S. FDA approval under the PMA regulatory pathway for our rhCollagen-based products.

        We are developing a bone graft surgical matrix, which we refer to as the CollPlant Surgical Matrix, in collaboration with Bioventus LLC, or Bioventus, a global leader in active orthopedic healing. The CollPlant Surgical Matrix is a novel resorbable carrier composed of rhCollagen and synthetic minerals which is intended to be charged with a bone morphogenic protein, or BMP, developed by Bioventus for use as a bone graft substitute in bone repair indications such as spinal fusion and trauma. When charged with a BMP, the CollPlant Surgical Matrix is intended to induce cell infiltration and proliferation, healing existing bone and producing new natural bone with a dose far below that of the current market-leading bone graft, which is expected to address safety concerns associated with that product while offering at least equivalent efficacy. We are party to a non-binding term sheet entered

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into on July 9, 2015 with Bioventus for the license and supply the CollPlant Surgical Matrix. In anticipation of filing an IND, Bioventus is undertaking preclinical animal studies comparing the CollPlant Surgical Matrix to other active comparators. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

        Since incorporation of our wholly owned subsidiary CollPlant Ltd. in 2004, which merged with and into CollPlant Holdings Ltd. in 2010, we have achieved a number of significant milestones:

    From 2005 to 2011, we developed our plant-based technology, which we believe is the only commercially viable technology available for the production of recombinant type I human collagen, or rhCollagen.

    In December 2011, we entered into a joint development agreement with Pfizer for the development of a product for the orthopedic market, comprised of a growth factor and our rhCollagen, along with other components. This agreement expired in 2013. This co-development is now continuing with Bioventus, which acquired the rights for commercialization of the BMP from Pfizer and to whom Pfizer assigned certain of its rights and obligations under the 2011 joint development agreement. The past work with Pfizer and the current work with the Bioventus promote our strategy to position rhCollagen as the "gold standard" platform technology for collagen based products in a broad range of markets, and to commercialize our product candidates through a network of collaborative partners.

    In December 2012, following a successful clinical trial, we received a CE mark for a predecessor wound healing product. This is the first medical device in the world to receive a CE marking that is based on rhCollagen. The product is a sterile, biodegradable advanced wound care sheet supplied in various sizes, composed of rhCollagen that provides a moist wound healing environment. Currently, we are not marketing this product, as we perceive it as a commodity product, and it is not part of the advanced wound care market that is our target market.

    In 2014, we completed the preclinical studies required to launch clinical trials in Israel for two of our product candidates, VergenixSTR and VergenixFG, and we launched clinical trials for VergenixSTR in January 2015 and VergenixFG in November 2014.

    On July 9, 2015, we signed a non-binding term sheet with Bioventus, a global leader in active orthopedic healing, for the license and supply of the CollPlant Surgical Matrix. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

    In June 2015, we expanded our VergenixSTR trial to include an additional 20 patients for the purpose of collecting further clinical data to support future sales efforts.

    In November 2015, we announced final results of our clinical trial of VergenixFG, showing full wound closure at four weeks in 45% of the 20 patients treated.

    In December 2015, we announced interim results for our clinical trial of patients suffering from tennis elbow who were treated with VergenixSTR, showing an average Patient Related Tennis Elbow Evaluation, or PRTEE, questionnaire score improvement of 51.3% at three months for the first 23 patients enrolled in the trial. Also in December 2015, we applied for CE marking certification for VergenixSTR.

    In February 2016, we received CE marking certification for VergenixFG, and we announced final results with respect to the first 20 patients enrolled in our VergenixSTR trial, with 90% of

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      patients showing at least a 25% reduction in pain and improvement in motion at six months post treatment, as measured by PRTEE.

    In June 2016, we entered into our first distribution agreement an Italian company to distribute VergenixFG in Italy, and in July 2016, we supplied our first order. In August 2016, we entered into a second distribution agreement with a Swiss company to distribute VergenixFG in Switzerland.

    In August 2016, we announced final results of our VergenixSTR trial. Results of the trial indicated that VergenixSTR was found to be safe for use on human subjects. At the three-month and six-month follow ups, patients reported an average 51% and 59% reduction in pain and improvement in motion, respectively, as measured by the PRTEE questionnaire.

    In October 2016, we received CE marking certification for VergenixSTR.

        To date, we have financed our operations primarily with the net proceeds from private placements and from public offerings of our securities on the TASE, participation in product development collaborations, and government grants from the OCS.

        Since our inception, we have incurred significant operating losses. Our net operating losses were NIS 14.0 million for the six months ended June 30, 2016 and NIS 13.0 million and NIS 18.6 million for the years ended December 31, 2014 and 2015, respectively. As of June 30, 2016, we had an accumulated deficit of NIS 145.5 million. We have not generated any material revenue to date from sales of our products.

        We expect to continue to incur expenses and operating 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:

    continue our research and preclinical and clinical development of our pipeline products;

    seek marketing approvals for VergenixSTR and VergenixFG and any other products in the United States and other new territories;

    maintain, expand, and protect our intellectual property portfolio;

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

    establish plant infrastructure to accommodate product capacity increase;

    add operational, financial, and management information systems and personnel, including personnel to support our product development, any future commercialization efforts, and our transition to a public reporting company in the United States; and

    identify additional product candidates.

Financial Operations Overview

Revenue

        As of June 30, 2016, we have not generated any material revenue from sales of our products. Our ability to generate revenue will depend on successful commercialization of VergenixSTR and VergenixFG.

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Operating Expenses

    Research and Development Expenses

        Research and development expenses consist of costs incurred for the development of both of our rhCollagen and our product candidates. Those expenses include:

    employee-related expenses, including salaries and share-based compensation expenses for employees in research and development functions;

    expenses incurred in operating our laboratories and small-scale manufacturing facility;

    expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials;

    expenses relating to outsourced and contracted services, such as external laboratories, consulting, and advisory services;

    supply, development, and manufacturing costs relating to clinical trial materials;

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

    costs associated with preclinical and clinical activities.

        Research and development activities are the primary focus of our business. 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 that our research and development expenses will increase in absolute dollars in future periods as we continue to invest in research and development activities related to the development of our product candidates.

        Our total research and development expenses for the six months ended June 30, 2016 and for the year ended December 31, 2015, were NIS 15.9 million and NIS 22.9 million, respectively. The research and development expenditures on our rhCollagen technology and our product candidates for the six months ended June 30, 2016 and for the year ended December 31, 2015 were partly funded in the amounts of NIS 6.2 million and NIS 11.0 million, respectively, by Bioventus and government grants. We charge all research and development expenses to operations as they are incurred.

        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. Additionally, future commercial and regulatory factors beyond our control will affect our clinical development programs and plans.

    Participation in Research and Development Expenses

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

        Participation by collaborators.    In 2011, we entered into a joint development agreement with Pfizer for the development of a product for the orthopedic market, comprised of a growth factor and our rhCollagen, along with other components. This agreement expired in 2013. This co-development is now continuing with Bioventus, which acquired the rights for commercialization of the growth factor from Pfizer and to whom Pfizer assigned certain of its rights and obligations under the 2011 joint development agreement.

        Participation by the OCS.    We have received grants from the OCS as part of the research and development programs for our rhCollagen technology and our product candidates. The requirements and restrictions for such grants are found in the Innovation Law. These grants are subject to repayment

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through future royalty payments on any products resulting from these research and development programs, including VergenixSTR and VergenixFG. Under the Innovation Law and related regulations, royalties of 3% - 5% on the revenues derived from sales of products and income generated from and related services developed in whole or in part under OCS programs are payable to the OCS, up to the total amount of grants received, linked to the U.S. dollar and bearing interest at an annual rate of LIBOR applicable to U.S. dollar deposits, as published on the first business day of each calendar year. The total gross amount of grants actually received by us from the OCS as of June 30, 2016, totaled approximately NIS 27.8 million. As of June 30, 2016, we paid non-material royalty amounts to the OCS.

        In addition to paying any royalty due, we must abide by other restrictions associated with receiving such grants under the Innovation Law that continue to apply following repayment to the OCS. These restrictions may impair our ability to outsource manufacturing or otherwise transfer our know-how outside of Israel and may require us to obtain the approval of the OCS for certain actions and transactions and pay additional royalties and other amounts to the OCS. If we fail to comply with the Innovation Law, we may be subject to civil claims and criminal charges.

        Research and development grants received from the OCS are recognized upon receipt as a liability if future economic benefits are expected from the project that will result in royalty-bearing sales. The amount of the liability for the loan is first measured at fair value using a discount rate that reflects a market rate of interest that reflects the appropriate degree of risks inherent in our business. The change in the fair value of the liability associated with grants from the OCS is reflected as an increase or decrease in our research and development expenses for the relevant quarter.

        Under applicable accounting rules, the grants from the OCS have been accounted for as an off-set against the related research and development expenses in our financial statements. Our balance sheet liabilities do not include obligations regarding royalties that we are obligated to pay to the OCS based on future sales of our products. As a result, our research and development expenses are shown on our financial statements net of the OCS grants. See Note 2G in our consolidated financial statements for more information.

    General, Administrative, and Marketing Expenses

        Our general and administrative expenses consist principally of:

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

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

    cost of offices, communication, and office expenses;

    information technology expenses; and

    business development and marketing activities.

        We expect that our general, administrative, and marketing expenses will increase in the future as our business expands and we incur additional general and administrative costs associated with being a public company in the United States, including compliance under the Sarbanes-Oxley Act and rules promulgated by the U.S. Securities and Exchange Commission. These public company-related increases will likely include costs of additional personnel, additional legal fees, audit fees, directors' liability insurance premiums, and costs related to investor relations. We also expect that our marketing expenses will increase, as we will incur additional marketing costs associated with the commencement of sales, when and if our product candidates are approved.

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    Financial Income/Financial Expense

        Financial income includes interest income regarding short term deposits and exchange rate differences. Financial expense consists primarily of exchange rate differences and bank commissions.

    Taxes on Income

        We do not generate taxable income in Israel, as we have historically incurred operating losses resulting in carry forward tax losses. As of December 31, 2015, we have incurred operating losses of approximately NIS 7.8 million for CollPlant Holdings Ltd. and NIS 110.0 million for CollPlant Ltd. We anticipate that we will be able to carry forward these tax losses indefinitely to future tax years assuming that we utilize them at the first opportunity. 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.

        The standard corporate tax rate in Israel is 25%. Under the Investment Law, and other Israeli legislation, we may be entitled to certain additional tax benefits, including reduced tax rates, accelerated depreciation, and amortization rates for tax purposes on certain assets and amortization of other intangible property rights for tax purposes.

Recent Developments

        On June 9, 2016, we completed a financing in Israel, raising gross proceeds of $3.1 million. In consideration, we issued an aggregate of 33,803,500 ordinary shares at a price per share of NIS 0.35 ($0.09) and 33,803,500 Series K warrants exercisable at an exercise price of NIS 0.60 ($0.16) per share. An additional 2,728,000 Series K warrants were issued to the Israeli underwriters in the offering.

        On May 29, 2016, we received approval from the OCS of a grant for 2016 of approximately $1.5 million.

Results of Operations

Comparison of the Six Months Ended June 30, 2015 and 2016

        The following table summarizes our results of operations for the six months ended June 30, 2015 and 2016:

 
  Six months ended June 30,  
 
  2015   2016   2016  
 
  (NIS in
thousands)

  (NIS in
thousands)

  (Convenience
translation
into USD
in thousands(1))

 

Statement of comprehensive loss data:

                   

Research and development expenses

    9,082     15,892     4,132  

Participation in research and development expenses

    (4,363 )   (6,244 )   (1,623 )

Research and development expenses, net

    4,719     9,648     2,509  

General, administrative, and marketing expenses

    2,545     4,202     1,093  

Operating loss

    7,264     13,850     3,602  

Financial income

    (148 )   (39 )   (10 )

Financial expenses

    210     204     53  

Financial expenses (income), net

    62     165     43  

Loss

    7,326     14,015     3,645  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

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    Research and Development Expenses

        Research and development expenses increased from NIS 9.1 million in the six months ended June 30, 2015 to NIS 15.9 million in the six months ended June 30, 2016. The expenses primarily related to the development of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix. The increase in the research and development expenses totaled NIS 6.8 million and is primarily due to our product development costs and expenses related to the production of collagen in the amount of NIS 5.2 million, share-based compensation costs of NIS 415,000, and NIS 1.2 million in salary costs for additional development staff.

        The participation in the research and development expenses amounted to NIS 4.4 million in the six months ended June 30, 2015, compared to NIS 6.2 million in the six months ended June 30, 2016. The increase in the amount of NIS 1.8 million is mainly due to the participation of third parties in the development of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix.

    General, Administrative, and Marketing Expenses

        General, administrative, and marketing expenses increased from NIS 2.5 million in the six months ended June 30, 2015 to NIS 4.2 million in the six months ended June 30, 2016. The increase is primarily attributed to share-based compensation costs relating to options amounting to NIS 514,000, legal and professional expenses of NIS 544,000 and an increase of NIS 433,000 in marketing salary costs.

    Financial Expenses, Net

        Financial expenses, net, totaled NIS 62,000 in the six months ended June 30, 2015 compared to NIS 165,000 in the six months ended June 30, 2016. The increase in the six months ended June 30, 2016 as compared to the same period ended June 30, 2015 was due to exchange rate differences in the U.S. dollar exchange rate against the NIS, where the U.S. dollar exchange rate decreased compared to the NIS, and affect our U.S. dollar currency short term bank deposits.

Comparison of the Three Months Ended June 30, 2015 and 2016

        The following table summarizes our results of operations for the three months ended June 30, 2015 and 2016:

 
  Three months ended June 30,  
 
  2015   2016   2016  
 
  (NIS in thousands)
  (NIS in thousands)
  (Convenience
translation
into USD
in thousands(1))

 

Statement of comprehensive loss data:

                   

Research and development expenses

    5,053     7,573     1,969  

Participation in research and development expenses

    (2,813 )   (3,329 )   (865 )

Research and development expenses, net

    2,240     4,244     1,104  

General, administrative, and marketing expenses

    1,431     2,167     564  

Operating loss

    3,671     6,411     1,668  

Financial income

    (3 )   (36 )   (9 )

Financial expenses

    191     13     3  

Financial expenses (income), net

    188     (23 )   (6 )

Loss

    3,859     6,388     1,662  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

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    Research and Development Expenses

        Research and development expenses increased from NIS 5.1 million in the three months ended June 30, 2015 to NIS 7.6 million in the three months ended June 30, 2016. The NIS 2.5 million increase is primarily related to the product development of VergenixSTR, the production of collagen, as well as the product development of the CollPlant Surgical Matrix.

        The participation in the research and development expenses amounted to NIS 2.8 million in the three months ended June 30, 2015, compared to NIS 3.3 million in the three months ended June 30, 2016. The increase in the amount of NIS 500,000 is mainly due to the participation of third parties in the development of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix.

    General, Administrative, and Marketing Expenses

        General, administrative, and marketing expenses increased from NIS 1.4 million in the three months ended June 30, 2015, to NIS 2.2 million in the three months ended June 30, 2016. The increase is primarily attributed to an increase in legal and professional expenses and an increase in marketing salary costs.

    Financial Expenses, Net

        Financial income, net, totaled NIS 188,000 in the three months ended June 30, 2015 compared to financial expenses, net of NIS 23,000 in the three months ended June 30, 2016. The change in the three months ended June 30, 2016 as compared to the same period ended June 30, 2015 was due to exchange rate differences in the U.S. dollar against the NIS, where the U.S. dollar exchange rate increased compared to the NIS, and affect our U.S. dollar currency short term bank deposits.

Comparison of the Years Ended December 31, 2014 and 2015

        The following table summarizes our results of operations for the years ended December 31, 2014 and 2015:

 
  Year ended December 31,  
 
  2014   2015   2015  
 
  (NIS in thousands)
  (Convenience
translation
into USD
in thousands(1))

 

Statement of comprehensive loss data:

                   

Research and development expenses

    14,879     22,919     5,959  

Participation in research and development expenses

    (5,145 )   (11,055 )   (2,874 )

Research and development expenses, net

    9,734     11,864     3,085  

General, administrative, and marketing expenses

    3,906     6,950     1,807  

Operating loss

    13,640     18,814     4,892  

Financial income

    642     215     56  

Financial expenses

    25     51     13  

Financial income, net

    (617 )   (164 )   (43 )

Loss

    13,023     18,650     4,849  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

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    Research and Development Expenses

        Research and development expenses increased from NIS 14.9 million in the year ended December 31, 2014 to NIS 22.9 million in the year ended December 31, 2015. The expenses primarily related to the development of VergenixSTR, VergenixFG and the CollPlant Surgical Matrix. The total increase in expenses amounting to NIS 8.0 million, is primarily due to share-based compensation costs of NIS 2.3 million relating to options granted in 2015, and increase of product development expenses of NIS 5.7 million. The product development expenses mainly relate to our two clinical trials of VergenixSTR and VergenixFG initiated in January 2015 and November 2014, respectively, as well as product development of the CollPlant Surgical Matrix.

        The participation in the research and development expenses increased from NIS 5.1 million in 2014 to NIS 11.0 million in 2015. The increase in the amount of NIS 5.9 million is mainly derived from the participation of third parties in the development of VergenixSTR, VergenixFG, and the CollPlant Surgical Matrix.

    General, Administrative, and Marketing Expenses

        General, administrative, and marketing expenses increased from NIS 3.9 million in the year ended December 31, 2014, to NIS 6.9 million in the year ended December 31, 2015. The increase is primarily attributable to an increase of NIS 1.5 million in share-based compensation costs relating to options and to legal and professional expenses of approximately NIS 1.4 million.

    Financial Income, Net

        Financial income, net, totaled NIS 617,000 in the year ended December 31, 2014, compared to financial income of NIS 164,000 in the year ended December 31, 2015. The decrease in 2015 as compared to the same period in 2014 was due to exchange rate differences in the U.S. dollar exchange rate against the NIS, where the U.S. dollar exchange rate decreased compared to the NIS, and affect our U.S. dollar currency short term bank deposits.

    Liquidity and Capital Resources

        To date, we have financed our operations primarily with the net proceeds from private placements and from public offerings of our securities on the TASE, participation from product development collaborations, and government grants from the OCS.

        We believe that based on our current business plan, our existing cash, cash equivalents, and the net proceeds from this offering will be sufficient to meet our currently anticipated cash requirements for at least the next three years.

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Cash Flows

        The following table summarizes our consolidated statement of cash flows for the years ended December 31, 2014 and 2015 and for the six months ended June 30, 2015 and 2016.

 
  Year ended
December 31,
   
  Six months ended June 30,  
 
  2014   2015   2015   2015   2016   2016  
 
  (NIS in thousands)
 
 
    

  (Convenience
translation
into USD
in thousands(1))

   
   
  (Convenience
translation
into USD
in thousands(1))

 

Net cash provided by (used in):

                                     

Operating activities

    (12,958 )   (14,497 )   (3,769 )   (8,789 )   (12,335 )   (3,208 )

Investing activities

    (397 )   (1,389 )   (361 )   (999 )   (227 )   (59 )

Financing activities

    45     10,037     2,609     27     18,505     4,812  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016, at the rate of one U.S. dollar per NIS 3.846.

    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 to net income for non-cash items include depreciation and amortization and share-based compensation.

        Net cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and measurements and changes in components of working capital. Adjustments to net loss for non-cash items include depreciation and amortization, equity-based compensation and exchange differences on cash and cash equivalents. This cash flow mainly reflects the cash needed for funding the product candidates and pipeline products development and management costs of the Company during the applicable periods.

        Net cash used in operating activities in the six months ended June 30, 2016 totaled NIS 12.3 million and consisted primarily of (i) a net loss of NIS 14.0 million, adjusted for non-cash items, including depreciation and amortization of NIS 525,000 and share based compensation of NIS 2.1 million, and (ii) a net increase in operating assets and liabilities of NIS 1.1 million. Net increase in operating assets and liabilities are mainly attributable to an increase in development activity, that resulted in an increase in other receivables including from the OCS and Bioventus.

        Net cash used in operating activities in the six months ended June 30, 2015, totaled NIS 8.8 million and consisted primarily of (i) net loss of NIS 7.3 million, adjusted for non-cash items, including depreciation and amortization of NIS 391,000 and share based compensation of NIS 1.2 million, and (ii) a net increase in operating assets and liabilities of NIS 3.0 million, mainly attributable to an increase in other receivables of NIS 2.9 million which relates mostly to the participation of the OCS in the amount of NIS 1.2 million, an increase in VAT receivables of NIS 500,000 and an increase in prepaid expenses of NIS 710,000 relating to this offering.

        Net cash used in operating activities in 2015 totaled NIS 14.5 million and consisted primarily of net loss of NIS 18.6 million, adjusted for non-cash items including depreciation and amortization of NIS 788,000 and share based compensation of NIS 4.1 million, and a net increase in operating assets and liabilities of NIS 611,000, mainly attributable to an increase in other receivables of NIS 1.7 million and an increase in trade payables of NIS 854,000 and other payables of NIS 249,000, all as a result of an increase of our development activity with VergenixSTR, VergenixFG and the CollPlant Surgical Matrix.

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        Net cash used in operating activities in 2014 totaled NIS 12.9 million and consisted primarily of net loss of NIS 13.0 million, adjusted for non-cash items including depreciation and amortization of NIS 802,000 and share based compensation of NIS 205,000, and a net increase in operating assets and liabilities of NIS 347,000, mainly attributable to a decrease in trade payables of NIS 214,000 and other payables of NIS 328,000.

    Net Cash Used in Investing Activities

        Net cash used in investing activities was NIS 227,000 and NIS 999,000 for the six months ended June 30, 2016 and 2015, respectively, and related primarily to the purchases of property and equipment. The decrease in the amount NIS 772,000 relates mainly to our investment in equipment for scaling up our capacity during the first six months of 2015.

        Net cash used in investing activities was NIS 397,000 during the year ended December 31, 2014 and NIS 1.4 million during the year ended December 31, 2015. The increase in the amount of approximately NIS 992,000 relates mainly to our investment in equipment for scaling up our capacity during 2015.

    Net Cash Provided by Financing Activities

        Net cash provided by financing activities was NIS 18.5 million in the six-month period ended June 30, 2016, compared to NIS 27,000 in the six-month period ended June 30, 2015. In the six-month period ended June 30, 2016 we consummated an equity raise in the Israeli capital market and raised a net NIS 18.5 million in return for the issuance of shares and warrants. Cash flow from financing activities in the six-month period ended June 30, 2015 amounted to NIS 27,000, resulting from the exercise of options to share capital.

        Net cash provided by financing activities amounted to approximately NIS 10.0 million for 2015 and NIS 45,000 in 2014. In 2015, we consummated an equity raise in the Israeli capital market and raised a net NIS 10.0 million in return for the issuance of our shares and warrants. Cash flow from financing activities in 2014 amounted to NIS 45,000 resulting from the exercise of options for ordinary shares.

Cash and Funding Sources

        The table below summarizes our sources of financing for the six-month period ended June 30, 2016 and for the years ended December 31, 2014 and 2015:

 
  Issuance of
Ordinary
Shares and
Warrants
  Government
Grants and
Strategic
Collaboration
  Total   Total  
 
  (NIS in thousands)
  
  
    

  (Convenience
translation
into USD
in thousands(1))

 

Six months ended June 30, 2016

    18,505     6,244     24,749     6,435  

Year ended December 31, 2015

    10,037     11,055     21,092     5,484  

Year ended December 31, 2014

    45     5,145     5,190     1,349  

(1)
Calculated using the exchange rate reported by the Bank of Israel for June 30, 2016 at the rate of one U.S. dollar per NIS 3.846.

Funding Requirements

        We believe that our existing cash and cash equivalents, together with the net proceeds of this offering will enable us to fund our operating expenses and capital expenditure requirements for at least

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the next three years. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

        Our present and future funding requirements will depend on many factors, including, among other things:

    the progress, timing, and completion of preclinical testing and clinical trials for VergenixSTR and VergenixFG or any future pipeline product;

    selling and marketing activities undertaken in connection with the anticipated commercialization of VergenixSTR and VergenixFG and any other product candidates;

    costs involved in the development of distribution channels, and for an effective sales and marketing organization, for the commercialization of our product candidates in Europe;

    the time and costs involved in obtaining regulatory approval for VergenixSTR and VergenixFG and our pipeline products 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—Even if this offering is successful, we may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain additional capital when needed may force us to delay, limit, or terminate our product development efforts or other operations."

Contractual Obligations and Commitments

        Our significant contractual obligations as of June 30, 2016 are summarized in the following table.

 
  Payments due by period  
 
  Less than
1 year
  1 to 2 years   2 to 5 years   More than
5 years
  Total  
 
  (NIS)
 

Operating lease obligations(1)

    1,019     907     307         2,233  

(1)
Operating lease obligations consist of payments pursuant to lease agreements for office and laboratory facilities, as well as lease agreements for eight vehicles, which generally run for a period of three years.

        Our balance sheet liabilities do not include obligations regarding royalties that we are obligated to pay to the OCS based on future sales of our products. As of June 30, 2016, the maximum royalty amount that would be payable by us, before interest, is approximately NIS 27.4 million (assuming 100% of the royalties are payable), contingent upon sales of our rhCollagen-based products.

Off-Balance Sheet Arrangements

        As of June 30, 2016, we do not have any, and during the periods presented we did not have any, off-balance sheet arrangements.

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Significant Accounting Estimates and Judgments

        Estimates and judgments are reviewed on an ongoing basis and are based on past experience and other factors, including expectations of future events, which are considered reasonable in view of current circumstances.

Significant Accounting Estimate

        We make estimates and assumptions with respect to the future. By nature, the accounting estimates are rarely identical to actual results. The estimate that has a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next financial year is listed below.

Impairment of In Process Research and Development

        We annually review the need to record impairment of in process research and development, or IPR&D. To test for impairment, we as a whole have been identified as the smallest cash-generating unit to which the intangible asset can be attributed. Accordingly, we measure our recoverable amount as a whole. The recoverable amount is the higher of value in use and fair value less costs of disposal. In accordance with IFRS 13, the quoted market price in an active market provides the most reliable evidence of fair value. Since fair value less costs of disposal, which is based on our market price, is significantly higher than the carrying amount of the cash-generating unit, we determined that no impairment exists.

Significant Judgments Made When Applying our Accounting Policy

    Grants from the OCS

        In accordance with the accounting treatment prescribed in Note 2G to our financial statements appearing elsewhere in this prospectus, our management is required to examine whether there is reasonable assurance that the OCS grant that was received will be repaid. In addition, if, at the date of initial recognition, the grant is recognized in the statement of comprehensive income (loss), then in subsequent periods our management is required to evaluate whether it is no longer reasonably assured that royalties will not be paid to the OCS. In such a case, a liability would be recognized based on our best estimate of the amount required to settle our royalty obligation to the OCS.

        As of June 30, 2016, most of our products for the orthobiologics and advanced wound care markets have yet to receive marketing clearance or regulatory approval, and grants received were recorded against the related research and development expenses in the statement of comprehensive loss.

        Following the signing of our first distribution agreement and the supply of our first order for VergenixFG, we believe that, as of June 30, 2016, there is reasonable assurance that NIS 607,000 of royalties will be paid to the OCS and a liability is included in our financial statements of the second quarter.

    Development Costs

        Development costs are capitalized in accordance with the accounting policy described in Note 2E(3) to our financial statements appearing elsewhere in this prospectus. Capitalization of costs is based on management's judgment about technological and economic feasibility.

        Our management believes that as of June 30, 2016, the above conditions were not met; therefore development costs were not capitalized.

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Quantitative and Qualitative Disclosures About Market Risks

        We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates.

Foreign Currency Exchange Risk

        Our functional and reporting currency is the New Israeli Shekel (NIS) which is the local currency in Israel. Our foreign currency exposures give rise to market risk associated with exchange rate movements of the NIS, mainly against the U.S. dollar and the Euro. Although the NIS is our functional currency, a small portion of our expenses consist principally of payments made to subcontractors and consultants for clinical trials, other research and development activities, and purchase of new equipment. A material portion of our research and development is conducted through collaboration agreements denominated in U.S. dollars, and therefore our net research and development expenses are subject to significant foreign currency risk. If the NIS fluctuates significantly against either the U.S. dollar or the Euro, it may have a negative impact on our results of operations. To date, such fluctuations in exchange rates have not materially affected our results of operations or financial condition for the periods under review.

        To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments. In the future, we may enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

Interest Rate Risk

        At present, our investments consist primarily of cash and cash equivalents in short-term deposits. The primary objective of our investment activities is to preserve our capital to fund our operations. Our investments are exposed to market risk due to fluctuation in interest rates, which may affect our interest income and the fair market value of our investments, if any. We manage this exposure by performing ongoing evaluations of our investments. Due to the short-term maturities, if any, of our investments to date, their carrying value has always approximated their fair value. We believe that our exposure to interest rate risk is not significant and a 1% change in market interest rates would not have a material impact on our assets.

Recent Accounting Pronouncements

IFRS 9 Financial Instruments

        The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories or financial assets: amortized cost, fair value through other comprehensive income, or OCI, and fair value through profit and loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.

        For financial liabilities there were no changes to classification and measurement except for the recognition in other comprehensive income of changes resulting from own credit risk, in liabilities designated at fair value, through profit or loss.

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        IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39.

        The standard is effective for accounting periods beginning on or after January 1, 2018. Early adoption is permitted. We have not yet assessed IFRS 9's full impact.

IFRS 16 Leases

        IFRS 16 will replace upon first-time implementation the existing guidance in IAS 17—Leases, or IAS 17. The standard sets out the principles for the recognition, measurement, presentation, and disclosure of leases, and is expected to have a material impact mainly on the accounting treatment applied by the lessee in a lease transaction.

        IFRS 16 changes the existing guidance in IAS 17 and requires lessees to recognize a lease liability that reflects future lease payments and a "right-of-use asset" in all lease contracts (except for the following exemption), with no distinction between financing and capital leases. IFRS 16 exempts lessees in short-term leases or the when underlying asset has a low value.

        IFRS 16 changes the definition of a "lease" and the manner of assessing whether a contract contains a lease.

        IFRS 16 will be effective retrospectively for annual periods beginning on or after January 1, 2019, taking into account the relief specified in the transitional provisions of IFRS 16. Under the provisions of IFRS 16, early adoption is permitted only if IFRS 15 has also been applied. We are assessing the expected impact of IFRS 16 on our financial statements.

JOBS Act

        With less than $1.0 billion in revenues during our last fiscal year, we qualify as an emerging growth company under the JOBS Act. An emerging growth company may take advantage of specified provisions in the JOBS Act that provide exemptions or reductions of its regulatory burdens related to reporting and other requirements that are otherwise applicable generally to public companies. These provisions include an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act. We may take advantage of some, but not necessarily all, of these provisions to reduce our burdens or exempt ourselves from regulatory requirements for up to five years or such earlier time that we are no longer deemed an emerging growth company. We have elected not to avail ourselves of an exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards. This election is irrevocable. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, our ordinary shares held by non-affiliates have a market value in excess of $700 million, or we issue more than $1.0 billion of non-convertible debt over a three-year period.

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BUSINESS

Overview

        We are a clinical-stage regenerative medicine company focused on developing and commercializing tissue repair products, initially for the orthobiologics and advanced wound care markets. Our product candidates are based on our rhCollagen, a form of human collagen produced with our proprietary plant-based genetic engineering technology. We believe our technology is the only commercially viable technology available for the production of genetically engineered, or recombinant, human collagen. We believe that our rhCollagen, which is identical to the type I collagen produced by the human body, has significant advantages compared to currently marketed tissue-derived collagens, including improved biological function, superior homogeneity, and reduced risk of immune response. We believe the attributes of our rhCollagen make it suitable for numerous tissue repair applications throughout the human body. We believe that the annual market opportunity for our current product candidates utilizing our rhCollagen within the orthobiologics and advanced wound care markets exceeds $5 billion.

        Our rhCollagen has superior biological function when compared to any tissue-derived collagens, whether from animal or human tissues, according to data published in peer-reviewed scientific publications. Our rhCollagen can be fabricated in different forms and shapes including gels, pastes, sponges, sheets, membranes, fibers, and thin coats, all of which have been tested in vitro and in animal models and proven superior to tissue-derived products. We have demonstrated that, due to its homogeneity, rhCollagen can produce fibers and membranes with high molecular order, meaning all the molecules are oriented in the same direction, which enables the formation of tissue repair products with distinctive physical properties. We produce our rhCollagen in genetically engineered tobacco plants, assuring an abundant supply of high quality raw materials.

        Our three leading rhCollagen-based product candidates are:

    VergenixSTR, a soft tissue repair matrix composed of our rhCollagen and platelet-rich plasma, or PRP, extracted from the patient's blood.  VergenixSTR is intended to accelerate healing in the treatment of tendinopathy, such as in the elbow tendon (for treatment of "tennis elbow"), rotator cuff, patellar tendon, Achilles tendon, and hand tendons. VergenixSTR forms a viscous gel matrix to serve as a scaffold in the vicinity of a tendon injury site. Following the scaffold formation, our rhCollagen activates the platelets in PRP to provide sustained release of growth factors, which promote healing and repair of tendon injuries. In August 2016, we completed an open label, single arm, multi-center clinical trial of VergenixSTR in Israel. In October 2016, we received CE marking certification for VergenixSTR which is required for a product to be marketed in the European Union. Following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue regulatory approval under the PMA regulatory pathway.

    VergenixFG, a wound-filling flowable gel made from our rhCollagen.  VergenixFG is intended to enhance the quality and speed of closure of deep surgical incisions and wounds, including diabetic ulcers, burns, bedsores, and other chronic wounds. The VergenixFG formulation provides a scaffold that fills the wound site and establishes intimate contact with the surrounding tissue. VergenixFG provides complete coverage of the wound site, facilitates wound closure through an engineered synchronization between scaffold degradation and growth of new tissue, and offers a non-allergenic and pathogen-free scaffold for safe and efficacious wound care therapy. We completed an open label, single arm, multi-center clinical trial of VergenixFG in Israel to support CE marking certification. In February 2016, we received CE marking certification for VergenixFG and in July 2016 supplied our first order in Europe. We intend to enter into additional distribution agreements in Europe, and following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue FDA approval under the PMA regulatory pathway.

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    CollPlant Surgical Matrix, a novel resorbable carrier designed to help accelerate bone healing and formation.  The CollPlant Surgical Matrix is a novel resorbable carrier composed of rhCollagen and synthetic minerals which is intended to be charged with a BMP developed by Bioventus for use as a bone graft substitute in bone repair indications such as spinal fusion and trauma. The CollPlant Surgical Matrix is being developed in collaboration with Bioventus, a global leader in active orthopedic healing. We are party to a non-binding term sheet entered into on July 9, 2015 with Bioventus for the license and supply of the CollPlant Surgical Matrix. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

      The CollPlant Surgical Matrix charged with a BMP, which we refer to as the Bioventus product candidate, is intended to induce cell infiltration and proliferation, healing existing bone and producing new natural bone, with a dose far below that of the current market-leading bone graft, which is expected to address safety concerns associated with that product, while offering at least equivalent efficacy. The Bioventus product candidate was tested in different animal models to verify its performance in bone healing. In these preclinical studies, the Bioventus product candidate demonstrated at least equivalent efficacy to the current market leading product, while requiring only one-tenth of the BMP dosage. In anticipation of filing an IND, Bioventus is undertaking preclinical animal studies comparing the CollPlant Surgical Matrix to other active comparators. These preclinical studies are based on animal models, including non-human primate studies, which may not be indicative of results in clinical trials with human subjects.

Collagen and Collagen-Based Products

        Collagen is the main component of connective tissue and is the most abundant protein in mammals. In humans, it comprises approximately 30% of the protein found in the body. Due to its unique characteristics and diverse profile in human body functions, collagen is frequently selected from a variety of biocompatible materials for use in tissue repair to support structural integrity, induce cellular infiltration and promote healing. We estimate the size of the market for human collagen-based tissue repair products for use in orthobiologics and advanced wound care applications is approximately $20 billion.

        Type I collagen is the most abundant form of collagen in the human body. It is the dominant constituent of connective tissue and serves as the primary scaffold in tissue or organ repair processes, making it a logical choice for regenerative medicine products. It is found in tendons, skin, artery walls, corneas, the endomysium surrounding muscle fibers, fibrocartilage, and the organic part of bones and teeth. Type II collagen is primarily found in articular cartilage. Type III collagen, which is produced quickly by young fibroblasts before the tougher type I collagen is synthesized, is found in granulation tissue such as artery walls, skin, intestines, and the uterus. While there may be some niche applications in the future where type III or possibly type II collagen is appropriate, type I collagen is best suited for applications associated with regenerative medicine because of its essential role in the healing process of bones, skin, and tendons. Type III recombinant human collagen is currently available for the research market, and is not used in any products currently approved for medical use.

    Disadvantages of Current Collagen-Based Products

        Currently, type I collagen for medical use is primarily derived from bovine (cow) and porcine (pig) sources, as well as from human cadavers. It is extracted from the tissues using mechanical processes and chemical treatments. Tissue-derived collagens suffer from a number of disadvantages:

    The harsh chemical conditions required to recycle collagen from mature tissue results in a collagen product with random defects in its protein structure, leading to a compromised triple

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      helix. Consequently, tissue-derived collagens have significant damage to binding sites for progenitor cells, which are required for cell proliferation and differentiation into tissue.

    Tissue-derived collagens are non-homogenous and contains high proportions of cross-linked collagen species with high molecular weight. The rate of degradation of collagen is based on the proportion of cross-linked collagen species within the product. Excessive proportions of cross-linked collagen can impair the collagen's ability to self-assemble homogenous scaffolds with a high surface area and fully functional integrin-binding capacity, and can also impede its rate of degradation. The inability to effectively control the level of cross-linked collagen species in tissue-derived collagens results in variability of performance for a given product, and affects the rate of infiltration of cells into the scaffold, which can delay healing.

    The extraction of collagen from mature mammalian tissues leaves, in many cases, contaminant proteins, growth factors, and cytokines. As a result, scaffolds made of tissue-derived collagens may provoke inflammation, as well as undesirable immune and foreign body responses that may cause adverse effects and unpredictable biological outcomes.

    Extraction from animals or humans is also associated with risk of disease transmission. Since 2007 the FDA has highlighted the risks of transmissible diseases to humans in medical devices that contain materials derived from animal sources In January 2014, the FDA released draft guidance suggesting precautionary procedures to be used in the production of medical devices containing materials derived from animal sources.

    Although collagen molecules are similar among various animal species, slight differences in the protein sequence between species may result in different biological behavior when applied to humans, and in some cases, invoke specific immune responses; for example, bovine collagen is associated with hypersensitivity and allergic reactions in approximately 3% of people.

Bone Graft Products

        Bone grafts serve four mechanistic functions: structural, osteoconduction, osteoinduction, and osteogenesis. Structural grafts, such as a tricortical iliac crest bone graft (ICBG) or a femoral ring allograft, provide mechanical support. Osteoconductive grafts provide a scaffold for bone formation. Osteoinductive grafts induce differentiation of progenitor cells into bone-forming cells, or osteoblasts. Osteogenic grafts directly contribute cells for bone formation.

        Autograft, which is a graft that uses bone taken directly from another site in the patient's body, has long been considered the "gold standard" for bone grafting. Autograft can serve all of the above functions; however, it requires an additional surgical procedure, and its efficacy is based on a number of factors, including age and health of the patient. In addition, the availability of bone in a patient's body for autograft procedures is limited; the most common source of harvesting is the ICBG. Autograft has been demonstrated to be successful, particularly in spine fusion, but the paucity of supply as well as the morbidity and pain associated with its harvest has led to demand for the development of alternatives and supplements.

        Allograft, which is a graft obtained from a human cadaver, provides an osteoconductive scaffold and is weakly osteoinductive. It does not, however, have any osteogenic potential, as the cells are killed during the part of allograft processing aimed at decreasing the risk of infection transmission and antigenicity. One type of allograft is Demineralized Bone Matrix (DBM), a bone graft substitute with osteoconductive and some osteoinductive qualities. It is extracted from allograft bone, resulting in the loss of mineralized bone components and consisting mostly of type I collagen with numerous retained growth factors.

        Synthetic bone graft substitutes mimic the structure of bone. They can be made of calcium-based substances, hydroxyapatite, or collagen-based matrices, a combination of tissue-derived collagens and

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synthetic minerals. Synthetic bone graft substitutes are by nature only osteoconductive, as they lack any cells or growth factors. They can be charged with cells or growth factors in order to add osteoinductivity to the substance. The bone graft substitute market is increasingly becoming a highly lucrative market for manufacturers due to the significant growth opportunities; however, producing a quality substitute that effectively mimics natural bone remains a challenge. For example, more than 50 DBM products are currently on the market, but less than 10 have shown clinical evidence of their benefits in orthopedic and spine surgeries.

Advantages of our rhCollagen and rhCollagen-based Products

        All of our product candidates are based on our proprietary recombinant type I human collagen, rhCollagen, which is identical to the type I collagen produced by the human body. The graphic below illustrates the structural differences between rhCollagen produced with our proprietary plant-based technology and currently marketed tissue-derived collagens.

GRAPHIC

        The key advantages of products using our rhCollagen, as compared to those using collagen derived from animals or human cadaveric tissue, include:

    Better biofunctionality in tissue regeneration.  Our rhCollagen has superior biological function when compared to animal or human tissue-derived collagen and has a number of useful physical characteristics, including thermal stability, or resistance to decomposition at high temperatures, and a pristine triple helix, according to data published in peer-reviewed scientific publications. The triple helix structure of collagen is formed when two a-1 protein chains and one a-2 protein chain wind together along a common axis. In the formation of rhCollagen, this structure is achieved without modifications that can lead to defects in the triple helix structure, thereby leading to a pristine triple helix identical to the form found in nature. A pristine triple helix enables superior binding, which accelerates primary human cell proliferation. Collagen scaffolds of our rhCollagen support endothelial, fibroblast, and keratinocyte cell attachment and proliferation. In all cell types tested, cell proliferation was significantly better in scaffolds made of rhCollagen than in commercially available scaffolds made of bovine collagen. The accelerated

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      cell proliferation achieved with our rhCollagen results in faster wound healing, less scarring, and higher quality tissue regeneration.

    Superior homogeneity.  Because our rhCollagen is synthesized by five human genes in tobacco plants producing pure molecules that are repeatable and identical to type I human collagen, it is more homogenous than collagen derived from animal or human tissue sources. The high level of homogeneity of our rhCollagen allows the formulation of extremely high concentrations of monomeric, or single-molecule, collagen, up to 150-200mg/ml, which is at least 10 to 100 times higher than the concentration achieved with tissue-derived collagen. The high concentration of homogeneous monomeric collagen is of particular importance where strong collagen fibers are needed for 3-D scaffolds. The homogeneity of our rhCollagen enables us to engineer consistent and reproducible products with a controlled degradation rate which can be optimized to the targeted indication. Achieving the same level of engineered performance would be difficult, if not impossible, with tissue-derived collagen that varies from batch to batch.

    Improved safety and greater purity.  Our pure rhCollagen does not induce an immunogenic response, whereas impurities carried over from the source of tissue-derived collagen can lead to immune system rejection. In vitro studies performed under an academic collaboration have demonstrated that rhCollagen incubated with activated THP1-macrophages produces significantly lower levels of inflammatory cytokines when compared with bovine collagen that is similarly incubated. This demonstrates that animal-derived collagen can provoke a foreign body response not seen with rhCollagen, which delays healing and increases scarring. Further, with our rhCollagen, there are no potential side effects in the growth of tissue because there are no residues of growth factors. In addition, with tissue-derived collagen, there is a possibility that the animal or human from which the collagen was produced was infected with a virus, prion, or other pathogen. With our rhCollagen there is no risk of transmitting diseases and pathogens.

    Novel applications.  Due to our ability to control the protein at the molecular level, it is possible to use our rhCollagen to produce products with unique physical features, as well as high repeatability, which is not possible with tissue-derived collagen. As compared to tissue-derived collagen, rhCollagen membranes have shown better thermal stability, improved tensile strength due to alignment of the collagen fibers, and higher levels of transparency. In addition, rhCollagen can be used to produce high concentration solutions of collagen at low viscosities. The unique properties of our rhCollagen make it an ideal building block for many products that we believe cannot currently be produced using tissue-derived collagen, such as BioInks for 3-D printing, artificial tendons, and transparent ophthalmic products.

        We believe the clinical attributes of our rhCollagen will translate into benefits for patients, payors, and physicians, and will be adopted rapidly by the market once our product candidates receive regulatory approval. The improved biofunctionality of our products is intended to lead to faster recovery, better clinical outcomes, and reduced hospitalization time. Our in vivo studies have shown faster tissue remodeling, faster wound closure, and reduced scarring compared to competing products made from tissue-derived collagen.

        The advantages of our rhCollagen outlined above have been demonstrated through in vitro testing and in preclinical animal studies, and are based on the performance of rhCollagen alone. The performance demonstrated in these studies is not necessarily indicative of the performance of our product candidates which contain rhCollagen. We cannot assure you that the same advantages of rhCollagen will be seen in clinical testing of our product candidates containing rhCollagen.

        We can produce our rhCollagen cost-effectively and have access to an abundant supply of raw materials. Tobacco is a relatively easy plant to grow, and can be cultivated in a wide range of climates and soils. The tobacco plant is an extremely hardy plant, may be grown in very large volumes and its growth time to reach desired maturity is relatively short (about eight weeks). Under our current

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production technology, we are able to achieve a cost of goods that allows us to offer products at prices that are competitive with tissue-derived collagen. We are advancing a new production process that will result in labor cost reductions and higher yields, assuring an abundant raw material supply as demand for our rhCollagen increases.

        Collagen-based products are already used extensively in the marketplace; therefore, we expect our product candidates will be eligible for reimbursement by third-party payors, including government agencies and insurance companies. We believe that the demand for tissue-derived collagen will decrease as the market recognizes the significant advantages of our rhCollagen.

Our Market Opportunity

        Our rhCollagen represents a platform for the development of products addressing significant opportunities in multiple therapeutic, aesthetic, and other medical markets. We are initially focused on the orthobiologics and advanced wound care markets, and we believe the annual market opportunity for our current product candidates utilizing our rhCollagen platform technology exceeds $5 billion. However, we also see a significant opportunity to use our rhCollagen platform to develop products to address additional indications in these markets as well as in new markets, including cardiovascular and ophthalmic, as well as to advance new enabling technologies such as 3-D bio-printing. We believe that the potential addressable market opportunity for products using our technology is even greater than the market size served by currently available collagen-based products, mainly due to continued unmet medical needs and the shortcomings of tissue-derived collagen.

Orthobiologics Market

        The established orthopedic market—estimated by QiG Group at more than $40 billion annual revenue worldwide in 2012—continues to offer exceptional growth opportunities. An aging population, active demographics, innovative technology, and emerging geographic areas are expected to continue to drive growth in the global orthopedic market. Top market segments within orthopedics include reconstructive devices, such as joint replacements; spinal implants and instruments, used to treat joint pain; fracture repair, including the use of plates and screws; and arthroscopy and soft tissue repair, primarily for sports and movement related injuries.

        Chronic complex musculoskeletal injuries that are slow to heal pose challenges to physicians and patients alike. Orthobiologics use cell-based therapies and biomaterials to help injuries heal more rapidly with a superior outcome. These products are made from substances that are naturally found in the body, which dynamically interact with the musculoskeletal system to facilitate the healing of bone, cartilage, meniscus, tendons, and ligaments affected by disease or injury. Orthobiologics products are spread across all segments of the larger orthopedic market, generating much of the growth within orthopedics. GlobalData recently estimated that the major segments of the orthobiologics market currently comprise an annual $6.7 billion worldwide market.

        The orthobiologics market is segmented as follows:

    Bone allografts;

    Bone graft substitutes;

    Viscosupplementation;

    Growth factors, such as BMP; and

    Cell-based therapies, such as PRP.

        It is estimated that bone and joint disorders account for approximately half of all chronic conditions in individuals above 50 years of age in developed countries, and they are the most common

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cause of severe, long-term pain and disability. Moreover, the U.S. population aged 60 years and above is projected to increase by 33% this decade, which represents a key driver of this market as elderly patients are slower to heal and more in need of products that enhance and speed recovery. A rise in the geriatric population along with lifestyle changes such as increased obesity and growing participation in sports and outdoor activities among the older as well as younger generation all contribute to the increase in musculoskeletal disorders. The overall increase in prevalence of musculoskeletal disorders combined with technological advancements in the orthobiologics field are fueling the growth of this market, resulting in a CAGR of 7.7% in the North American market from 2014 to 2019, as predicted by MicroMarket Monitor.

Advanced Wound Care Market

        The global market for wound care encompasses traditional dressings and bandages, as well as advanced wound care products such as bioengineered skin and skin substitutes and wound care growth factors. Over the past 30 years, there has been a shift from traditional wound dressings towards advanced therapies that aim to optimize the wound healing environment. Advanced wound care is composed of biocompatible products that are intended to actively promote wound healing by interacting either directly or indirectly with wound tissues. Attempts to reduce the duration of hospital stays in order to limit healthcare costs and the goal of enhancing therapeutic outcomes are driving the demand for advanced wound care and closure products. One of the primary market drivers for advanced wound care products is the increasing incidence of chronic wounds, which are on the rise due to an aging population and a sharp rise in the incidence of diabetes and obesity worldwide. Both advanced age and chronic medical conditions are associated with a slower healing process, and all phases of wound healing are affected. The inflammatory response is decreased or delayed, as is the proliferative response.

        Espicom estimates that the global market for advanced wound care in 2013 had reached $6.2 billion, representing a growth rate of approximately 5% since 2012. The three major market segments are device-based wound care, comprised of negative-pressure wound therapy and hydrosurgery systems; moist wound care, comprised of dressings that create and maintain a moist environment; and biologics, comprised of bioactive technologies that provide new approaches to debridement and dermal repair and regeneration.

        With a wide range of dressings to choose from, dressing selection is a significant challenge for wound care clinicians. The ideal dressing should induce rapid healing at reasonable cost with minimal inconvenience to the patient. In a healing wound, a cascade of events occurs that includes platelet accumulation, inflammation, fibroblast proliferation, cell contraction, angiogenesis, and re-epithelization, ultimately leading to scar formation and wound remodeling. Collagen plays an important role in each of these phases of wound healing. Native intact collagen provides a natural scaffold or substrate for new tissue growth. Dressings containing collagen are thought to provide the wound with an alternative collagen source that is degraded over time, leaving the endogenous native collagen to continue normal wound healing.

        Biological wound dressings have the benefit of forming part of the natural tissue matrix and some of them play an important role in natural wound healing and new tissue formation. These characteristics make them the most attractive and fastest growing segment of the overall advanced wound care market with anticipated double digit growth in upcoming years. In certain instances, these bioactive matrices are incorporated with compounds such as growth factors and antimicrobials for delivery to the wound site. There are a number of biological wound care dressings available that incorporate tissue-derived collagen to enhance wound bed preparation.

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Our Strategy

        We plan to exploit the unique characteristics of our rhCollagen to develop and commercialize an extensive portfolio of regenerative medicine products. The key elements of our strategy include the following:

    Position our rhCollagen as the "gold standard" platform technology for collagen-based products in a broad range of markets.  We believe that our rhCollagen represents a significant advance in collagen technology, demonstrated by its improved biofunctionality, superior homogeneity, and reduced risk of immune response. Our rhCollagen is a platform technology which can be utilized in a broad range of therapeutic, aesthetic, and other medical applications, as well as in emerging industries such as bio-printing which we believe cannot be adequately addressed with currently available collagen technologies. We intend to expand the awareness of rhCollagen through partnerships and collaborations with leading commercial and academic partners around the world and further clinical trials which we will seek to have published in peer-reviewed journals, as well as through our participation in academic and industry conferences, to position rhCollagen as the "gold standard" platform technology for collagen-based products. We believe our platform technology, and the knowledge and expertise we have gained in its development, will enable the development, both independently and with collaborators, of differentiated products in multiple industries with a short time to market.

    Establish a regulatory process for rhCollagen-based end products using VergenixSTR and VergenixFG as precedent.  We have obtained marketing clearance for our initial product candidates, VergenixSTR and VergenixFG, through CE marking in Europe. The CE mark is a symbol that indicates that a product conforms with all applicable EU requirements and, once affixed, enables a product to be sold within the European Union and other countries that recognize the CE mark, subject to compliance with applicable submission and approval requirements in such other countries. Following adoption by key opinion leaders and establishment of sales in Europe, we plan to hold a pre-Investigational Device Exemption, or IDE, meeting with the FDA. This meeting will help us determine the regulatory pathway required for FDA approval for our rhCollagen-based products. We believe that this strategy will allow us to gain earlier market access and thereby more rapid industry acceptance for our rhCollagen-based end products, since the timeline to achieve CE marking is generally shorter than the FDA approval route. Utilizing this strategy is expected to result in more physicians gaining exposure to rhCollagen-based products sooner. Following receipt of a CE mark, we will be able to conduct post-marketing surveillance studies of our products with key opinion leaders, resulting in physicians gaining more hands-on experience with rhCollagen. Should these post-marketing surveillance studies successfully demonstrate the efficacy of our initial product candidates, we will endeavor to have these results published in peer-reviewed medical journals as a means of expanding the clinical credibility of rhCollagen and rhCollagen-based end products.

    Utilize collaborative partners and distributors to develop and commercialize our technology and products.  We believe the market-leading characteristics of our rhCollagen will create attractive collaboration opportunities for our product candidates, and we intend to selectively establish collaborations and strategic partnerships with respect to our current and future product candidates in order to accelerate their development and commercialization. We intend to create a commercial organization, initially in Europe, with well-established companies whose distribution networks are deeply entrenched. Our commercial organization will be comprised of the distribution networks of our collaboration partners, particularly in the United States and China, as well as local and regional distributors in certain markets.

    Expand our manufacturing capacity to support commercialization of rhCollagen-based end products.  We cultivate the tobacco plants used in the production of our rhCollagen in a network

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      of farms in Israel, and we extract the raw materials used to manufacture our rhCollagen from these tobacco plants. We intend to utilize a portion of the proceeds from this offering to construct a manufacturing facility in Israel that will enable us to manufacture commercial quantities of our rhCollagen and rhCollagen-based end products in a cost-competitive manner for application in both premium and commodity markets.

    Expand our pipeline through ongoing development of new products.  We intend to continue to develop additional products, both independently and with strategic collaborators, initially in the orthobiologics and advanced wound care markets and subsequently in other high value markets, based on our rhCollagen. Our product candidate pipeline and our research and development program are expected to yield new product candidates in the coming years. Some of these new product candidates are derivatives of current product candidates, and therefore may benefit from an easier regulatory pathway and shorter time to market, should our current product candidates receive regulatory approval.

    Advance our leadership position in recombinant protein production through our plant-based technology.  We continually seek to expand our knowledge of plant-based protein production systems and introduce improvements into our process. We are shifting production to an enhanced line of tobacco plants with higher collagen yield, along with improvements in the growing and cultivation process as well as collagen extraction and purification. As tissue engineering and regenerative medicine continue to evolve and expand, we expect that the demand for high-quality biomaterials will grow. We intend to collaborate with commercial and academic partners in order to identify and develop other recombinant proteins beyond collagen which may be produced with our proprietary plant-based protein production know-how.

Our Product Candidates

VergenixSTR—Tendinopathy Treatment

        VergenixSTR is a soft tissue repair matrix which combines cross-linked rhCollagen with PRP, a concentrated blood plasma that contains high levels of platelets, a critical component of the wound healing process. Platelets contain growth factors that are responsible for stimulating tissue generation and repair, including soft tissue repair, bone regeneration, development of new blood vessels, and stimulation of the wound healing process. VergenixSTR serves as a scaffold to support cell proliferation and the release of growth factors. The product candidate is injected into the affected area, and forms a viscous gel matrix which serves as a temporary reservoir for PRP in the vicinity of a tendon injury site, holding the platelet concentrate in place at the injured area. The matrix formed has the capabilities to activate the platelets in PRP, thereby releasing growth factors in a controlled manner and controlled biodegradation time, enabling optimal healing.

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        The following graphic illustrates the VergenixSTR kit and application:

GRAPHIC

    Market for Tendinopathy Treatment

        VergenixSTR is intended for the treatment of tendinopathy by promoting healing and repair of tendon injuries in a variety of tendons including the elbow tendon (for treatment of "tennis elbow"), rotator cuffs, patellar tendons, Achilles tendon, and hand tendon.

GRAPHIC

Tendinopathy: Annual procedures per indication in the United States

        Today, the main treatments offered for tendinopathy are local steroid injection, shock wave therapy, and PRP alone. PRP is an orthobiologic that has recently gained popularity as an adjuvant treatment for musculoskeletal injuries. PRP has found application in diverse surgical fields to enhance bone and soft-tissue healing by placing high concentrations of autologous platelets at the site of tissue damage. The platelets contain alpha granules that are rich in several growth factors and play key roles in tissue repair mechanisms. The relative ease of preparation, applicability in the clinical setting, favorable safety profile, and possible beneficial outcome make PRP a promising therapeutic approach for regenerative treatments. One of the challenges in utilizing PRP for tissue repair is the localization

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of the platelets in the vicinity of the injured tissue. PRP injected alone displays a tendency to migrate and is rapidly degraded. Without addressing the issue of platelet localization, PRP's efficacy will be limited, particularly in joints like the knee and shoulder which contain relatively large volumes of synovial fluid. VergenixSTR was developed to overcome these inherent limitations associated with the current use of PRP.

        We estimate the size of the target market for VergenixSTR for treating tendinopathy is three million procedures per year, or approximately $2.0 billion. While our initial focus for VergenixSTR is in tendinopathy, VergenixSTR may be applicable to other soft tissue indications such as tendon rupture, meniscus tear, and cartilage repair, as well as in the aesthetic market as a dermal filler. Transparency Market Research valued the global orthopedic soft tissue market at $5.6 billion in 2013. Globally, the aging population is playing a major role in increasing the incidence of sports injuries as the reduced flexibility and mobility associated with aging can make the body more prone to injury. Consequently, Transparency Market Research forecasts that the orthopedic soft tissue market will grow to $8.5 billion in 2019, a CAGR of 7.2%. The difficulties associated with healing in an aging population highlight the need for advanced orthobiologics products to serve this market.

    VergenixSTR Product Development

        As part of the VergenixSTR development, we conducted a number of preclinical studies to validate the treatment protocol and confirm the enhanced healing potential of the treatment. We completed a preclinical study in August 2013 based on an established model of tendinopathy induced in rats by injection of collagenase into the Achilles tendon. The purpose of this study was to demonstrate the healing ability of VergenixSTR in the treatment of injured and inflamed tendons. The control group participating in the VergenixSTR testing was treated with an injection of PRP only. The efficacy of the product was assessed by histology, measuring parameters of healing at different stages. The preclinical study findings demonstrated that VergenixSTR resulted in lower initial inflammatory mononuclear cell levels, which correlates with a reduction in pain. This effect, along with observations on the appearance of mature fibrosis and elimination of early granulated tissue, suggests that VergenixSTR may accelerate the healing of tendons in comparison with the control treatment.

        In a follow-up preclinical study, the ability of VergenixSTR to form a scaffold which is retained to promote healing was assessed through injection of the product into a subcutaneous pocket in rats. Animals treated with VergenixSTR demonstrated a slow degradation of the clot over a period of four to eight weeks, whereas the control group demonstrated nearly immediate dispersion of the injected material.

GRAPHIC

        Results of subcutaneous clot implantation in rats. Clot degradation profile is presented as % of weight at time 0.

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        Analysis of the injection sites showed significant levels of the growth factors PGDF and VEGF, which are both due to the healing process, throughout the study period, suggesting that VergenixSTR is effective in retaining platelet-related growth factors at the site of tendon injury. The preclinical study results confirm VergenixSTR's ability to promote an improved healing process through the activity of platelet-related growth factors.

        We completed a 40 patient open label, single arm, multi-center clinical trial of VergenixSTR at hospitals in Israel which demonstrated the safety and evaluated the performance of VergenixSTR in patients suffering from tennis elbow or lateral epicondylitis. Tennis elbow is an inflammation of the tendons that join the forearm muscles on the outside of the elbow. The forearm muscles and tendons become damaged from overuse, leading to pain and tenderness on the outside of the elbow. Tennis, racquet sports and other sports and activities are a common cause of this condition. Tennis elbow affects 1% to 3% of population in the United States and Europe.

GRAPHIC

        The trial, which commenced in January 2015, initially enrolled 20 patients and was expanded to enroll an additional 20 patients. Patients enrolled in the trial received a one-time injection of VergenixSTR and are monitored for the level of pain, tendon healing, and recovery of hand movement at three and six months after treatment.

        In August 2016, we announced final results. At the three-month and six-month follow ups, patients treated with VergenixSTR reported an average 51% and 59% reduction in pain and improvement in motion, respectively, as measured by score improvement over the baseline on the Patient-Rated Tennis Elbow Evaluation, or PRTEE, questionnaire. The PRTEE questionnaire is designed to measure reduction in pain and recovery of motion for patients with tennis elbow. Furthermore, at three-month and six-month follow ups, 74% and 86%, respectively, of patients treated with VergenixSTR showed at least a 25% reduction in pain and improvement in motion as measured by PRTEE. In contrast, a study of standard-of-care tennis elbow therapies published in 2010 in the American Journal of Sports Medicine, or AJSM, reported that, at three and six months, 48% and 36%, respectively, of steroid patients showed at least a 25% reduction in pain and improvement in motion as measured by PRTEE. Also at the three-month and six-month follow ups, 62% and 64%, respectively, of patients treated with VergenixSTR showed at least a 50% reduction in pain and improvement in motion as measured by PRTEE, whereas the 2010 AJSM study showed 33% and 17% reductions at three and six months, respectively, for this same measurement.

        In October 2016, we received CE marking certification for VergenixSTR. We are now in the process of identifying distributors in Europe. Following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue regulatory approval for VergenixSTR in the United States under the PMA regulatory pathway.

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VergenixFG—Wound Filler

        VergenixFG is an advanced wound care product candidate based on our rhCollagen which received CE marking certification in February 2016. VergenixFG is intended for the treatment of deep surgical incisions and deep wounds, including diabetic ulcers, venous and pressure ulcers, burns, bedsores, and other chronic wounds that are difficult to heal. VergenixFG is designed to be easy to use and to be administrated through a cannula by a doctor or nurse. The VergenixFG formulation provides a scaffold of pure human collagen, an important characteristic in promoting the closure of wounds, that fills the wound bed and is engineered to create maximal contact with the surrounding tissue, which is believed to enhance healing. VergenixFG provides complete coverage of the wound site, facilitates wound closure through an engineered synchronization between scaffold degradation and growth of new tissue, and offers a non-allergenic and pathogen-free scaffold for safe and efficacious wound care therapy. Other flowable gel products are available on the market, but they are based on tissue-derived collagen.

    Market for Chronic Wounds

        VergenixFG is designed to meet the needs of the advanced wound care market, initially in the treatment of chronic wounds. Chronic wounds are rarely seen in individuals who are otherwise healthy. Major chronic diseases such as peripheral vascular diseases, cardiovascular diseases, diabetes, and other debilitating diseases have led to an increase in the incidence of chronic wounds. In wound healing, a cascade of events occurs that includes platelet accumulation, inflammation, fibroblast proliferation, cell contraction, angiogenesis, and re-epithelization, ultimately leading to scar formation. A chronic wound is stalled at one of these healing stages. This usually occurs during the inflammatory phase and is linked to elevated levels of the enzyme matrix metalloproteinase (MMPs) in the wound. During normal wound healing, proteases such as MMPs are attracted to the wound during the inflammatory phase and have an important role in breaking down unhealthy extracellular matrices (ECMs) so that new tissue forms. However, when MMPs are present in a wound at elevated levels for a prolonged period of time, this results in the destruction of healthy ECMs, which is associated with delayed wound healing and an increase in wound size. When the excess of MMPs is not balanced by normal physiological processes, alternative methods are required to reduce protease levels in the wound. This suggests a role for dressings containing collagen in the management of wounds where healing is stalled, as dressings containing collagen are thought to provide the wound with an alternative collagen source that can be degraded by the high levels of MMPs as a sacrificial substrate, leaving the body's native collagen to continue normal wound healing

        We plan on selling VergenixFG at a competitive price to the other advanced healing products in the market. One of the most common areas where chronic wounds are seen is with diabetic foot ulcers. We estimate the diabetic foot ulcer market for VergenixFG to be approximately 300,000 patients and $500 million annually. Diabetic foot ulcers alone represent about one quarter of the total chronic wound market. In addition to diabetic foot ulcers, the total chronic wound market also includes venous and pressure ulcers, which indicates that our initial target market is several magnitudes greater than the diabetic foot ulcer market alone. We also see the opportunity for expansion of VergenixFG beyond chronic wounds into the treatment of deep surgical incisions. The National Center for Health Statistics reported a total of 51.4 million inpatient surgical procedures took place in the United States in 2010, and we believe at least half of those resulted in a major surgical wound that could benefit from an advanced wound closure product such as VergenixFG to facilitate healing.

    VergenixFG Product Development

        As part of our product development of VergenixFG during the years 2011 to 2013, preclinical studies were conducted by an external laboratory under Good Laboratory Practices, or GLPs. The purpose of the studies was to investigate the performance of VergenixFG in the treatment of wounds in large animals in comparison to a competing product produced from bovine collagen. In a cutaneous

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full-thickness wound pig model, a broadly accepted model for the human healing process, 95% wound closure was observed with VergenixFG at day 21 compared to 68% closure in wounds treated with the benchmark product. Moreover, VergenixFG treatment induced an early angiogenic response and induced a significantly lower inflammatory response than in the control group. The researchers concluded that VergenixFG proved effective in animal wound models and is expected to be capable of reducing the healing time of human wounds.

        We have completed an open label, single arm, multi-center registration trial of VergenixFG of 20 patients in Israel to demonstrate safety and to evaluate the performance of VergenixFG in patients with hard-to-heal chronic wounds of the lower limbs. Patients enrolled in the trial, which commenced in November 2014, received a single treatment of VergenixFG followed by a four-week follow up. Product performance was examined according to several measures, the main one being the percentage of wound closure achieved.

        In November 2015, we announced final results of the trial, which indicated that VergenixFG is safe for use on human subjects. An analysis of the final results found average wound closure rates of 80% within four weeks of treatment, with 9 of the 20 patients treated (45%) achieving full wound closure in that time period. In contrast, according to a scientific study published in 2014 in the International Wound Journal treatment with the current standard-of-care resulted in complete wound closure after 12 weeks of treatment in just 24% of patients, for wounds comparable in their severity to the wounds treated in our VergenixFG trial.

        In February 2016, we received CE marking certification for VergenixFG. In June 2016, we entered into our first distribution agreement with an Italian company to distribute VergenixFG in Italy, and in July 2016, we supplied our first order. Subsequently, in August 2016, we entered into our second distribution agreement with a Swiss company to distribute VergenixFG in Switzerland. We intend to enter into additional distribution agreements in Europe, and following adoption by key opinion leaders and establishment of sales in Europe, we intend to pursue regulatory approval for VergenixFG in the United States under the PMA regulatory pathway.

CollPlant Surgical Matrix

        The CollPlant Surgical Matrix is a novel resorbable carrier composed of rhCollagen and synthetic minerals that mimics bone structure intended for use in bone repair indications such as spinal fusion and trauma. The CollPlant Surgical Matrix is being developed in collaboration with Bioventus, a global leader in active orthopedic healing. When charged with a BMP, the CollPlant Surgical Matrix is intended to induce cell infiltration and proliferation, healing existing bone and producing new natural bone, with a dose far below that of the current market-leading bone graft, which is expected to address safety concerns associated with that product while offering at least equivalent efficacy. This product candidate, which we refer to as the Bioventus product candidate, is in preclinical development for use in a one-time treatment that is easy to implant during open surgery and is intended to cover a broad spectrum of bone repair indications.

    Market for Bone Repair Products

        The Bioventus product candidate is intended to be used as a bone void filler, initially targeting trauma.

        We believe this product candidate will have wide applicability in skeletal procedures, and we expect that it will be used in multiple markets, including spinal fusion. Bioventus has estimated that the size of the target market for the Bioventus product candidate is approximately 300,000 procedures per year for posterior lumbar interbody fusion, transforaminal lumbar interbody fusion, and open tibial fractures in the United States and spine procedures in Europe, representing a market size of approximately

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$1.2 billion, and is projected to grow to 360,000 procedures per year, representing a market size of $1.4 billion by 2019.

    CollPlant Surgical Matrix Product Development

        In December 2011, we entered into a joint development agreement with Pfizer for the development of a product for the orthopedic market, comprised of a BMP and our rhCollagen, along with other components. This agreement expired in 2013. This co-development is now continuing with Bioventus, which acquired the rights for commercialization of the BMP from Pfizer and to whom Pfizer assigned certain of its rights and obligations under the 2011 joint development agreement. On July 9, 2015, we signed a non-binding term sheet with Bioventus for the license and supply of the CollPlant Surgical Matrix. While negotiations for a binding license and supply agreement are ongoing, no license and supply agreement has been entered into and there can be no assurance that we will enter into any definitive agreement with Bioventus.

        The CollPlant Surgical Matrix charged with a BMP, which we refer to as the Bioventus product candidate, is intended to induce cell infiltration and proliferation, healing existing bone and producing new natural bone, with a dose far below that of the current market-leading bone graft, which is expected to address safety concerns associated with that product, while offering at least equivalent efficacy. The Bioventus product candidate was tested in different animal models to verify its performance in bone healing. In these preclinical studies, the Bioventus product candidate demonstrated at least equivalent efficacy to the current market leading product, while requiring only one-tenth of the BMP dosage. In anticipation of filing an IND, Bioventus is undertaking preclinical animal studies comparing the CollPlant Surgical Matrix to other active comparators. These preclinical studies are based on animal models, including non-human primate studies, which may not be indicative of results in clinical trials with human subjects.

Technology

        Our rhCollagen is based upon research conducted by our founder and Chief Scientific Officer, Prof. Oded Shoseyov. We believe our technology is the only viable technology available for the production of recombinant type I human collagen, the most abundant collagen in the human body.

        The production of our rhCollagen begins with the creation of genetically engineered cultures which are transferred to selected greenhouses across Israel, and continues with the harvesting of tobacco leaves and the processing of such leaves to an extract which then undergoes purification until the completion of the rhCollagen.

        Five human genes encoding heterotrimeric type I collagen are introduced into tobacco plants. The three protein chains that make up type I collagen—two a1 protein chains and one a2 protein chain—are encoded by two genes. The other three genes encode the human prolyl-4-hydroxylase (P4Ha and P4Hb) as well as lysyl hydroxylase 3 (LH3) enzymes. These enzymes are responsible for key post-translational modifications of collagen, and plants co-expressing all five of these vacuole-targeted genes generate intact procollagen. The plants are grown in a greenhouse under strict growing protocols and mature leaves are transported to a protein extraction facility. Upon extraction, pro-collagen is enzymatically converted to atelocollagen using a plant-derived protease. The protein is purified to homogeneity through a cost-effective industrial process taking advantage of collagen's unique properties which make it soluble at a very low pH.

        RhCollagen forms thermally stable triple helix structures which readily fibrillate at natural pH and low sodium chloride concentrations, making it ideal for use in the manufacture of products for tissue repair in the human body. Binding of integrins (transmembrane receptors) presented by the cells to a specific 3-D structure on type I collagen fibrils requires a perfect triple helix. This binding is essential for binding and proliferation of cells on tissue repair scaffolds. In a recent study published in the

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Journal of Biomedical Materials Research Part B: Applied Biomaterials, rhCollagen was compared with acid-solubilized collagen from bovine dermis and pepsin-solubilized collagen from human fibroblast cell culture. Tested samples of the tissue-derived collagens had random fibrillar organization, whereas rhCollagen membranes showed far greater regional fibril alignment and transparency. RhCollagen membranes also showed better thermal stability compared with the tissue-derived collagens. The authors concluded that cross-linked rhCollagen membranes had a superior combination of desirable properties, namely higher transparency, higher thermal and tensile strengths, and adequate hydration.

        We have selected tobacco as the medium for production of rhCollagen due to certain attributes of the tobacco plant that provide us with a number of advantages:

    The genetic structure of tobacco is well understood and therefore can be effectively manipulated.

    We can monitor the effect of weather conditions on the accumulation of proteins in the plants, which allows us to make optimal use of the growing area. We control the growing process in order to maximize yields.

    Because tobacco is not part of the food chain, there are no concerns about cross-contamination of the food supply that could result from genetically modified plants, which eases the regulatory burden.

    Tobacco plants may be grown in very large volumes and its growth time until reaching the desired maturity is relatively short (about eight weeks).

        We have developed a large portfolio of configurations and composites based on our rhCollagen that are used to create high-quality products, including our three product candidates, as follows:

GRAPHIC

Our Development Activities

Development History

        Our rhCollagen was first developed as a collaboration among several commercial partners and the Hebrew University of Jerusalem, a major academic institution in Israel, under the direction of our founder, Professor Oded Shoseyov. Prof. Shoseyov is a faculty member at the Robert Smith Institute of

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Plant Science and Genetics at the Hebrew University of Jerusalem. The intellectual property was transferred to our wholly owned subsidiary, CollPlant Ltd.

        As part of our regulatory strategy, we first developed and achieved a CE marking for a collagen-based non-invasive dressing, VergenixWD. We believe that VergenixWD is the first medical device in the world based on rhCollagen to be authorized for marketing. VergenixWD is a sterile, biodegradable advanced wound care sheet supplied in various sizes, composed of rhCollagen that provides a moist wound healing environment. Currently, we are not promoting a marketing strategy for VergenixWD, which is considered a commodity product, and it is not part of the advanced wound care market that is our target market. We pursued a CE mark for this product as a predicate product for our intended CE marking for our VergenixSTR and VergenixFG product candidates in the European Union.

Future Development

        To facilitate efficient development, our management holds annual research and development meetings where they prioritize development projects and determine future product candidates. The prioritization process is based on several factors, including our business plan, commercial potential of the product candidate, time to market, cost of development, feasibility of the project, and our established strategic objectives. We have several development projects which are in different stages of development.

    Future Product Candidates

        We periodically examine the continued development of other collagen-based product candidates that we have conceived. Each one of our current product candidates offers a platform to product derivatives that can address other indications and contribute to our pipeline and revenues. These derivative product candidates include, for example, the use of VergenixSTR for ACL repair and ophthalmology applications, and the use of VergenixFG for the treatment of deep surgical incisions. We currently have in-house research and development projects related to tendon rupture and surgical wounds and are actively seeking collaborators in these indications. We are also pursuing other platforms for our rhCollagen, such as biomaterial coatings in order to reduce foreign body response and tissue adhesion, through ongoing research and business development discussions.

    BioInk for 3-D Bio-printing

        3-D bio-printing is being applied to regenerative medicine to address the need for complex scaffolds and tissues and organs suitable for transplantation. We are developing BioInks suitable for 3-D printing using our rhCollagen. Our researchers have chemically modified the gelling behavior of the collagen to adapt the biological molecules for printing. Instead of gelling like unmodified collagen, the BioInks remain fluid during printing. Once the BioInks are irradiated with UV light, they cross-link and cure to form hydrogels. We have the ability to control the chemical modification of the biological molecules so that the resulting gels have differing strengths and swelling characteristics. The properties of natural tissue can therefore be imitated—from solid cartilage to soft adipose tissue.

    Other Recombinant Proteins

        As tissue engineering and regenerative medicine continue to evolve and expand, we expect that the demand for high-quality biomaterials will grow. There are a number of other extracellular proteins such as elastin, fibronectin, and different types of collagen which may be produced through our plant production system. Another protein, Resilin, has been produced using another proprietary technology for the production of recombinant proteins. Resilin is a polymeric rubber-like protein secreted by insects to specialized cuticle regions, in areas where high resilience and low stiffness are required. Combining collagen at the nano-scale with Resilin to produce fibers resulted in super-performing fibers

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with greater tensile strength and elasticity exceeding that of natural collagen fibers. This composite biomaterial can be used in indications where elasticity, strength, and memory shape properties are required, such as tendons, meniscus, and nucleus polyposis.

Manufacturing, Supply, and Production

        The majority of our product research and development work is carried out at our offices and research laboratories in the Weizmann Science Park in Ness-Ziona, Israel. The agricultural research and development and extraction activities for our rhCollagen are carried out at our site in the north of Israel.

        We work with subcontractors with greenhouses for growing the tobacco plant containing human collagen in several locations in Israel. This tobacco growth occurs year-round and is optimized to the climate conditions in order to achieve the maximum amount of the protein in the leaves. The growers use our protocols and are monitored by our agronomists to ensure their compliance with these protocols. Each grower has the infrastructure that can be scaled-up to accommodate future demand without additional capital expenditures.

        We perform the extraction process by which rhCollagen is extracted from the tobacco plants at our manufacturing facility in the north of Israel. The collagen purification process which produces rhCollagen is carried out by dedicated subcontractors spread across Israel. Our rhCollagen-based product candidates are currently manufactured in the United States by a subcontractor using rhCollagen we supply to them under our production protocols.

        We currently have the ability to produce sufficient quantities of quality recombinant type I human collagen to support our product development activities and the expected commercial launch of VergenixFG and VergenixSTR in Europe in 2016. We are undertaking development and optimization of the production process, which will enable us to increase production capacity and reduce production costs. Our activities are focused on yield improvement, scale-up, and cost reduction.

        While our upstream and downstream processes are quite robust and efficient, we continuously invest in further yield improvement and scalability, in order to reduce costs. In order to increase yield, we plan to increase biomass per growing area by using new genetic derivatives, improvement and optimization of growing techniques, and introduction of online controls. Our next-generation tobacco plants have been created through improved genetics and cross-breeding, and produce three times the amount of collagen as our first-generation plants. Shifting our growing process from tissue culture techniques to cultivation of plants from seed, which we are implementing in 2016, will also streamline the production process and reduce costs. In addition, increased growing areas will reduce overall cost per harvest. We also plan further process optimization of our extraction process to increase yields.

        We are currently developing a full in-house purification capability. Following the purification process development, and in order to accommodate upcoming commercialization requirements, we plan to increase our overall production capacity through the establishment of a new facility which will be equipped with the production equipment and infrastructure to support the larger scale (i.e., clean rooms, water and air systems). We intend to utilize a portion of the proceeds of this offering to construct this manufacturing facility in Israel, which will enable us to produce large commercial quantities of our rhCollagen and rhCollagen-based end products.

        Under our current production techniques, we achieve a cost of goods that allow us to offer competitive pricing in the orthobiologics, advanced wound care, and other premium collagen-based products markets. We anticipate that the above-mentioned production enhancements will reduce the production cost of our rhCollagen to a level that will enable us to be competitive in both premium and commodity markets for collagen-based products.

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Sales, Marketing, and Distribution

        Our plan for marketing and distributing VergenixSTR and VergenixFG in the initial European market is to partner with large, established distributors to sell our products. In June 2016, we entered into our first distribution agreement with an Italian company to distribute VergenixFG in Italy, and in July 2016, we supplied our first order. Subsequently, in August 2016, we entered into our second distribution agreement with a Swiss company to distribute VergenixFG in Switzerland and supplied our first order in September 2016. We are currently in discussions with additional distributors in Europe for the commencement of sales of VergenixFG in additional European countries, and for the commencement of sales of VergenixSTR. These potential distributors are active in the orthobiologics and wound healing markets and have the existing sales infrastructure in place.

        We have commenced a Post Marketing Surveillance study with our European Key Opinion Leaders in order to generate additional clinical data that demonstrates the efficacy and superiority of our products. The study is intended to facilitate market adoption of our products in Europe, as well as provide additional support for the submission package to other regulatory agencies, such as the FDA.

        We anticipate that any products we develop in collaboration with a strategic partner or collaborator, such as the CollPlant Surgical Matrix product candidate, will be marketed by the partner's sales force.

        During 2013, we entered into a non-binding memorandum of understanding with Trauwin, a strategic shareholder based in China. We agreed in principle, subject to the negotiation of a definitive agreement, that Trauwin or its affiliate would distribute our products (excluding orthopedic products) in China.

        Our proprietary end products will be marketed to physicians, hospitals, and clinics. We plan to expand the awareness of rhCollagen and our rhCollagen-based products to the end users through the publication of clinical trial data as well as marketing studies we may conduct, along with participation in academic and industry conferences. We will also market our rhCollagen to companies developing products using collagen which do not compete with our primary end products. We anticipate entering into collaborations or partnerships with these companies where we would supply them with rhCollagen for use in their products in return for royalties.

        Until recently, our only sales of rhCollagen were to different consumers in the research market. We sell our rhCollagen in the research market under the brand name Collage. Sigma-Aldrich Company distributes Collage in the global research market, which includes, among others, academic institutions and hospitals worldwide. The Collage that we sell to Sigma-Aldrich under this framework is intended only for research laboratories (in vitro) and not for preclinical or clinical (in vivo) uses. To date, sales to Sigma-Aldrich were immaterial in scope and amount.

Competition

        We are not aware of any competitors that produce human collagen from plants or that produce recombinant type I human collagen. However, our industry is characterized by rapidly evolving technology and intense competition, and our rhCollagen-based product candidates will compete with several alternative tissue-derived or synthetic products. Adequate protection of intellectual property, successful product development, adequate funding, and retention of skilled, experienced, and professional personnel are among the many factors critical to success in the pharmaceutical industry.

        Generally, our competitors currently include large fully integrated companies, as well as academic research institutes and companies in various developmental stages that develop alternative sources and forms of collagen and tissue-derived products.

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        Our VergenixSTR product candidate will compete with companies that sell steroid injections and PRP kits, including Biomet Inc., Arthrex Inc., Harvest Technologies Corporation, MTF Sports Medicine, and Arteriocyte Medical Systems Inc.

        The primary competitors to our VergenixFG product candidate are products based on tissue-derived collagens. The lead competitors in this area are Integra Lifesciences Corporation, which manufactures products used in tissue regeneration, spine and nervous system regeneration and the treatment of wounds, and Wright Medical Technology Inc., which manufactures and markets tissue-derived collagens and sells collagen products (sponges, sheets, gel) produced from skin donations for a wide range of medical treatments such as wound healing and orthopedics.

        The CollPlant Surgical Matrix will compete primarily with Medtronic Inc.'s INFUSE bone graft product, which combines a recombinant bone growth protein and bovine-based collagen; Nuvasive Inc.'s Osteocel, a cellular bone matrix product; and Othrofix's TRINITY ELITE allograft product.

Intellectual Property

        Our success depends, in part, on our ability to protect our proprietary technology and intellectual property. We rely on a combination of patent, trade secret, and trademark laws in the United States and other jurisdictions to protect our intellectual property rights. In addition, we rely on proprietary processes and know-how, intellectual property licenses, and other contractual rights, including confidentiality and invention assignment agreements, to protect our intellectual property rights and develop and maintain our competitive position.

Patents

        We have a global patent portfolio that is comprised of eight patent families. Almost two dozen of our patent applications have issued as patents or will issue soon, having been allowed by the relevant patent office. We have exclusive ownership of 17 issued patents in our patent family that cover methods of creating collagen-producing plants and two issued patents in our patent family that cover methods of processing recombinant collagen. These issued patents and others that may issue in the future in these patent families, assuming timely payment of annual fees, are expected to expire beginning in 2025. Our patent portfolio also includes patent families that cover production and use of collagen.

        In addition, our patent portfolio includes pending applications, some of which are jointly owned with Yissum, as well as issued patents that are jointly owned with Yissum, which cover production of other biomaterials. Our more recently filed patent applications, if granted, could provide patent protection for our rhCollagen through 2034.

        We are not aware of any impediments to the patent applications being granted in the United States or other jurisdictions. However, our patent applications may never issue as patents, and our issued patents and any that may issue in the future may be challenged, invalidated or circumvented.

Trade Secrets and Confidential Information

        In addition to patented technology, we rely on our trade secrets and continuing technological innovations to develop and maintain our competitive position. In an effort to protect our trade secrets, we rely on, among other safeguards, confidentiality and invention assignment agreements to protect our proprietary technology, know-how and other intellectual property that may not be patentable or that we believe is best protected by means that do not require public disclosure. For example, we require our employees, consultants and advisors to execute confidentiality agreements in connection with their employment or consulting relationships with us, and to disclose and assign to us inventions conceived in connection with their services to us. These agreements also provide that all confidential information

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developed or made known to the individual during the course of their relationship with us must be kept confidential, except in specified circumstances.

Trademarks

        We rely on trade names, trademarks and service marks to protect our name brands. Our registered trademarks in several countries include the following: "collage" and "Vergenix."

Materials Transfer Agreements

        We periodically enter into materials transfer agreements with commercial organizations, medical institutions and research and development institutions to transfer materials and product candidates developed by us. These agreements include provisions that are customary for such agreements concerning the permitted use of the transferred material and any results obtained using the material, confidentiality, the rights in the transferred materials and in the results of the research and/or development in which the materials are used, and instructions concerning care and usage of the materials. These agreements may be used as a basis for further cooperation between us and the counterparties.

        We may be unable to obtain, maintain, and protect the intellectual property rights necessary to conduct our business, and may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For a more comprehensive summary of the risks related to our intellectual property, see "Risk Factors."

Agreement with Yissum Research Development Company of the Hebrew University of Jerusalem Ltd. with respect to our rhCollagen

        Under an agreement dated July 13, 2004 among Meytav—Technological Innovation Center Ltd., Yehuda Zafrir Fagin, Yissum Research Development Company of the Hebrew University of Jerusalem Ltd., or Yissum, and Prof. Oded Shoseyov (our chief scientific officer and a director), we carried out a research and development project to develop a process for the production of quality human collagen in plants and further developed the resulting product candidates created by us, Professor Shoseyov and Zafrir, for commercial applications. Yissum and Professor Shoseyov have assigned all intellectual property rights developed by Professor Shoseyov and owned by them to us, including the intellectual property rights in connection with the development of the method for production of quality human collagen in plants. Pursuant to this agreement, in the event of: (i) the appointment of a receiver or liquidator for all or substantially all of our assets, which appointment is not removed within sixty days; (ii) our passing a resolution for a voluntary winding up, or a winding up application being made against us and not set aside within sixty days; or (iii) our making an assignment of rights or other assets for the benefit of our creditors, all rights in such patents and trade secrets will revert to Yissum. In connection with this reversion right, we agreed that all intellectual property rights that can be registered in connection with such project would be registered with a 1% ownership interest in Yissum's name, solely in order to protect Yissum's reversion right. However, to date, all of our patents regarding our rhCollagen have been registered (or are proposed to be registered) with our wholly owned subsidiary, CollPlant Ltd., as 100% owner, without reflecting Yissum's 1% interest. Accordingly, Yissum may claim that such intellectual property rights should be registered in accordance with the terms of the agreement.

Government Regulation

        We are a developer of tissue products which are subject to extensive regulation as medical devices in the United States, the European Union and other jurisdictions. These regulations govern, among other things, the introduction of new medical devices, the observance of certain standards with respect

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to the design, manufacture, testing, promotion and sales of the devices, the maintenance of certain records, the ability to track devices, the reporting of potential product defects, the import and export of devices, and other matters.

        As a medical device company that wishes to obtain marketing authorization in the United States, we are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies. The Federal Food, Drug, and Cosmetic Act, or FD&C Act, the Public Health Service Act, or the PHS Act, and their implementing regulations set forth, among others, requirements for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising, and promotion of our product candidates. A failure to comply with relevant requirements may lead to administrative, civil, or criminal sanctions. These sanctions could include the imposition by the FDA of a clinical hold or other suspension on clinical trials, refusal to approve pending marketing applications or supplements, withdrawal of approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, or criminal prosecution.

        Although the discussion below focuses on regulation in the United States, we anticipate seeking approval for the marketing of our product candidates in other countries which have their own regulatory requirements. Generally, our activities in other countries will be subject to regulations that are similar in nature and scope as that imposed in the United States such as medical device approval, quality system requirements, product data and certifications, although there can be important differences and the number and scope of these regulatory requirements are generally increasing.

        We must obtain approval by comparable regulatory authorities of foreign countries outside of the European Union and the United States before we can commence clinical trials or marketing of our product candidates in those countries. The approval process varies from country to country and the process may be longer or shorter than that required for FDA approval. In addition, the requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country. In all cases, clinical trials must be conducted in accordance with the FDA's regulations, commonly referred to as good clinical practices, or GCPs, and the applicable regulatory requirements and ethical principles that have their origin in the Declaration of Helsinki.

        Government regulation may delay or prevent testing or marketing of our product candidates and impose costly procedures upon our activities. The testing and approval process, and the subsequent compliance with appropriate statutes and regulations, require substantial time, effort, and financial resources, and we cannot be certain that the FDA or any other regulatory agency will grant approvals for our product candidates or any future product candidates on a timely basis, or at all. The policies of the FDA or any other regulatory agency may change and additional governmental regulations may be enacted that could prevent or delay regulatory approval of our product candidates or any future product candidates or approval of new indications or label changes. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative, judicial, or administrative action, either in the United States or abroad.

Approval by Health Authorities

        The following is a summary review of the laws and regulations governing our operations. Our product candidates are medical product candidates, and their marketing, once development is complete,

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is contingent upon approval of the health authorities in every country in which the product candidates will be marketed:

Israel

        Our operations are subject to permits from the Israeli Ministry of Health in Israel (Ministry of Health) on two levels:

    First, the registration of medical devices, importing and marketing the medical devices and accessories, and issuing the documentation necessary for the export of medical devices from Israel are all supervised by the medical accessories and devices unit (AMR) of the Ministry of Health.

    Second, pertaining to research and development, clinical trials in humans are subject to the approval of the Helsinki Committee, which acts by force of the Public Health Regulations (Trials in Human Beings), 1980 (Trials in Human Subjects Regulations) and according to the Guidelines for Clinical Trials in Human Subjects issued by the Israel Ministry of Health (the Guidelines) and the guidelines of the Helsinki declaration, or any other approval required by the Ministry of Health. According to the Trials in Human Subjects Regulations, and the Guidelines the Helsinki Committee must plan and approve every experimental process that involves human beings. The Helsinki Committee is an institutional committee that acts in the medical institution where the trial is performed and is the party that approves and supervises the entire trial process. In practice, the physician, who is the principal investigator, submits a trial protocol to the committee on behalf of the requesting party. The committee forwards its decisions regarding the requests for clincial trials that were approved by the committee to the manager of the medical institute and the manager has the authority to approve the requests, and in some cases the additional approval of the Ministry of Health will be required. According to the procedure for medical trials in human beings of the Ministry of Health, the Helsinki Committee will not approve performance of a clincial trial, unless it is absolutely convinced that the following conditions, among others, are fulfilled: (i) the expected benefits for the participant in the clincial trial and to the requesting party to justify the risk and the inconvenience involved in the clincial trial to its participant; (ii) the available medical and scientific information justifies the performance to the requested clincial trial; (iii) the clincial trial is planned in a scientific manner that enables a solution to the tested question and is described in a clear, detailed, and precise manner in the protocol of the clincial trial, conforming with the Helsinki principles declaration; (iv) the risk to the participant in the clincial trial is as minimal as possible; (v) optimal monitoring and follow-up of the participant in the clincial trial; (vi) the initiator, the principal investigator and the medical institute are capable and undertake to allocate the resources required for adequate execution of the clincial trial, including qualified personnel and required equipment; and (vii) the nature of the commercial agreement with the principal investigator and the medical institute does not impair the adequate performance of the clincial trial.

        All phases of clinical trials conducted in Israel must be conducted in accordance with the Trials in Human Subjects Regulations, including amendments and addenda thereto, the Guidelines for Clinical Trials in Human Subjects issued by the Israel Ministry of Health (the Guidelines) and the International Conference for Harmonized Tripartite Guideline for Good Clinical Practice. The regulations and the Guidelines stipulate that a medical study on humans will only be approved after the Helsinki Committee at the hospital intending to perform the study has approved the medical study and notified the relevant hospital director in writing. In addition, certain clinical studies require the approval of the Ministry of Health. The relevant hospital director, and the Ministry of Health, if applicable, also must be satisfied that the study is not contrary to the Helsinki Declaration or to other regulations.

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        Additionally the Israeli penal code prohibits bribing a foreign public employee in exchange for any action related to such employee's role, in order to achieve, guarantee, or promote business activities or other business advantage.

United States

        The regulatory process of obtaining product approvals and clearances can be onerous and costly. Foreign companies manufacturing medical devices intended for sale in the United States are required to meet the FDA's regulatory requirements. The FDA does not recognize the regulatory certification provided by governmental authorities of other countries.

    Pre-Marketing Regulation

        In the United States, medical devices are regulated by the FDA. Unless an exemption applies, a new medical device will require either prior 510(k) clearance or approval of a premarket approval application, or PMA, before it can be marketed in the United States. The information that must be submitted to the FDA in order to obtain clearance or approval to market a new medical device varies depending on how the medical device is classified by the FDA. Medical devices are classified into one of three classes on the basis of the controls deemed by the FDA to be necessary to reasonably ensure their safety and effectiveness. Class I devices, which are those that have the lowest level or risk associated with them, are subject to general controls, including labeling, premarket notification, and adherence to the QSR. Class II devices are subject to general controls and special controls, including performance standards. Class III devices, which have the highest level of risk associated with them, are subject to most of the previously identified requirements as well as to premarket approval. Most Class I devices and some Class II devices are exempt from the 510(k) requirement, although manufacturers of these devices are still subject to registration, listing, labeling and QSR requirements.

        A 510(k) premarket notification must demonstrate that the device in question is substantially equivalent to another legally marketed device, or predicate device, that did not require premarket approval. In evaluating the 510(k), the FDA will determine whether the device has the same intended use as the predicate device, and: (i)(a) has the same technological characteristics as the predicate device, or (b) has different technological characteristics; and (ii)(a) the data supporting the substantial equivalence contains information, including appropriate clinical or scientific data, if deemed necessary by the FDA, that demonstrates that the device is as safe and as effective as a legally marketed device, and (b) does not raise different questions of safety and effectiveness than the predicate device. Most 510(k)s do not require clinical data for clearance, but the FDA may request such data. If the FDA does not agree that the new device is substantially equivalent to the predicate device, the new device will be classified in Class III, and the manufacturer must submit a PMA.

        The PMA process is more complex, costly, and time consuming than the 510(k) clearance procedure. A PMA must be supported by extensive data including, but not limited to, technical, preclinical, clinical, manufacturing, control, and labeling information to demonstrate to the FDA's satisfaction the safety and effectiveness of the device for its intended use. After a PMA is submitted, the FDA has 45 days to determine whether it is sufficiently complete to permit a substantive review. If the PMA is complete, the FDA will file the PMA. The FDA is subject to performance goal review times for PMAs and may issue a decision letter as a first action on a PMA within 180 days of filing, but if it has questions, it will likely issue a first major deficiency letter within 150 days of filing. It may also refer the PMA to an FDA advisory panel for additional review, and will conduct a preapproval inspection of the manufacturing facility to ensure compliance with the QSR, either of which could extend the 180-day response target. A PMA can take several years to complete, and there is no assurance that any submitted PMA will ever be approved. Even when approved, the FDA may limit the indication for which the medical device may be marketed. Changes to the device, including changes to its manufacturing process, may require the approval of a supplemental PMA.

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        If a medical device is determined to present a "significant risk," the manufacturer may not begin a clinical trial until it submits an investigational device exemption, or IDE, to the FDA and obtains approval of the IDE from the FDA. The IDE must be supported by appropriate data, such as animal and laboratory testing results, and include a proposed clinical protocol. The clinical trials must be conducted in accordance with applicable regulations, including but not limited to the FDA's IDE regulations and current good clinical practices. A clinical trial may be suspended by the FDA or the sponsor at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the trial. Even if a clinical trial is completed, the results may not demonstrate the safety and efficacy of a device, or may be equivocal or otherwise not be sufficient to obtain approval.

        In August 2010, we submitted a 510(k) notification to the FDA for VergenixWD, a collagen-based non-invasive dressing. In October 2010, we received notice that the Center for Devices and Radiological Health, or CDRH, which is the FDA center with jurisdiction over medical devices, determined that the product candidate required a submission of a PMA for regulatory approval and not a 510(k). We filed an appeal of this decision which was denied, and in April 2012, the FDA confirmed its previous determination that our product candidate would require PMA approval prior to its marketing in the United States. We believe that most, if not all, of our product candidates will be subject to the PMA process.

        We expect, based on our prior limited interaction with the FDA in connection with our predecessor wound healing product candidate, that our current product candidates will be regulated as medical devices through a PMA process; however, no assurance can be given that the FDA will not impose additional, more stringent, regulatory requirements with respect to one or more of our current or future product candidates. Conducting clinical trials for our pipeline product candidates that are required to undergo the PMA process may take one to three years, depending on the composition of the product candidate under development and its designation.

        To date, we are not conducting any discussions with the FDA with respect to any of our product candidates being developed.

European Union

        Under the European Union Medical Device Directive, or EU MDD, medical devices must meet the EU MDD requirements and receive a CE marking certification prior to marketing in the European Union, or EU. CE marking is the uniform labeling system of products designed to facilitate the supervision and control of the EU concerning manufacturers' compliance with the various regulations and directives of the EU and to clarify the obligations imposed in the various legislative provisions in the EU. Use of a uniform product labeling indicates compliance with all of the directives and regulations required for the application of such labeling, and it is effective as a manufacturer's declaration that the product meets the required criteria and technical specifications of the relevant authorities such as health, safety, and environmental protection. CE marking ensures free trade between the EU and European Free Trade Association countries (Switzerland, Iceland, Liechtenstein, and Norway) and permits the enforcement and customs authorities in European countries not to allow the marketing of similar products that do not bear the CE marking sign. Such certification allows, among other things, marking the products (according to various categories) with the CE marking and their sale and marketing in the EU.

        CE marking certification requires a comprehensive quality system program, comprehensive technical documentation and data on the product, which are then reviewed by a Notified Body, or NB. An NB is an organization designated by the national governments of the EU member states to make independent judgments about whether a product complies with the EU MDD requirements and to grant the CE marking if we, and our product, comply with specified terms. After receiving the CE

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marking, we must pass a review carried out by the competent NB annually, under which it audits our facilities to verify our compliance with the ISO 13485 quality system standard.

        Compliance with the ISO 13485 standard, for medical device quality management systems, is required for regulatory purposes. ISO standards are recognized international quality standards that are designed to ensure that we develop and manufacture quality medical devices. Other countries are also instituting regulations regarding medical devices. Compliance with these regulations requires extensive documentation and clinical reports for all of our product candidates, revisions to labeling, and other requirements such as facility inspections to comply with the registration requirements.

        In February 2016, we received CE marking certification for VergenixFG and in October 2016, we received CE marking for VergenixSTR. In December 2012, we received CE marking permitting the sale and marketing of VergenixWD in Europe. VergenixWD was our first medical product candidate based on collagen protein derived from plants that is authorized for sale and marketing in Europe, but we are not currently promoting a marketing strategy for VergenixWD, which is considered a commodity product and is not targeted towards the advanced wound care market, which is our target market.

China

        China's medical device market, currently in a rapid state of expansion, is overseen by the China Food and Drug Administration, or CFDA (formerly the State Food and Drug Administration). The CFDA issues registration certificates required for all medical devices sold in China. The CFDA uses a risk-based system, and its approval process requires mandatory testing for Class II and III devices. Class II devices are moderate-risk devices and Class III devices are high-risk medical devices. Third-party reviews of devices are currently not allowed in China; only the CFDA is authorized to approve devices. The registration process requires the submission of a registration standard along with device samples for testing. Manufacturers of Class II and Class III medical devices are also required to demonstrate that the device has been approved by the country of origin with documents like a CE certificate, 510(k) letter and PMA approval and compliance with ISO 13485, and they may also be required to submit clinical data in support of their application. In addition to these requirements, all medical device manufacturers must also include product information in Chinese on all packaging and labeling. Manufacturers exporting medical devices to China must appoint several China-based agents to act on their behalf. These include a registration agent to coordinate the CFDA registration process, a legal agent to handle any adverse events reported with a registered device, including a product recall, and an after-sales agent to provide technical service and maintenance support.

Other U.S. Federal Healthcare Laws and Regulations

        Healthcare providers, physicians, and third-party payors play a primary role in the recommendation and medical devices that are granted marketing approval. In the United States, we are subject to laws and regulations pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws that regulate the means by which companies in the healthcare industry may market their products to hospitals and healthcare providers and may compete by discounting the prices of their products. The delivery of our product candidates is subject to regulation regarding reimbursement, and federal healthcare laws apply when a customer submits a claim for a product that is reimbursed under a federally funded healthcare program. These rules require that we exercise care in structuring our sales and marketing practices and customer discount arrangements.

        Arrangements with healthcare providers, third-party payors, and other customers are subject to broadly applicable fraud and abuse and other healthcare laws and regulations, including the following:

    the federal healthcare Anti-Kickback Law prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase,

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      order, or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;

    the U.S. False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;

    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

    HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information;

    the federal false statements statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services;

    the federal transparency requirements under the Health Care Reform Law require manufacturers of drugs, devices, and medical supplies to report to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests; and

    analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers.

        Healthcare providers that purchase medical devices generally rely on third-party payors, including, in the United States, the Medicare and Medicaid programs and private payors, such as indemnity insurers, employer group health insurance programs, and managed care plans, to reimburse all or part of the cost of the products. As a result, demand for our product candidates is and will continue to be dependent in part on the coverage and reimbursement policies of these payors. The manner in which reimbursement is sought and obtained varies based upon the type of payor involved and the setting in which the product is furnished and utilized. Reimbursement from Medicare, Medicaid, and other third-party payors may be subject to periodic adjustments as a result of legislative, regulatory, and policy changes as well as budgetary pressures. Possible reductions in, or eliminations of, coverage or reimbursement by third-party payors, or denial of, or provision of uneconomical reimbursement for new products, may affect our customers' revenue and ability to purchase our product candidates. Any changes in the healthcare regulatory, payment, or enforcement landscape relative to our customers' healthcare services has the potential to significantly affect our operations and revenue.

Other Approvals

        Our international operations as well as being an Israeli company subject us to laws regarding sanctioned countries, entities, and persons; customs, import-export, and laws regarding transactions in foreign countries; and the U.S. Foreign Corrupt Practices Act and local anti-bribery and other laws regarding interactions with healthcare providers. Among other things, these laws restrict, and in some cases can prevent, United States companies from directly or indirectly selling goods, technology, or services to people or entities in certain countries. In addition, these laws require that we exercise care in structuring our sales and marketing practices in foreign countries.

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        In addition to the above regulations, we are and may be subject to regulation under country-specific federal and state laws, including, but not limited to, requirements regarding record keeping, and the maintenance of personal information, including personal health information. As a public company whose securities will be registered pursuant to the Securities Act of 1933, as amended, we will be subject to U.S. securities laws and regulations, including the Sarbanes-Oxley Act of 2002. We also are subject to other present, and could be subject to possible future, local, state, federal, and non-U.S. regulations in countries in which we will distribute our products.

Israeli Ministry of Agriculture

        The process of growth of transgenic plants and the treatment thereof is subject to the regulations published by the Israeli Ministry of Agriculture and the approval of the Ministry of Agriculture to engage in the cultivation of recombinant plants. Although the Ministry of Agriculture requirements do not necessarily apply to our operations, we hold a valid permit from the Plant Protection and Inspection Services Administration, or PPIS, for growing tobacco plants in greenhouses in the north of Israel, as well as in all of our subcontractors' facilities.

Business Licensing

        Under the Israeli Licensing of Businesses Law, to which our production site and laboratories are subject, operating a business without a license or temporary permit is a criminal offense. We have a business license for our laboratories and offices, in effect until December 31, 2019. We have a temporary business license for our production site at Yessod Hama'ala, in effect until November 5, 2016. We expect to receive a permanent business license for this site; however, there is no assurance that a permanent business license will be issued on a timely basis or at all.

Planning and Zoning

        Our production sites and laboratories are subject to the Israeli Planning and Zoning Law, which sets provisions and obligations, inter alia, regarding the licensing process for a new building, including building permits, non-conforming use and easements, the supervision over its construction, and the required occupancy permits. According to the Planning and Zoning Law, work or use of land without a permit where such permit is required, a deviation from the permit granted, or use of agricultural land in violation of the law, constitutes a criminal offense.

Employees

        As of September 30, 2016, we had 37 full-time employees, including 25 in research and development, six in manufacturing and six in general and administrative positions. 11 of our employees have either MDs or PhDs. All of our employees are located in Israel. We believe our employee relations are good.

        In addition, we employ a limited number of part-time employees on a temporary basis, as well as consultants and service providers.

        Israeli labor laws govern the length of the workday, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws, and other conditions of employment. Subject to specified exceptions, Israeli law generally requires severance pay upon the retirement, death, or dismissal of an employee, and requires us and our employees to make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Our employees have defined benefit pension plans that comply with the applicable Israeli legal requirements.

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        None of our employees currently work under any collective bargaining agreements.

Facilities

        Our corporate headquarters and research facilities are located in Weizmann—the Science Park in Ness-Ziona, Israel, where we lease an aggregate of approximately 7,653 square feet of office and laboratory space, pursuant to lease agreements that expire on August 18, 2017. We rent additional areas in Yessod Hama'ala, Israel, of approximately 64,583 square feet of greenhouse and manufacturing facility pursuant to a lease agreement that expires on April 30, 2017. In addition, on July 28, 2016, we leased additional space in Rehovot, Israel, of approximately 6,329 square feet for development and production activities pursuant to a lease agreement that expires on July 28, 2019, with an option to extend for four additional years.

        The majority of our research and development work is carried out at our offices and research laboratories in the Science Park—Kiryat Weizmann in Ness-Ziona, Israel. The plant research process and production of our rhCollagen are carried out at our site in the north of Israel, while the tobacco plant cultivation and collagen purification are carried out in various areas in Israel. Our greenhouses for tobacco growing are located in several areas in Israel, where we are using subcontractors under several agreements. The greenhouses are used by us for growing tobacco plants and other development services.

        We believe that our existing facilities are adequate for our near-term needs. When our leases expire, we may look for additional or alternate space for our operations. We believe that suitable additional or alternative space and area would be available if required in the future on commercially reasonable terms.

Environmental, Health, and Safety Matters

        Our research, development, and manufacturing processes involve the controlled use of certain hazardous materials. Therefore, we are subject to extensive environmental, health, and safety laws and regulations in a number of jurisdictions, in Israel, governing, among other things: the use, storage, registration, handling, emission, and disposal of chemicals, waste materials, and sewage; chemicals, air, water, and ground contamination; air emissions, and the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals, waste materials, and sewage. Our operations at our Ness-Ziona manufacturing facility use chemicals and produce waste materials and sewage. Our activities require permits from various governmental authorities including local municipal authorities, the Ministry of Environmental Protection, and the Ministry of Health. The Ministry of Environmental Protection, the Ministry of Health, local authorities, and the municipal water and sewage company conduct periodic inspections in order to review and ensure our compliance with various regulations.

        These laws, regulations, and permits could potentially require the expenditure by us of significant amounts for compliance or remediation. We believe that our environmental, health, and safety procedures for handling and disposing of these materials comply with the standards prescribed by the controlling laws and regulations. If we fail to comply with such laws, regulations, or permits, we may be subject to fines and other civil, administrative, or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we may be required to pay damages or civil judgments with respect to third-party claims, including those relating to personal injury (including exposure to hazardous substances we use, store, handle, transport, manufacture, or dispose of), property damage, or contribution claims. These risks are managed to minimize or eliminate associated business impacts. Some environmental, health, and safety laws allow for strict joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a responsible party under such laws. Such developments could have a material adverse effect on our

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business, financial condition, and results of operations as these kinds of liabilities could exceed our resources. We could be subject to a regulatory shutdown of a facility that could prevent the distribution and sale of product candidates manufactured in such facility for a significant period of time and we could suffer a casualty loss that could require a shutdown of the facility in order to repair it, any of which could have a material, adverse effect on our business. Although we continuously strive to maintain full compliance with respect to all applicable global environmental, health, and safety laws and regulations, we could incur substantial costs to fully comply with future laws and regulations, and our operations, business, or assets may be negatively affected.

        In addition, compliance with laws and regulations relating to environmental, health, and safety matters is an ongoing process and are often subject to change. In the event of any changes or new laws or regulations, we could be subject to new compliance measures or to penalties for activities which were previously permitted. For instance, Israeli regulations were promulgated in 2012 relating to the discharge of industrial sewage into the sewer system. These regulations establish new and potentially significant fines for discharging forbidden or irregular sewage into the sewage system. We have compliance procedures in place for employee health and safety programs, driven by a centrally led organizational structure that ensures proper implementation, which is essential to our overall business objectives.

        We invest resources in creating a green production environment, and in the treatment and disposal of waste using environmentally friendly processes. We have received all the necessary permits from the Ministry of Environmental Protection regarding our operations in Yessod Hama'ala and Ness-Ziona. We consult with environmental consultants for direction on environmental issues.

Legal and Corporate Structure

        Our legal and commercial name is CollPlant Holdings Ltd. We were incorporated in Israel on November 9, 1981 as a private company limited by shares. As of 1993, we are a public company and all of our ordinary shares are listed on the Tel Aviv Stock Exchange. Our name has changed several times, but has been CollPlant Holdings Ltd. since May 30, 2010, immediately after the consummation of the merger transaction with CollPlant Ltd.

        We hold all of the issued and outstanding shares of CollPlant Ltd. and have no holdings in other companies.

        CollPlant Ltd. was incorporated in Israel on August 12, 2004 as a private company limited by shares and began its operations as a technology incubator company under the OCS's technology incubators program. CollPlant Ltd. owns all of our intellectual property.

Legal Proceedings

        To date, we are a party to the following legal proceedings:

Opposition Proceedings to European Patent No. 0 951 537 B1

        On August 2, 2006, we initiated at the European Patent Office, or EPO, opposition proceedings to European Patent No. 0 951 537 B1, published in the name of Meristem Therapeutics SA, or Meristem, relating to the production of recombinant collagen in plants. To the best of our knowledge, patent opposition proceedings were also initiated by Fibrogen Inc. In addition, to the best of our knowledge, Meristem's patent rights in Europe and Canada expired as a result of failure to make payment of the annual renewal fees. The patent application filed by Meristem in the United States matured into a patent (U.S. 6,617,431) which, to the best of our knowledge, does not limit our business. To the best of our knowledge, the opposition proceedings in Europe continued at the request of the second entity opposing these proceedings (Fibrogen Inc.), and in the absence of a defense on the part of Meristem,

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on October 4, 2010, notice was received from the EPO that the patent was revoked. To the best of our knowledge, on January 30, 2011, Meristem's window for appealing the cancellation of the patent expired.

Opposition Proceedings to European Patent No. 1 809 751 B1

        Our European Patent No. 1 809 751 entitled "Collagen Producing Plants and Methods of Generating and Using Same," was granted by the EPO on September 1, 2010. On June 1, 2011, Fibrogen, Inc. initiated an opposition proceeding with the EPO, seeking revocation of the patent in its entirety on the grounds that the claims were not supported by the contents of the patent, were not novel, and were not inventive. On January 22, 2013, the EPO issued its decision to maintain the patent in amended form with claims that cover genetically modified plants that produce collagen.

        On June 3, 2013, Fibrogen, Inc. appealed the decision. On August 1, 2013, we filed an appeal, seeking to expand the scope of the patent. Oral hearings on these appeals are scheduled for July 2017. The ultimate outcome of these proceedings remains uncertain, and final resolution of the proceeding may take a number of years and result in substantial costs to us.

Opposition Proceedings to European Patent No. 2 357 241

        Our European Patent No. 2 357 241 entitled "Collagen Producing Plants and Methods of Generating and Using Same," a divisional of the above 1 809 751, was granted by the EPO, on March 4, 2015. On December 10, 2015, Fibrogen, Inc. initiated an opposition proceeding with the EPO, seeking revocation of the patent in its entirety on the grounds that the claims were not supported by the contents of the patent, were not novel, and were not inventive. On August 16, 2016, we filed a response. The ultimate outcome of these proceedings remains uncertain, and final resolution of the proceeding may take a number of years and result in substantial costs to us.

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MANAGEMENT

Senior Management and Directors

        The following table sets forth certain information relating to our senior management and directors, including their ages as of the date of this prospectus. Unless otherwise stated, the address for our directors and senior management is at the Company's registered address c/o 3 Sapir Street, Weizmann Science Park, P.O. Box 4132, Ness-Ziona 7414002, Israel.

Name
  Age   Position

Senior Management

         

Yehiel Tal

    64   Chief Executive Officer

Prof. Oded Shoseyov

    60   Founder, Chief Scientific Officer

Eran Rotem, CPA

    48   Chief Financial Officer

Dr. Ilana Belzer

    56   Chief Operating Officer

Dr. Nadav Orr

    59   Vice President, Research and Development

Dr. Philippe Bensimon

    51   Vice President, Regulatory Affairs and Quality Assurance

Shomrat Shurtz

    50   Senior Director, Business Development

Non-Employee Director

   
 
 

 

Adi Goldin(6)(7)

    42   Chairman and Director

Xiaojin Qian

    34   Director

Ira Leiderman(2)(3)(5)(6)(8)

    59   Director

Dr. Abraham Havron(1)(5)(6)(7)(8)

    69   Director

Orli Tori Trubovitz(1)(2)(3)(4)(7)(8)

    51   Director

Rami Armon(1)(2)(3)(4)(6)(7)(8)

    45   Director
Chairman of the Audit Committee
Chairman of the Financial Statements Committee
Chairman of the Compensation Committee

(1)
Member of the Compensation Committee

(2)
Member of the Audit Committee

(3)
Member of Financial Statements Committee

(4)
External Director under Israeli Law

(5)
Independent Director under Israeli Law

(6)
Member of Financing Committee

(7)
Member of the Nominating and Corporate Governance Committee

(8)
Independent Director under NASDAQ Listing Rules

Senior Management

        Yehiel Tal has served as our chief executive officer since January 2010. Mr. Tal possesses over 22 years of management experience in the Israeli and American high-tech and biotechnology industries. Prior to joining us, Mr. Tal was the chief executive officer and co-founder of Regentis Biomaterials Ltd. Prior to that Mr. Tal served as vice-president of business development at ProChon BioTech Ltd. He has also served as vice president of marketing and business development at OrthoScan Technologies Ltd. and director of business development and business unit manager at Kulicke and Soffa Industries, Inc. Mr. Tal holds a Bachelor's and a Master's degree in mechanical engineering from the Technion, Israel Institute of Technology.

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        Prof. Oded Shoseyov founded our company in 2004 and has served as our chief scientific officer since August 2008 and was a member of our board of directors from May 2010 until October 2016. Prof. Shoseyov is a faculty member of the Hebrew University of Jerusalem. He has extensive experience with plant transformation systems and protein engineering. Prof. Shoseyov has authored or co-authored over 160 scientific publications and is the inventor or co-inventor of 45 patents. Prof. Shoseyov holds a Ph.D. from The Hebrew University of Jerusalem, Israel. Prof. Shoseyov received the Outstanding Scientist Polak Award for 2002, the 1999 and 2010 Kay Awards for Innovative and Applied Research, and The 2012 Israel Prime Minister Citation for Entrepreneurship and Innovation. He is the scientific founder of nine companies, including: Fulcrum Materials Ltd., a nano-biotech company which manufactures SP1-Carbon Nano Tube coated fabrics for the composite industry; CBD-Technologies/FuturaGene, a forestry agro-biotech company that develops and commercializes transgenic trees for the pulp and paper and the bio-fuel industry; Melodea Ltd., a nano-biotech company that develops and manufactures Nano Crystaline Cellulose from sludge for structural foam and fuel for combustion and jet engines as well as explosives; and Valentis Nanotech Ltd., a nanotechnology company that develops and manufactures nano-bio-based transparent films for food packaging and agriculture.

        Eran Rotem has served as our chief financial officer since January 2012. Mr. Rotem possesses 20 years of broad financial and operational experience, primarily with biotechnology and industrial companies. Prior to joining us, Mr. Rotem served as the chief financial officer of Tefron Ltd., an industrial global company traded on both the Tel Aviv Stock Exchange (TASE:TFRN) and on the OTCBB (OTC:TFRFF) in the United States. Before Tefron, Mr. Rotem served as chief financial officer of Healthcare Technologies, Ltd. (NASDAQ:HCTL) and Gamida Ltd., a group of companies that specialize in the development, manufacturing, and marketing of clinical diagnostic test kits, as well as medical equipment and services to the biotechnology and high-tech industries. Prior to joining Healthcare Technologies, Ltd., Mr. Rotem served as a senior manager at Ernst & Young. Mr. Rotem holds a Bachelor's degree in Accounting and Business Administration from the Tel Aviv College of Management and is a Certified Public Accountant.

        Dr. Ilana Belzer has served as our chief operating officer since October 2015. Prior to joining us, Dr. Belzer served as the chief operating officer of BioHarvest, an innovative biotechnology company, from October 2012 to September 2015, and prior to that as vice president of research and development and operations at Procognia Ltd. Prior to that, Dr. Belzer held executive positions in Omrix Biopharmaceuticals Inc., now part of the Johnson & Johnson family of companies, and InterPharm Labratories Ltd., now a subsidiary of Merck-Serono. Dr. Belzer holds an M.Sc., a B.Sc. and a Ph.D in Microbiology and Cell Biology from Tel Aviv University, Israel.

        Dr. Nadav Orr has served as our vice president of research and development since September 2014. Dr. Orr has over 15 years of experience in research and development, including nine years in the development of biosurgery products. Prior joining us, Dr. Orr served as the associate director of research and development at Omrix Biopharmaceuticals Ltd., a subsidiary of Ethicon US LLC, part of the Johnson & Johnson family of companies. As part of his role at Omrix, Dr. Orr led an international team in the development of hemostatic combination products and led base business support for production processes and products. Dr. Orr holds a PhD from the Weizmann Institute of Science, Israel.

        Dr. Philippe Bensimon has served as our vice president of regulatory affairs and quality assurance since February 2011. Dr. Bensimon has 19 years of experience in regulatory affairs, quality assurance and clinical affairs in international medical device companies. Prior to joining us Dr. Bensimon served for 14 years at InterVascular Datascope (now Maquet-Getinge Group), a manufacturer of long-term cardiovascular implants, including as director of regulatory affairs, quality assurance, and clinical affairs. Dr. Bensimon also served for five years at 3M Medical as manager of regulatory affairs. Dr. Bensimon holds a PharmD degree from the University of Pharmacy, Marseille, France.

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        Shomrat Shurtz has served as our senior director of business development since September 2015. Ms. Shurtz has over 20 years of diverse experience in sales, marketing, regulatory, and strategy management. Prior to joining us, Ms. Shurtz served as a senior director at Protalix Biotherapeutics Inc. where she oversaw the company's lead product through its clinical development, approval, and commercialization. Prior to that, Ms. Shurtz held executive positions in BBDO Data Pro-Proximity Worldwide, Bank Hapoalim Switzerland Ltd., and Clal Insurance Enterprises Holdings Ltd. Ms. Shurtz holds an M.Sc. and B.Sc. degree in Biology from Tel Aviv University, Israel.

Non-Employee Director

        Adi Goldin has served on our board of directors since May 2010, and has been acting as interim chairman since May 2016. Mr. Goldin has over 15 years of experience in the life science, industrial, and technology industries in the areas of investments, business strategy, deal structure, and company management. For the last 10 years, Mr. Goldin has served as a vice president at Docor International BV, and has played a key role in investing, managing, and nurturing technology-driven companies and startups in the information technology, industrial, and life science industries. Until 2010, Mr. Goldin was the chief executive officer of Softlib Ltd., an information technology company. Previously, Mr. Goldin was VP of investments and analysis at Inventech Investment Company Ltd. (TASE: IVTC), where he took an active role in building startup companies and was involved in public offerings, M&A, and all aspects of the capital markets. In addition, Mr. Goldin was part of the teaching staff of the Executive MBA program run by Tel Aviv University. Mr. Goldin participated in the International Marketing and Global Consulting Program, a joint project of the University of Pennsylvania's Wharton Business School and Tel Aviv University's Business School. Mr. Goldin is a member of the Israel Bar Association. Mr. Goldin holds Bachelor's and Master's degrees in economics, summa cum laude, and an LL.B. in law from Tel Aviv University, Israel.

        Xiaojin Qian has served on our board of directors since November 2013. Mr. Qian is the managing director of Flon (China) Medical Material Co., Ltd. and a board member of Jiangsu Traumark Holdings Group Co., Ltd. and Trauwin Pte Ltd. Until March 2013, Mr. Qian served as vice president of Trauson Holding Co., Limited, a leading manufacturer of orthopedic products in China. Previously, Mr. Qian was director of public relations, secretary of the board, and secretary to the president of Trauson. Mr. Qian is experienced in maintaining relationships with public and other companies and in carrying out operational management duties. Mr. Qian graduated from Simon Fraser University, Canada, with a Master of Business Administration in 2009.

        Ira Leiderman has served on our board of directors as an independent director since February 2015. Since May, 2016 Mr. Leiderman has been a managing director of the healthcare practice at Cassel Salpeter & Co. Prior to that he was founder and managing partner of Long Trail Advisors LLC, a life sciences advisory firm and M&A boutique. Mr. Leiderman formed Long Trail after his departure from Ladenburg Thalmann in New York City where he was co-head of the healthcare group. Mr. Leiderman joined Ladenburg Thalmann when that firm acquired Punk Ziegel & Company in May 2008. At Punk Ziegel, Mr. Leiderman served as head of healthcare and sat on the firm's management committee. Prior to Punk Ziegel, Mr. Leiderman was at the Palladin Group, an investment management firm where he oversaw investment transactions in public and private life sciences companies. Mr. Leiderman joined Palladin after leading the healthcare practice at Gerard Klauer Mattison (now part of BMO). Mr. Leiderman currently serves on the board of directors of MarginSurgical, Inc. and was chairman of the board of directors of Apthera Inc. Mr. Leiderman also serves on the boards of several not-for-profit organizations.

        Dr. Abraham Havron has served on our board of directors since May 2016. Dr. Havron is a 35-year veteran of the biotechnology industry. Since 2011, Dr. Havron has been serving as an external director at Kamada (NASDAQ: KMDA), where he is a member of the audit and compensation committees, and since 2014, Dr. Havron has been serving on the board of directors of MediWound Ltd.

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(NASDAQ: MDWD) and Enlivex Theraputics Ltd., a private company. From 2005 to 2014, Dr. Havron was the CEO and Director of PROLOR Biotech Inc., prior to its acquisition by OPKO Health Inc. Dr. Havron also served as the Vice President and Chief Technology Officer of Clal Biotechnology Industries Ltd. from 1999 to 2003. From 1987 to 1999, Dr. Havron was the Vice President Manufacturing and Process Development at BioTechnology General Ltd. which is currently a subsidiary of Ferring Pharmaceuticals. In 1980 he joined the founding team of Interpharm Laboratories Ltd. (a subsidiary of Merck Serono S.A.) and was Director of Research and Development until 1987. Dr. Havron earned his Ph.D. in Bio-Organic Chemistry from the Weizmann Institute of Science, and served as a Research Fellow at Harvard Medical School, Department of Radiology.

        Orli Tori Trubovitz has served on our board of directors as an external director since March 2014 and is a member of our audit, compensation, and financial statements committees. Ms. Trubovitz has a strong background in both life sciences and business. Ms. Trubovitz is currently the CEO of Bar Ilan Research and Development Company Ltd. Prior to that she served as General Manager of Neopharm Israel, a diversified company combining activity in pharmaceuticals, medical and scientific devices, diagnostics, and consumer healthcare products and services. Ms. Trubovitz obtained her Master's degree in microbiology, cum laude, and Bachelor's degree in Life Sciences at Tel Aviv University in Tel Aviv, Israel, and has studied economics and management of health systems at Ben Gurion University in Beer Sheva, Israel. Ms. Trubovitz graduated from the Executive Program for senior business managers at Tel Aviv University School of Business.

        Rami Armon has served on our board of directors as an external director since October 2011, and is the chairman of our audit, compensation, and financial statements committees. Mr. Armon is the chief executive officer and founder of Armon Capital Management Ltd., a company that offers services in the area of private equity, investment services, and corporate finance. Previously, Mr. Armon was vice president and chief investment officer of Menora Mivtachim Pension Ltd. Mr. Armon holds a Bachelor's degree from Bar Ilan University, Israel, where he studied investments and securities.

        All of our current board members are also board members of CollPlant Ltd., our wholly owned subsidiary.

Advisory Boards

        We have established a scientific advisory board and a clinical advisory board. The members of our advisory boards are appointed by our chief executive officer after consultation with our board of directors. Once nominated, the members of our advisory boards sign a standard letter of engagement. Most of the members of our advisory boards are not appointed for a specific term and their position may be terminated by either us or the member of the advisory board according to standard notice periods. With the exception of Prof. Hershko, who is our employee, the members of our advisory boards are all paid either daily or hourly fees for their services and are entitled to the reimbursement of their expenses. Furthermore, several of the members of our advisory boards have been granted options due to their strategic role and years of service. The members of our advisory boards are as follows:

Scientific Advisory Board

Prof. Avraham Hershko
Prof. Vicki Rosen
Prof. Abhay Pandit
Arthur Gertzman
Prof. Ofer Levy, MD, MCh (Orth)
Joseph M. Lane, MD

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Clinical Advisory Board

Prof. Ofer Levy, MD, MCh (Orth)
Joseph M. Lane, MD
Scott Rodeo, MD
Thomas Serena, MD
Gabi Agar, MD

Corporate Governance Practices

        Under the Companies Law, companies incorporated under the laws of the State of Israel, whose shares are publicly traded, including companies whose shares are listed on the NASDAQ Stock Market, or NASDAQ, are considered public companies under Israeli law and are required to comply with various corporate governance requirements under Israeli law relating to such matters as external directors, the audit committee, compensation, policy, company's auditors, and an internal auditor. This is the case even if our shares are not listed on the Tel Aviv Stock Exchange. These requirements are in addition to the corporate governance requirements imposed by NASDAQ rules also referred to as the NASDAQ listing requirements, and other applicable provisions of U.S. securities laws to which we will become subject (as a foreign private issuer) upon the closing of this offering and the listing of the ADSs on NASDAQ. Under the NASDAQ listing requirements, a foreign private issuer, such as us, may generally follow its home country rules of corporate governance in lieu of the comparable requirements of NASDAQ, except for certain matters including (among others) the composition and responsibilities of the audit committee and the independence of its members within the meaning of the rules and regulations of the SEC.

        We intend to rely on this "home country practice exemption" with respect to the following NASDAQ rules:

    Quorum requirements.  As permitted under the Companies Law pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders will consist of at least two shareholders present in person, by proxy or by other voting instrument in accordance with the Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, any number of participating shareholders), instead of 331/3% of the issued share capital required under the NASDAQ Listing Rules.

    Distribution of certain reports to shareholders.  As opposed to the NASDAQ Listing Rules, which require listed issuers to make certain reports, such as annual reports, interim reports, and quarterly reports, available to shareholders in one of a number of specific manners, Israeli law does not require that we distribute similar reports (annual reports, interim and immediate reports, and quarterly reports, including our financial statements). As such, the generally accepted business practice in Israel is to distribute such reports to shareholders, through a public regulated distribution website. In addition to making such reports available on a public website, we plan to make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC's proxy solicitation rules. See "Where You Can Find More Information" for a description of our Exchange Act reporting obligations.

    Shareholder approval.  We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporate actions in accordance with NASDAQ Listing Rule 5635. In particular, under this NASDAQ Listing Rule, shareholder approval is generally required for: (i) an acquisition of shares or assets of another company that involves the issuance of 20% or more of the acquirer's shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to

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      a change of control; (iii) adoption or amendment of equity compensation arrangements; and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (or via sales by directors, officers or 5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (a) transactions with directors concerning the terms of their service (including indemnification, exemption, and insurance for their service or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors, and shareholders are all required; (b) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval described below under "Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions"; (c) terms of office and employment or other engagement of our controlling shareholder, if any, or such controlling shareholder's relative, which require the special approval described below under "Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions"; (d) approval of transactions with Company's Chief Executive Officer with respect to his or hers compensation, whether in accordance with the approved compensation policy of the Company or not in accordance with the approved compensation policy of the Company, or transactions with officers of the Company not in accordance with the approved compensation policy; and (e) approval of the compensation policy of the Company for office holders. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies.

        Except as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on NASDAQ, subject to certain exemptions the JOBS Act provides to emerging growth companies. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other NASDAQ listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on NASDAQ, may provide less protection than is accorded to investors under NASDAQ listing requirements applicable to domestic issuers.

Board of Directors

        Under the Companies Law, the overseeing of the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors and specified in their specific employment agreements. Our chief executive officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other officers are appointed by our chief executive officer with the prior review of our board of directors and compensation committee, and are subject to the terms of any applicable employment agreements that we may enter into with them.

        Under our articles of association, our board of directors must consist of at least three and not more than twelve directors, including at least two external directors. Currently our board of directors consists of seven directors, including two external directors. The external directors were nominated by our board of directors and were subject to election at a meeting of our shareholders. Other than external directors, for whom special election requirements apply under the Companies Law, as detailed below, our articles of association provide that directors (other than external directors) are elected annually at the general meeting of our shareholders by a vote of the holders of a majority of the voting power present and voting, in person or by proxy, at that meeting.

        We have three types of directors: independent directors, external directors (who are also independent in nature), and "regular" directors. For purposes of complying with NASDAQ Listing

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Rules, upon the closing of this offering and the listing on the NASDAQ Capital Market our board of directors will be comprised of four independent directors (of which two are external directors).

        Our board of directors has determined that with the exception of Mr. Adi Goldin, and Mr. Xiojan Qian, all of our directors are independent under such rules. The definition of "independent director" under NASDAQ rules and "external director" under the Companies Law overlap to a significant degree such that we would generally expect the two directors serving as external directors to satisfy the requirements to be independent under NASDAQ rules. However, it is possible for a director to qualify as an "external director" under the Companies Law without qualifying as an "independent director" under NASDAQ rules, or vice-versa. The definition of external director under the Companies Law includes a set of statutory criteria that must be satisfied, including criteria whose aim is to ensure that there is no factor that would impair the ability of the external director to exercise independent judgment. The definition of independent director under NASDAQ rules specifies similar, if slightly less stringent, requirements in addition to the requirement that the board of directors consider any factor which would impair the ability of the independent director to exercise independent judgment. In addition, external directors serve for a period of three years pursuant to the requirements of the Companies Law. However, external directors must be elected by a special majority of shareholders while independent directors may be elected by an ordinary majority. See "—External Directors" for a description of the requirements under the Companies Law for a director to serve as an external director. In accordance with the exemption available to foreign private issuers under NASDAQ rules, we do not intend to follow the requirements of NASDAQ rules with regard to the process of nominating directors, and instead, will follow Israeli law and practice, in accordance with which our board of directors (or a committee thereof) is authorized to recommend to our shareholders director nominees for election. See "—Corporate Governance Practices" for more information.

        Under the Companies Law any shareholder holding at least 1% of our outstanding voting power may propose to nominate one or more persons for election as directors at a general meeting by delivering a written notice of such shareholder's intent to make such nomination or nominations to our registered office. Each such notice must set forth all of the details and information as required to be provided by our amended and restated articles of association and the Companies law.

        In addition, our articles of association allow our board of directors to appoint additional director or directors who shall remain in office until the next annual shareholders' meeting, provided that the board of directors must consist not more than 12 directors. In addition, our articles of association allow our board of directors to appoint alternate directors to fill vacancies on our board of directors, for a term of office equal to the remaining period of the term of office of the director(s) whose office(s) have been vacated. According to the Companies Law, external directors are elected for an initial term of three years and may be elected for two additional three-year terms under the circumstances described below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See "—External Directors."

        Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. See "—External Directors" below. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors who are required to have accounting and financial expertise is one.

External Directors

        Under the Companies Law, a public company is required to have at least two directors who qualify as external directors. The Companies Law further provides relief for certain dual-listed companies with no controlling shareholder, such as ourselves, exempting such companies from being required to

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appoint external directors so long as such companies satisfy the requirements of the foreign laws in the listing jurisdiction outside of Israel which apply to companies incorporated in such jurisdiction. We presently have two external directors on our board of directors, but we may elect in the future to rely on such exemption available to dual-listed companies with no controlling shareholder. The appointment of external directors was made by a resolution of the general meeting of our shareholders, and our external directors are Mr. Rami Armon and Ms. Orli Tori Trubovitz.

        The Companies Law provides that external directors must be elected by a majority vote of the shares present and voting at a shareholders' meeting, provided that either:

    such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or

    the total number of shares voted against the election of the external director by non-controlling shareholders and by shareholders who do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) does not exceed 2% of the aggregate voting rights in the company.

        Under the Companies Law, the term "controlling shareholder" means a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or a corresponding body of another corporation or has the right to appoint the more than half of the directors of the company or its general manager. For the purpose of approving transactions with controlling shareholders, a controlling shareholder is deemed to include any shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the company. For purposes of determining the holding percentage stated above, two or more shareholders who have a personal interest in a transaction that is brought for the company's approval are deemed as joint holders.

        Under the Companies Law, the initial term of an external director is three years. Thereafter, an external director may be reelected to serve in that capacity for no more than two additional three-year terms, provided that either (i) his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company's voting rights and is approved at a shareholders' meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company, provided that the nominating shareholder, the external director, and certain of their related parties meet additional independence requirements; (ii) his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders' meeting by the same majority required for the initial election of an external director (as described above); or (iii) the external director has recommended that he or she be nominated for each such additional term and such nomination is approved at a shareholders' meeting by the same majority and under the same criteria required as if he had been recommended by a shareholder.

        The term of office for external directors for companies traded on certain foreign stock exchanges, including the NASDAQ Capital Market, may be further extended, in increments of additional three-year terms (but no more than a total of two additional consecutive three-year terms, unless restricted for only one additional consecutive three-year term under the articles of association). Extension of tenure of external directors beyond the third term is allowed in each case provided that, in addition to reelection in such manner described above, (i) the audit committee and subsequently the board of directors of the company confirm that, in light of the external director's expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional

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period is beneficial to the company, and provided that (ii) the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described above). Prior to the approval of the reelection of the external director at a general shareholders' meeting, the company's shareholders must be informed of the term previously served by him or her and of the reasons why the board of directors and audit committee recommended the extension of his or her term.

        External directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves such dismissal by the same shareholder vote percentage required for their election or by a court, in each case, only under limited circumstances, including ceasing to meet the statutory qualifications for appointment, or violating their duty of loyalty to the company. If an external directorship becomes vacant and there are fewer than two external directors on the board of directors at the time, then the board of directors is required under the Companies Law to call a shareholders' meeting as soon as possible to appoint a replacement external director.

        Each committee of the board of directors that exercises the powers of the board of directors must include at least one external director. The audit committee and the compensation committee must include all external directors then serving on the board of directors and should be comprised of a majority of independent directors, the external directors must be the majority of the members of the compensation committee, and the financial statements committee's chairman (as well as of the audit committee's and of the compensation committee's) must be an external director. See "—Committees of the Board of Directors." Under the Companies Law, external directors of a company and all members of the compensation committee are prohibited from receiving, directly or indirectly, any compensation for their services, other than for their services as external directors pursuant to the Companies Law and the regulations promulgated thereunder. Compensation of an external director is determined prior to his or her appointment and may not be changed during his or her term subject to certain exceptions. Under the regulations pursuant to the Companies Law, certain exemptions and reliefs are granted to companies which securities are traded outside of Israel. We may use those exemptions and reliefs after the registration of the ADSs with the NASDAQ under this offering.

        The Companies Law provides that a person is not qualified to serve as an external director if (i) the person is a relative of a controlling shareholder of the company or (ii) if that person or his or her relative, partner, employer, another person to whom he or she was directly or indirectly subject, or any entity under the person's control, has or had, during the two years preceding the date of appointment as an external director: (a) any affiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative of such person, or with any entity controlled by or under common control with the company; or (b) in the case of a company with no shareholder holding 25% or more of its voting rights, had at the date of appointment as external director, any affiliation or other disqualifying relationship with a person then serving as chairman of the board or chief executive officer, a holder of 5% or more of the issued share capital or voting power in the company, or the most senior financial officer.

        The term "relative" is defined under the Companies Law as a spouse, sibling, parent, grandparent, or descendant; spouse's sibling, parent, or descendant; and the spouse of each of the foregoing persons. Under the Companies Law, the term "affiliation" and the similar types of prohibited relationships include (subject to certain exceptions):

    an employment relationship;

    a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships);

    control; and

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    service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares if such director were appointed as a director of the private company in order to serve as an external director following the initial public offering.

        The term office holder is defined under the Companies Law as the general manager, chief executive officer, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of that person's title, and a director, or a manager directly subordinate to the general manager.

        In general, the external directors must be of Israeli residency (unless the company on which he or she serves, had offered shares (or bonds) to the public outside of Israel or are registered on a stock exchange outside of Israel) and must possess the minimal criteria required for the directorship of a "regular" director. In addition, no person may serve as an external director if that person's position or professional or other activities create, or may create, a conflict of interest with that person's responsibilities as a director or otherwise interfere with that person's ability to serve as an external director or if the person is an employee of the Israel Securities Authority or of an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or she received direct or indirect compensation from the company including amounts paid pursuant to indemnification or exculpation contracts or commitments and insurance coverage for his or her service as an external director, other than as permitted by the Companies Law and the regulations promulgated thereunder.

        For a period of two years from the date that an external director of a company ceases to act in such capacity, the company in which such external director served, and its controlling shareholder or any entity under control of such controlling shareholder may not, directly or indirectly, grant such former external director, or his or her spouse or child, any benefit, including via (i) the appointment of such former director or his or her spouse or his child as an officer in the company or in an entity controlled by the company's controlling shareholder, (ii) the employment of such former external director and (iii) the engagement, directly or indirectly, of such former external director as a provider of professional services for compensation, including via an entity under his or her control. With respect to a relative who is not a spouse or a child, such limitations shall only apply for one year from the date such external director ceased to be engaged in such capacity.

        If, at the time at which an external director is appointed, all members of the board of directors, who are not controlling shareholders or relatives of controlling shareholders of the company are of the same gender, the external director to be appointed must be of the other gender. A director of one company may not be appointed as an external director of another company if a director of the other company is acting as an external director of the first company at such time.

        According to regulations promulgated under the Companies Law, a person may be appointed as an external director only if he or she has professional qualifications or if he or she has accounting and financial expertise (each, as defined below). In addition, at least one of the external directors must be determined by our board of directors to have accounting and financial expertise.

        A director with accounting and financial expertise is a director who, due to his or her education, experience, and skills, possesses an expertise in, and an understanding of, financial and accounting matters and financial statements, such that he or she is able to understand the financial statements of the company and initiate a discussion about the presentation of financial data. A director is deemed to have professional qualifications if he or she has: (i) an academic degree in economics, business management, accounting, law, or public administration; (ii) an academic degree or has completed other higher education, in the primary field of business of the company or a field which is relevant to his or her position in the company; or (iii) at least five years of experience serving in one of the following capacities, or at least five years cumulative experience serving in two or more of the following capacities: (a) a senior business management position in a company with a significant volume of business; (b) a senior position in a company's primary field of business; or (c) a senior position in

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public administration or service. The board of directors is charged with determining whether a director possesses financial and accounting expertise or professional qualifications.

        Our board of directors has determined that Mr. Rami Armon, who serves as an external director, has accounting and financial expertise and possesses professional qualifications as required under the Companies Law.

Role of Board of Directors in Risk Oversight Process

        Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.

Leadership Structure of the Board of Directors

        In accordance with the Companies Law and our articles of association, our board of directors is required to appoint one of its members to serve as chairman of the board of directors. Our board of directors has appointed Mr. Adi Goldin to serve as an interim chairman of the board of directors and we are currently seeking a candidate to serve as chairman of the board of directors.

Committees of the Board of Directors

        Currently, our board of directors has four active committees: audit committee, compensation committee, financial statements committee, and financing committee. The first three committees are mandatory and regulated under the Companies Law provisions.

Audit Committee

        Under the Companies Law, we are required to appoint an audit committee. The audit committee of a public company must be comprised of at least three directors, including all of the external directors, one of whom must serve as chairman of the committee. The audit committee may not include the chairman of the board, any director employed by or otherwise providing services on a regular basis to the company, to a controlling shareholder or to any entity controlled by a controlling shareholder, any director who derives most of his or her income from a controlling shareholder, nor a controlling shareholder or a relative thereof.

        In addition, under the Companies Law, the audit committee of a publicly traded company must consist of a majority of unaffiliated directors. In general, an "unaffiliated director" under the Companies Law is defined as either an external director or as a director who meets the following criteria:

    he or she meets the qualifications for being appointed as an external director and the audit committee has approved that he or she meets such qualifications, except for the requirement (i) that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered (under this offering) outside of Israel to date or are listed outside of Israel) and (ii) for accounting and financial expertise or professional qualifications; and

    he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than two years in the service shall not be deemed to interrupt the continuation of the service.

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        Under the NASDAQ listing requirements, we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and at least one of whom has accounting or related financial management expertise.

        Recent amendments to regulations promulgated under the Companies Law exempt certain dual-listed companies with no controlling shareholder, such as ourselves, from certain Companies Law provisions with respect to the composition of the audit committee, so long as such companies satisfy the requirements of the foreign laws in the listing jurisdiction outside of Israel which apply to companies incorporated in such injurisdiction. Presently, we have an audit committee in place which composition complies with the listing requirements of the Companies Law, although we may elect in the future to rely on such exemption available to dual-listed companies with no controlling shareholder.

        Our audit committee consists of Mr. Rami Armon, Mr. Ira Leiderman and Ms. Orli Tori Trubovitz and is chaired by Mr. Armon. Mr. Armon possesses accounting and financial expertise and is an audit committee financial expert as defined by the Securities and Exchange Commission rules, and all of the members of our audit committee have the requisite financial literacy as defined by the NASDAQ Stock Market rules. Mr. Armon, Ms. Trubovitz and Mr. Leiderman are "independent" as such term is defined in Rule 10A-3(b)(1) under the Exchange Act and under the listing standards of NASDAQ.

        Our board of directors has adopted an audit committee charter to be effective upon the listing of the ADSs on the NASDAQ Capital Market setting forth the responsibilities of the audit committee consistent with the rules of the Securities and Exchange Commission and NASDAQ rules as well as the requirements for such committee under the Companies Law, including the following:

    oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;

    recommending the engagement or termination of the person filling the office of our internal auditor; and

    recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors.

        Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control, and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management.

        Under the Companies Law, our audit committee is mainly responsible for:

    determining whether there are deficiencies in our business management practices, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices;

    determining whether certain acts of an office holder not in accordance with his or her fiduciary duty owed to the Company are extraordinary or material and to approve such acts and certain related party transactions (including transactions in which an office holder has a personal interest) and whether such transaction is extraordinary or material under the Companies Law (see "—Approval of Related Party Transactions Under Israeli Law");

    determining procedures for a competitive process, or other procedures, before approving related party transactions with controlling shareholders, even if such transactions are deemed by the

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      audit committee not to be extraordinary transactions. This process is to be supervised by the audit committee, or any person authorized for such supervision, or via any other method approved by the audit committee;

    determining the approval process for transactions that are not negligible, as well as determine which types of transactions would require the approval of the audit committee. Non-negligible transactions are defined as related party transactions with a controlling shareholder, or in which the controlling shareholder has a personal interest, even if they are deemed by the audit committee not to be extraordinary transactions but which have also been classified by the audit committee as non-negligible transactions;

    where the board of directors approves the work plan of the internal auditor, to examine such work plan before its submission to the board and propose amendments thereto;

    examining our internal controls and internal auditor's performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;

    examining the scope of our auditor's work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and

    establishing procedures for the handling of employees' complaints as to deficiencies in the management of our business and the protection to be provided to such employees.

        Our audit committee may not approve any actions requiring its approval (see "—Approval of Related Party Transactions Under Israeli Law"), unless at the time of approval a majority of the committee's members are present, which majority consists of unaffiliated directors including at least one external director.

Compensation Committee

        Our compensation committee consists of Mr. Rami Armon, Dr. Abraham Havron and Ms. Orli Tori Trubovitz. Mr. Armon is the chairman of the compensation committee. As prescribed by the Companies Law, our compensation committee includes our two external directors, one of whom is the chairperson of the committee. Dr. Abraham Havron is an independent director, as defined in "—Board of Directors."

        Under the Companies Law, the board of directors of a public company must appoint a compensation committee. Subject to certain exceptions compensation committee must be comprised of at least three directors, including all of the external directors, which shall be a majority of the members of the compensation committee and one of whom must serve as chairman of the committee. Our compensation committee includes all of the external directors, who also constitute a majority of the compensation committee.

        Each compensation committee member who is not an external director must be a director whose compensation is equivalent to the compensation that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions as the audit committee as to who may not be a member of the committee. According to the Companies Law, our audit committee may also act as compensation committee.

        Recent amendments to regulations promulgated under the Companies Law exempt certain dual-listed companies with no controlling shareholder, such as ourselves, from the requirements to appoint a compensation committee or of its composition, so long as such companies satisfy the requirements of the foreign laws in the listing jurisdiction outside of Israel which apply to companies incorporated in such jurisdiction. Presently, we have a compensation committee in place which

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composition complies with the requirements of the Companies Law, although we may elect in the future to rely on such exemption available to dual-listed companies with no controlling shareholder.

        The duties of the compensation committee include the recommendation to the company's board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a compensation policy and to examine the necessity of updating the compensation policy. That policy must be adopted by the company's board of directors, after considering the recommendations of the compensation committee, and must be approved by the company's shareholders, which approval requires what we refer to as a Special Majority. A "Special Majority" approval requires shareholder approval by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (i) such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement; or (ii) the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company's aggregate voting rights. Under special circumstances, the board of directors may approve the compensation policy despite the objection of the shareholders on the condition that the compensation committee (or the audit committee acting in lieu of a compensation committee pursuant to the Companies Law) and then the board of directors decide, on the basis of detailed arguments and after discussing again the compensation policy, that approval of the compensation policy, despite the objection of the meeting of shareholders, is for the benefit of the company. Our compensation policy was approved by our shareholders on January 23, 2014 and will be in effect for a period of three years from the date of approval. The compensation policy does not, by nature, grant any rights to our directors or officers. The compensation policy includes both long-term and short-term compensation elements and is to be reviewed from time to time by our compensation committee and our board of directors, according to the requirements of the Companies Law.

        Our compensation policy serves as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment with respect to employment or engagement. According to the Companies Law, the compensation policy must be approved (or reapproved) not longer than every three years and relate to certain factors, including advancement of the company's objectives, the company's business plan and its long-term strategy, and creation of appropriate incentives for office holders. It must also consider, among other things, the company's risk management, size, and nature of its operations. The compensation policy must furthermore consider the following additional factors:

    the knowledge, skills, expertise, and accomplishments of the relevant office holder;

    the office holder's roles and responsibilities and prior compensation agreements with him or her;

    the ratio between the terms offered and the average compensation of the other employees of the company, including those employed through manpower companies;

    the impact of disparities in salary upon work relationships in the company;

    the possibility of reducing variable compensation at the discretion of the board of directors;

    the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and

    as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company's performance during that period of service, the person's contributions towards the company's achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.

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        The compensation policy must also include the following principles:

    the linkage between variable compensation and long-term performance and measurable criteria; however, in certain circumstances, we may grant up to three monthly salaries per year of unmeasurable criteria for an office holder who is not our chief executive officer.

    the ratio between variable and fixed compensation, and the ceiling for the value of variable compensation;

    the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company's financial statements;

    the minimum holding or vesting period for variable, equity-based compensation; and

    maximum limits for severance compensation.