10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to

Commission file number: 001-37769

VBI VACCINES INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada	N/A
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

222 Third Street, Suite 2241 Cambridge, Massachusetts	02142
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 617-830-3031

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [X]
Non-accelerated filer [  ]	Smaller reporting company [X]
	Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, no par value per share	97,661,887
(Class)	Outstanding at May 1, 2019

VBI VACCINES INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED March 31, 2019

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		5
Item 1.	Condensed Consolidated Financial Statements	5
	Condensed Consolidated Balance Sheets - March 31, 2019 (unaudited) and December 31, 2018	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2019 and 2018 (unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II - OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosure	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
Signatures		32

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
CONTAINED IN THIS REPORT

This quarterly report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “will”, “may,” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2018 annual report on the Form 10-K filed with the Securities and Exchange Commission on February 25, 2019. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

● the timing of, and our ability to, obtain and maintain regulatory approvals for our clinical trials, products and pipeline candidates;

● the timing and results of our ongoing and planned clinical trials for products and pipeline candidates;

● the amount of funds we require for our infectious disease and immuno-oncology pipeline candidates;

● the potential benefits of strategic partnership agreements and our ability to enter into strategic partnership arrangements;

● our ability to effectively execute and deliver our plans related to commercialization, marketing and manufacturing capabilities and strategy;

● our ability to license our intellectual property;

● our ability to maintain a good relationship with our employees;

● the suitability and adequacy of our office, manufacturing and research facilities and our ability to secure term extensions or expansions of leased space;

● our ability to manufacture, or to have manufactured, any products we develop to the standards and requirements of regulatory agencies;

● the ability of our vendors to manufacture and deliver materials that meet regulatory agency and our standards and requirements to meet planned timelines and milestones;

● any disruption in the operations of our manufacturing facility where we manufacture all of our clinical and commercial supplies of Sci-B-Vac® and future clinical supplies of VBI-2601;

● the ability to complete the modernization and capacity increase of our manufacturing facility and resume manufacturing in a timely manner;

● our compliance with all laws, rules and regulations applicable to our business and products;

● our ability to continue as a going concern;

● our history of losses;

● our ability to generate revenues and achieve profitability;

● emerging competition and rapidly advancing technology in our industry that may outpace our technology;

● customer demand for our products and pipeline candidates;

● the impact of competitive or alternative products, technologies and pricing;

● general economic conditions and events and the impact they may have on us and our potential customers;

● our ability to obtain adequate financing in the future on reasonable terms, as and when we need it;

● our ability to implement network systems and controls that are effective at preventing cyber-attacks, malware intrusions, malicious viruses and ransomware threats;

● our ability to secure and maintain protection over our intellectual property;

● our ability to maintain our existing licenses or obtain new licenses for intellectual property;

● changes to legal and regulatory processes for biosimilar approval and marketing that could reduce the duration of market exclusivity for our products;

● our success at managing the risks involved in the foregoing items; and

● other factors discussed in this Form 10-Q.

3

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless otherwise stated or the context otherwise requires, the terms “VBI,” “we,” “us,” “our” and the “Company” refer to VBI Vaccines Inc. and its subsidiaries.

Unless indicated otherwise, all references to the U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America and all references to € mean Euros, the legal currency of the European Union. We may also refer to NIS, which is the New Israeli Shekel, the legal currency of Israel, and the Canadian Dollar or CAD, which is the legal currency of Canada.

Except for share and per share amounts or as otherwise specified to be in millions, amounts presented are stated in thousands.

4

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	March 31, 2019			December 31, 2018
	(unaudited)
CURRENT ASSETS
Cash	$	43,308		$	59,270
Accounts receivable, net		117			56
Inventory, net		1,083			911
Prepaid expenses		708			982
Other current assets		580			512
Total current assets		45,796			61,731
NON-CURRENT ASSETS
Other long-term assets		881			835
Property and equipment, net		9,944			8,525
Right of use assets		1,719			-
Intangible assets, net		59,465			58,249
Goodwill		8,438			8,265
Total non-current assets		80,447			75,874
TOTAL ASSETS	$	126,243		$	137,605
CURRENT LIABILITIES
Accounts payable	$	5,654		$	6,055
Other current liabilities		12,552			13,847
Current portion of deferred revenues		2,333			2,375
Current portion of lease liability		795			-
Current portion of long-term debt, net of debt discount – related party		1,659			1,100
Total current liabilities		22,993			23,377
NON-CURRENT LIABILITIES
Lease liability, net of current portion		924			-
Long-term debt, net of debt discount – related party		12,443			12,927
Liabilities for severance pay		429			371
Deferred revenues, net of current portion		2,759			2,797
Total non-current liabilities		16,555			16,095
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS’ EQUITY
Common shares (unlimited authorized; no par value) (2019 - issued and outstanding 97,661,887; 2018 - issued and outstanding 97,343,777)		246,848			246,417
Additional paid-in capital		64,459			63,449
Accumulated other comprehensive loss		(2,431	)		(4,158	)
Accumulated deficit		(222,181	)		(207,575	)
Total stockholders’ equity		86,695			98,133
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	126,243		$	137,605

See accompanying Notes to Condensed Consolidated Financial Statements

5

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended March 31
	2019			2018
Revenues	$	360		$	178
Operating expenses:
Cost of revenue		988			1,413
Research and development		9,227			6,964
General and administrative		3,964			3,425
Total operating expenses		14,179			11,802
Loss from operations		(13,819	)		(11,624	)
Interest expense, net of interest income (including related party – see Note 8)		(480	)		(539	)
Foreign exchange loss		(307	)		(88	)
Loss before income taxes		(14,606	)		(12,251	)
Income tax expense		-			-
NET LOSS	$	(14,606	)	$	(12,251	)
Net loss per share of common shares, basic and diluted	$	(0.15	)	$	(0.19	)
Weighted-average number of common shares outstanding, basic and diluted		97,481,625			64,179,605
Other comprehensive (loss) income - currency translation adjustments		1,727			(1,902	)
COMPREHENSIVE LOSS	$	(12,879	)	$	(14,153	)

See accompanying Notes to Condensed Consolidated Financial Statements

6

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

	Number of Common Shares		Share Capital		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss) - Currency Translation Adjustments			Accumulated Deficit			Total Stockholders’ Equity
BALANCE AS OF DECEMBER 31, 2018		97,343,777	$	246,417	$	63,449	$	(4,158	)	$	(207,575	)	$	98,133
Stock-based compensation		318,110		431		831		-			-			1,262
Warrant modification in connection with debt amendment		-		-		179		-			-			179
Net loss		-		-		-		-			(14,606	)		(14,606	)
Currency translation adjustments		-		-		-		1,727			-			1,727
BALANCE AS OF MARCH 31, 2019		97,661,887	$	246,848	$	64,459	$	(2,431	)	$	(222,181	)	$	86,695
BALANCE AS OF DECEMBER 31, 2017		64,078,781	$	201,806	$	60,891	$	1,065		$	(143,975	)	$	119,787
Stock-based compensation		135,000		88		734		-			-			822
Common shares issued on exercise of stock options		1,946		5		-		-			-			5
Net loss		-		-		-		-			(12,251	)		(12,251	)
Currency translation adjustments		-		-		-		(1,902	)		-			(1,902	)
BALANCE AS OF MARCH 31, 2018		64,215,727	$	201,899	$	61,625	$	(837	)	$	(156,226	)	$	106,461

See accompanying Notes to Condensed Consolidated Financial Statements

7

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	For the Three Months Ended March 31
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(14,606	)	$	(12,251	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		124			149
Stock-based compensation		1,262			822
Amortization of debt discount		255			299
Net change in operating working capital items:
Increase in accounts receivable		(59	)		(27	)
(Increase) decrease in inventory		(143	)		1
Decrease in prepaid expenses		327			54
Increase in other current assets		(84	)		(106	)
Decrease (increase) in other long-term assets		4			(21	)
Decrease in operating right of use assets		245			-
(Decrease) increase in accounts payable		(1,089	)		614
(Decrease) increase in deferred revenues		(284	)		84
Increase in other current liabilities		273			1,804
Payments made on operating lease liabilities		(245	)		-
Net cash flows used in operating activities		(14,020	)		(8,578	)
INVESTING ACTIVITIES
Purchase of property and equipment		(1,896	)		(1,015	)
Net cash flows used in investing activities		(1,896	)		(1,015	)
FINANCING ACTIVITIES
Proceeds from issuance of common shares for cash, upon exercise of stock options		-			5
Net cash flows provided by financing activities		-			5
Effect of exchange rates on cash		(46	)		(12	)
CHANGE IN CASH FOR THE PERIOD		(15,962	)		(9,600	)
CASH, BEGINNING OF PERIOD		59,270			67,694
CASH, END OF PERIOD	$	43,308		$	58,094
Supplementary information:
Interest paid – related party	$	518		$	474
Non-cash investing and financing activities:
Warrant modification in connection with debt amendment		179			-
Capital expenditures included in accounts payable and other current liabilities		958			-

See accompanying Notes to Condensed Consolidated Financial Statements

8

VBI Vaccines Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(in thousands, except share and per share amounts)

1. NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

Corporate Overview

VBI Vaccines Inc. (the “Company” or “VBI”) was incorporated under the laws of British Columbia, Canada on April 9, 1965.

The Company and its wholly-owned subsidiaries, VBI Vaccines (Delaware) Inc., a Delaware corporation (“VBI DE”); VBI DE’s wholly-owned subsidiary, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI US”); Variation Biotechnologies Inc. a Canadian company and the wholly-owned subsidiary of VBI US (“VBI Cda”); SciVac Ltd. an Israeli company (“SciVac”) and SciVac Hong Kong Limited (“SciVac HK”) are collectively referred to as the “Company”, “we”, “us”, “our” or “VBI”.

The Company’s registered office is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 with its principal office located at 222 Third Street, Suite 2241, Cambridge, MA 02142. In addition, the Company has manufacturing facilities located in Rehovot, Israel and research facilities located in Ottawa, Ontario, Canada.

Principal Operations

VBI is a commercial-stage, biopharmaceutical company developing next generation vaccines to address unmet needs in infectious disease and immuno-oncology. We currently manufacture our product, Sci-B-Vac a third generation prophylactic Hepatitis B vaccine for adults, children and newborns, which is approved for use in Israel and 10 other countries. Sci-B-Vac has not yet been approved by the United States Food and Drug Administration (the “FDA”), the European Medicines Agency (the “EMA”) or Health Canada. VBI is currently conducting a global Phase III clinical program to obtain FDA, EMA and Health Canada market approvals for commercial sale of Sci-B-Vac in the United States, Europe, and Canada, respectively. Our wholly-owned subsidiary in Rehovot, Israel, currently manufactures and sells Sci-B-Vac. We are also developing a protein-based immunotherapeutic for treatment of Hepatitis B in collaboration with Brii Biosciences Limited (“Brii Bio”).

We are also developing a pipeline of products that target unmet medical needs in infectious disease and oncology. These programs are developed using VBI’s proprietary technology, the enveloped “Virus Like Particle” or “eVLP” vaccine platform, that allows for the design of enveloped virus-like particle vaccines that closely mimic the target viruses. VBI’s lead eVLP programs are targeting human cytomegalovirus (“CMV”), an infection that can lead to serious complications in; newborns, solid organ transplant recipients, people with weakened immune systems, and is present in glioblastoma (“GBM”), an aggressive form of adult brain cancer.

9

Liquidity and Going Concern

The Company has a limited operating history and faces a number of risks, including but not limited to, uncertainties regarding the success of the development and commercialization of its products, demand and market acceptance of the Company’s products and reliance on major customers. The Company anticipates that it will continue to incur significant operating costs and losses in connection with the development of its products.

The Company has an accumulated deficit of $222,181 as of March 31, 2019 and cash outflows from operating activities of $14,020 for the three months ended March 31, 2019.

The Company will require significant additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch its products. The Company plans to finance future operations with existing cash reserves. Additional financing, if required, will be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings, and revenues from potential collaborations, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Financial instruments recognized in the condensed consolidated balance sheet consist of cash, accounts receivable, other current assets, accounts payable and other current liabilities. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The Company does not hold any derivative financial instruments.

The carrying amounts of the Company’s long-term assets approximate their respective fair values.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2018 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 10-K”), as filed with the SEC on February 25, 2019.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: SciVac, VBI DE, VBI US, VBI Cda and SciVac HK. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2018 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2019, other than accounting for leases discussed below.

Leases

The Company determines if an arrangement is a lease at inception.  For the Company’s operating leases, the right-of-use (“ROU”) assets represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. See also Note 3.

10

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Leases

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. On January 1, 2019, the Company adopted the new lease standard using the optional transition method under which comparative financial information will not be restated and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reasses the lease classifications or reasses the initial direct costs associated with expired or existing leases.

The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components.

On January 1, 2019, the Company recognized ROU assets and lease liabilities of $1,653 on its consolidated balance sheet.

Compensation – Stock Compensation

In June 2018, the FASB issued ASU 2018-07: Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees, and as a result, the accounting for share-based payments to non-employees will be substantially aligned. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, early adoption is permitted but no earlier than an entity’s adoption date of Topic 606. Our adoption of this ASU, effective January 1, 2019, did not have a material impact on our condensed consolidated financial statements and footnote disclosures.

Recently Issued Accounting Standards, not yet Adopted

Intangibles – Goodwill and Other, Internal-Use Software

In August 2018, the FASB issued ASU 2018-15: Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. This ASU can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this new guidance will have on its condensed consolidated financial statements and related disclosures.

11

4. INVENTORY, NET

Inventory is stated at the lower of cost or market and consists of the following:

	March 31, 2019		December 31, 2018
Finished goods	$	60	$	81
Work-in-process		67		64
Raw materials		956		766
	$	1,083	$	911

5. INTANGIBLES AND GOODWILL

			March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(472	)	$	-		$	18		$	215
IPR&D assets		61,500		-			(300	)		(1,950	)		59,250
	$	62,169	$	(472	)	$	(300	)	$	(1,932	)	$	59,465

			December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(457	)	$	-		$	11		$	223
IPR&D assets		61,500		-			(300	)		(3,174	)		58,026
	$	62,169	$	(457	)	$	(300	)	$	(3,163	)	$	58,249

The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives.

Amortization related to the IPR&D assets will not begin amortizing until the Company commercializes its products.

The change in carrying value for IPR&D assets from December 31, 2018 relates to currency translation adjustments which decreased by $1,217 for the three-month period ended March 31, 2019.

The goodwill is in VBI Cda and the change in carrying value from December 31, 2018 relates to currency translation adjustments which decreased goodwill by $173 for the three-month period ended March 31, 2019.

6. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2019		December 31, 2018
Accrued research and development expenses (including clinical trial accrued expenses)	$	10,122	$	9,763
Payroll and employee-related costs		1,179		2,294
Other current liabilities		1,251		1,790
	$	12,552	$	13,847

7. LOSS PER SHARE OF COMMON SHARES

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, and stock options, which would result in the issuance of incremental shares of common shares unless such effect is anti-dilutive. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as their effect would be anti-dilutive. These potentially dilutive securities are more fully described in Note 9, Stockholders’ Equity and Additional Paid-in Capital.

The following potentially dilutive securities outstanding at March 31, 2019 and 2018 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2019		March 31, 2018
Warrants		2,618,824		2,618,824
Stock options and equity awards		7,377,995		3,960,549
		9,996,819		6,579,373

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8. LONG-TERM DEBT – RELATED PARTY

As at March 31, 2019 and the December 31, 2018, the long-term debt is as follows:

	March 31, 2019			December 31, 2018
Long-term debt, net of debt discount of $1,198	$	14,102		$	14,027
Less: current portion, net of debt discount of $141		(1,659	)		(1,100	)
	$	12,443		$	12,927

On May 6, 2016, the Company through VBI US assumed a term loan facility with Perceptive Credit Holdings, LP, a related party, (the “Lender”) in the amount of $6,000 (the “Facility”). On December 6, 2016, the Company amended the Facility (the “Amended Credit Facility”) and raised the Lender’s commitment amount to $13,200, which was combined with the remaining balance from the Facility of $1,800. On July 17, 2018, the Company amended the Amended Credit Facility (the “Second Amendment”) to extend the period the Company is required to pay only the interest on the loan from May 31, 2018 to December 31, 2018 and to extend the expiration date of certain warrants to purchase 363,771 common shares issued to the Lender with an original expiration date of July 25, 2019 to December 6, 2021. The Company accounted for this as a debt modification, and as a result of the extension of the warrant expiration date in connection with the Second Amended Facility, the debt discount was increased by $386. This amount represents the incremental fair value of the modified warrants.

On January 31, 2019, the Company further amended the Amended Credit Facility (the “Third Amendment”) to i) extend the period the Company is required to pay only the interest on the loan from December 31, 2018 to the Amortization Commencement Date (which is defined as the later of July 31, 2019 and, if Sci-B-Vac Phase III clinical trial endpoints are achieved by June 30, 2019, January 31, 2020), ii) extend the maturity of the term loan to June 30, 2020 and iii) reduce the exercise price on certain warrants to purchase common shares issued to the Lender to $2.75 from $4.13 for 363,771 warrants issued on July 25, 2014 and for 363,771 warrants issued on December 6, 2016 and from $3.355 for 1,341,282 warrants issued on December 6, 2016. The Company has accounted for this as a debt modification, and as result of the amendment to the exercise price in connection with the Third Amendment, the debt discount was increased by $179. This amount represents the incremental fair value of the modified warrants.

The total principal amount of the loan under the Amended Credit Facility outstanding at March 31, 2019, including the $300 exit fee discussed below, is $15,300. The principal amount of the loan made under the Amended Credit Facility accrues interest at an annual rate equal to the greater of (a) one-month LIBOR (subject to a 5.00% cap) or (b) 1.00%, plus the Applicable Margin. The Applicable Margin will be 11.00%. The Company was required to only pay interest initially until May 31, 2018, which date was extended to December 31, 2018, pursuant to the Second Amendment and further extended to the Amortization Commencement Date pursuant to the Third Amendment. The interest rate as of March 31, 2019 was 13.50%. Upon the occurrence of an Event of Default (as defined in the Amended Credit Facility), and during the continuance of an event of default, the Applicable Margin, defined above, will be increased by 4.00% per annum. This term loan facility maturity date has been extended from December 6, 2019 to June 30, 2020 and includes both financial and non-financial covenants, including a minimum cash balance requirement. The Company was in compliance with these covenants as of March 31, 2019. Pursuant to the Amended Credit Facility, the Company agreed that the Lender shall designate an individual who would be appointed to the Company’s board of directors (the “Board”). The Lender’s designee was also a portfolio manager of the Company’s largest shareholder. Effective January 2018, the Lender’s designee resigned from our Board.

The Company’s obligations under the Amended Credit Facility are secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries and are guaranteed by the Company and its subsidiaries. The Amended Credit Facility also contains customary events of default.

The total debt discount of $4,018 is being charged to interest expense using the effective interest method over the term of the debt. As of March 31, 2019, and December 31, 2018, the unamortized debt discount is $1,198 and $1,274, respectively.

At March 31, 2019 and December 31, 2018, the fair value of our outstanding debt, which is considered level 3 in the fair value hierarchy, is estimated to be approximately $15,354 and $14,975, respectively.

Interest expense, net of interest income recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019			2018
Interest expense – related party	$	518		$	474
Amortization of debt discount – related party		255			299
Interest income		(293	)		(234	)
Total interest expense, net of interest income	$	480		$	539

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Third Amendment and exit fee
Remaining 2019	$	1,200
2020		14,100
	$	15,300

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9. STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

Stock option plans

The Company’s stock option plans are approved by and administered by the Company’s Board and its Compensation Committee. The Board designates, in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates the number of options, exercise price and vesting period of the new options.

2006 VBI US Stock Option Plan

No further options will be issued under the 2006 VBI US Stock Option Plan (the “2006 Plan”). As at March 31, 2019, there were 1,112,696 options outstanding under the 2006 Plan.

2013 Equity Incentive Plan

No further options will be issued under the 2013 Equity Incentive Plan (the “2013 Plan”). As at March 31, 2019, there were 3,460 options outstanding under the 2013 Plan.

2014 Equity Incentive Plan

No further options will be issued under the 2014 Equity Incentive Plan (the “2014 Plan”). As at March 31, 2019, there were 604,474 options outstanding under the 2014 Plan.

2016 VBI Incentive Plan

The 2016 VBI Equity Incentive Plan (the “2016 Plan”) is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding on a non-diluted basis at the time of any grant under the 2016 Plan. The 10% maximum is inclusive of options granted under all equity incentive plans. The 2016 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights (“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted stock or other such award as may be permitted under the 2016 Plan. As at March 31, 2019, there were 5,277,962 options and 379,403 stock awards outstanding under the 2016 Plan.

The aggregate number of common shares remaining available for issuance for awards under the 2016 Plan total 1,396,061 at March 31, 2019.

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Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2018		3,479,676		$	4.14
Granted		3,570,000		$	1.66
Forfeited		(51,084	)		4.62
Balance outstanding at March 31, 2019		6,998,592		$	2.88
Exercisable at March 31, 2019		2,575,244		$	4.16

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2018		268,570		$	4.13
Granted		330,000		$	1.65
Vested		(219,167	)	$	1.97
Unvested shares outstanding at March 31, 2019		379,403		$	3.22

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2019			2018
Volatility		118.12	%		114.53	%
Risk free interest rate		2.46	%		2.48	%
Expected term in years		5.77			5.77
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.43		$	3.53

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019		2018
Research and development	$	228	$	191
General and administrative		1,017		618
Cost of revenues		17		13
Total stock-based compensation expense	$	1,262	$	822

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10. REVENUES AND DEFERRED REVENUE

Revenue is comprised of the following:

	March 31, 2019		March 31, 2018
Product revenues	$	93	$	164
R&D service revenues		267		14
	$	360	$	178

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2019:

	Total		Remaining 2019		2020 and thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		4,623		2,333		2,290
Total	$	5,092	$	2,333	$	2,759

The following table presents changes in the deferred revenue balance for the year ended December 31, 2018:

Balance at December 31, 2018	$	5,172
Recognition of deferred revenue		(261	)
Currency translation		181
Balance at March 31, 2019	$	5,092
Short Term	$	2,333
Long Term	$	2,759

Collaboration and License Agreement – Brii Bio

On December 4, 2018, we entered into a License Agreement with Brii Bio, whereby:

● the Company and Brii Bio agreed to collaborate on the development of a hepatitis B recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan and Macau (collectively, the “Licensed Territory”), and to conduct a Phase II collaboration clinical trial for the purpose of comparing VBI-2601, which is a recombinant protein-based immunotherapeutic developed by VBI for use in treating chronic hepatitis B, with a novel composition developed jointly with Brii Bio (either being the “Licensed Product”); and

● The Company granted Brii Bio an exclusive royalty-bearing license to perform studies, and regulatory and other activities, as may be required to obtain and maintain marketing approval of the Licensed Product, for the treatment of hepatitis B in the Licensed Territory and to commercialize the Licensed Product for the diagnosis and treatment of chronic hepatitis B in the Licensed Territory

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Pursuant to the Collaboration and License Agreement, the Company is responsible for the R&D services and Brii Bio is responsible for costs relating to the clinical trials for the Licensed Territory.

The initial consideration of the Collaboration and License Agreement consisted of a $11 million non-refundable upfront payment. As part of Collaboration and Licences Agreement, the Company and Brii Bio entered into a stock purchase agreement. Under the terms of the stock purchase agreement, the Company issued to Brii Bio 2,295,082 shares of its common stock valued at $3.6 million (based on the Company’s common stock price on December 4, 2018). The remaining $7.4 million, deemed to be the initial transaction price, was allocated to two performance obligations: i) the VBI-2601 license and ii) R&D services. The R&D services were allocated $4.8 million of the transaction price using an estimated selling price based on a expected cost plus a margin approach and the remaining transaction price of $2.6 million was allocated to the VBI-2601 license using the residual method.

In addition, the Company is also eligible to receive an additional $117.5 million in potential regulatory and sales milestone payments, along with royalties on commercial sales in the licensed territory. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Therefore, no variable consideration was included in the initial transaction price and no such amounts have been recognized to date.

On December 4, 2018, the Company recognized the VBI-2601 license when it was transferred and Brii Bio is able to use and benefit from the license, as it was determined to be distinct. The R&D Services will be satisfied over time as services are rendered using the “cost-to-cost” input method as this method represents the most accurate depiction of the transfer of services based on the types of costs expected to be incurred. As at March 31, 2019, R&D services that remain unsatisfied are $4.4 million.

Upon termination of the License Agreement prior to the end of the term, there is no obligation for refund and any amounts in deferred revenue related to unsatisfied performance obligations will be immediately recognized.

11. INCOME TAXES

The Company operates in U.S., Israel and Canadian tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another.

The Company determines its annual effective tax rate at the end of each interim period based on the year to date period results. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 26.50% in the determination of the estimated annual effective tax rate.

The Company’s effective tax rate on loss before tax for the three months ended March 31, 2019 of 0.00% (0.00% for the three months ended March 31, 2018) differs from the Canadian statutory rate of 26.50% primarily due to recording a valuation allowance on the Canadian deferred tax assets in excess of the remaining Canadian deferred tax liability and the effect of recording a valuation allowance against deferred tax assets in all other jurisdictions.

The Company maintains a valuation allowance on all of its deferred tax assets. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

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On September 13, 2018, two actions were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege among other things, defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April, 2011 and seeking damages in a total amount of NIS 1,879,500,000 (not in thousands) ($517,483). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. The trial of the civil action has been scheduled to begin on September 19, 2019.

Operating leases

The Company has entered into various non-cancelable lease agreements for its office, lab and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on April 30, 2020, with no option to extend. Our manufacturing facility lease agreement expires on January 31, 2022, which includes one five-year option to extend until January 31, 2027. The lease agreement for our research facility in Canada, which comprises of office and laboratory space, expires on December 31, 2019 with the option to extend the term for two periods of three years.

Options to extend are not recognized as part of the lease liabilities or recognized as right to use assets. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Three months ended March 31, 2019
Lease cost:
Operating lease costs	$	280
Other information:
Weighted average remaining lease term		2.21 years
Weighted average discount rate		12	%

Operating lease costs are included in general and administrative (“G&A”) expenses in the statement of operation and comprehensive loss.

Operating cash flow supplemental information as of March 31, 2019:

On January 1, 2019, initial right of use ("ROU") assets of $1,653 was recognized as a non-cash asset addition with the adoption of the new lease standard. During the three months ended March 31, 2019, the Company entered into a new lease agreement and recognized a ROU asset of $222.

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The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963
Effect of discounting		(244	)
Total lease liability	$	1,719
Less: current portion		(795	)
Long term lease liability	$	924

ASC 840 comparative period disclosure

The future annual minimum payments under these leases is as follows:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963

13. SEGMENT INFORMATION

The Company’s Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker. The CEO evaluates the performance of the Company and allocates resources based on the information provided by the Company’s internal management system at a consolidated level. The Company has determined that it has only one operating segment.

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2019		2018
Israel	$	99	$	106
China / Hong Kong		261		30
Europe		-		42
Total	$	360	$	178

There was no revenue attributed to our country of domicile, Canada, for the three months ended March 31, 2019 and 2018.

14. SUBSEQUENT EVENTS

Subsequent to March 31, 2019, the Company granted 300,000 stock options to new directors and employees pursuant to the 2016 Plan. 200,000 stock options vest on a monthly basis over 36 months and 100,000 stock options vest 25% on the first anniversary of the grant date and the remainder will vest on a monthly basis over 36 months thereafter. The options automatically expire 10 years from grant date.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our 2018 10-K as filed with the SEC.

Except for share and per share amounts or as otherwise specified to be in millions, amounts presented are stated in thousands.

Overview

We are a commercial-stage, biopharmaceutical company developing next generation vaccines to address unmet needs in infectious disease and immuno-oncology. Our lead product, Sci-B-Vac, is a prophylactic Hepatitis B vaccine for use in adults, children and newborns, which is approved for use in Israel and 10 other countries. Sci-B-Vac has not yet been approved for use by the FDA, EMA or Health Canada. We are currently conducting a global Phase III clinical program for Sci-B-Vac designed to achieve FDA, EMA, and Health Canada market approvals for commercial sale of Sci-B-Vac in the United States, Europe, and Canada respectively. The program consists of two concurrent Phase III studies - a safety and immunogenicity study (“PROTECT”) and a lot-to-lot consistency study (“CONSTANT”). Top-line data from PROTECT are expected mid-year 2019, and top-line data from CONSTANT are expected around year-end 2019. Our wholly-owned subsidiary in Rehovot, Israel, SciVac, manufactures and sells Sci-B-Vac.

We are also developing VBI-2601, a recombinant, protein-based immunotherapeutic for treatment of Hepatitis B, a disease that affects more that 250 million people worldwide. Chronic Hepatitis B infection can lead to cirrhosis of the liver, hepatocellular cancer, and other liver disease, making it a life-threatening global health problem. VBI-2601 is uniquely formulated to induce broad immunity against Hepatitis B virus, including T-cell immunity which plays an important role in controlling Hepatitis B infection. On December 6, 2018, the Company announced that it had entered into a license and collaboration agreement (the “License Agreement”) with Brii Bio for development of a functional cure for Hepatitis B using VBI-2601.

We are also advancing a pipeline of eVLP programs, developed with our eVLP platform technology that allows for the design of vaccines that closely mimic the target viruses. We have programs in both infectious diseases, with our prophylactic CMV (“VBI-1501”) vaccine candidate, and in immuno-oncology, with our GBM (“VBI-1901”) vaccine immunotherapeutic candidate.

CMV may cause severe infections in newborn children (congenital CMV) and may also cause serious infections in people with weakened immune systems, such as solid organ or bone marrow transplant recipients. In May 2018, we announced positive top-line results from the randomized, placebo-controlled Phase I study of VBI-1501. The final Phase I study results demonstrated that VBI-1501 was safe and well-tolerated at all doses, with and without the adjuvant alum. The highest dose of VBI-1501, 2.0 µg, with alum, elicited CMV-neutralizing antibodies against fibroblast cell infection in 100% of subjects after the third vaccination, up from 81% of subjects after the second vaccination, inducing titers comparable to those observed in patients protected as a result of natural infection. Neutralizing antibodies against epithelial cell infection were also seen in 31% of subjects after the third vaccination of VBI-1501 2.0µg with alum. The data also showed the formulation of the vaccine with alum enhanced antibody titers. The highest dose of VBI-1501 tested, 2.0µg with alum, has approximately 10-fold less antigen content than that used in several other VLP-based vaccines or in past non-VBI CMV vaccine candidates. On December 20, 2018 we announced plans for a Phase II clinical study evaluating VBI-1501 following positive discussions with Health Canada, and anticipate similar discussions with the FDA. The Phase II study is expected to assess the safety and immunogenicity of dosages of VBI-1501 up to 20µg with alum, with an anticipated study start around the end of the year. A toxicology study to support the new dose levels is underway, the results of which are required prior to the start of the clinical study.

Our GBM brain cancer vaccine immunotherapeutic program, VBI-1901, targets CMV in tumor cells. CMV is virus that is associated with a number of solid tumors, including GBM. We initiated dosing in a multi-center Phase I/IIa clinical study evaluating VBI-1901 in patients with recurrent GBM in January 2018. The DSMB has completed reviews of all safety data from our fully-enrolled Part A portion of the Phase I/IIa trial in recurrent GBM subjects, which included 6 subjects in each of 3 different dose cohorts. The DSMB unanimously recommended the continuation of the study without modification and had no safety concerns about any of the 3 dose levels of VBI-1901. The final subject in the high dose cohort was enrolled in mid-December 2018. On April 23, 2019, we announced that, based on safety and immunogenicity, the highest dose tested in Part A of the study, 10mcg, has been selected as the optimal dose level to test in Part B of the study. Initiation of enrollment of the 10 patients in Part B of the study is expected mid-year 2019. We also announced that expanded immunologic data and tumor and clinical responses from all three dose cohorts in Part A of the study will be presented in a poster presentation at the American Society of Clinical Oncology Annual Meeting in early June, 2019.

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We may also seek to in-license clinical-stage vaccines or vaccine-related technologies that we believe complement our product and pipeline portfolio, in addition to technologies that may supplement our therapeutic vaccination efforts in immuno-oncology.

At present, our operations are focused on:

● conducting the Sci-B-Vac Phase III clinical program to support various marketing authorization applications in the United States, Europe and Canada;

● conducting the Phase I/IIa clinical study of our GBM vaccine immunotherapeutic candidate, VBI-1901;

● further developing VBI-1501, our preventative CMV vaccine candidate, into the next phase of development;

● developing VBI-2601, our protein-based immunotherapeutic for treatment of Hepatitis B, in collaboration with Brii Bio;

● modernizing and increasing capacity of our Sci-B-Vac manufacturing facility in Rehovot, Israel;

● increasing sales of Sci-B-Vac in territories where it is currently registered or available on a named-patient basis, and further preparing for commercialization of Sci-B-Vac in additional markets where we may obtain regulatory approval;

● continuing the research and development of our pipeline candidates, including the exploration and development of new pipeline candidates, including a Zika vaccine candidate;

● implementing operational, financial and management information systems and adding human resources support, including additional personnel to support our product development and commercialization activities; and

● maintaining, expanding and protecting our intellectual property portfolio.

● developing our internal systems and processes for regulatory affairs and compliance.

VBI’s revenue generating activities have been the sale of Sci-B-Vac product in markets where it is approved or on a named patient basis where it is not approved, though those markets have generated a limited number of sales to-date, various collaboration agreements, and R&D services generating fees. VBI has incurred significant net losses and negative operating cash flows since inception and expects to continue incurring losses and negative cash flows from operations as we carry out our planned clinical, regulatory, R&D, sales and manufacturing activities with respect to the advancement of our Sci-B-Vac and new pipeline candidates. As of March 31, 2019, VBI had an accumulated deficit of approximately $222 million and stockholders’ equity of approximately $87 million. Our ability to maintain our status as an operating company is dependent upon obtaining adequate cash to finance our clinical development, manufacturing, our administrative overhead and our research and development activities. We plan to finance future operations with existing cash reserves. We expect that we will need to secure additional financing to finance our business plans, if required, which may be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings and revenues from potential collaborations, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

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We have incurred operating losses since inception, have not generated significant product sales revenue and have not achieved profitable operations. We incurred net losses of $15 million for the three months ended March 31, 2019 and we expect to continue to incur substantial losses in future periods. We anticipate that we will continue to incur substantial operating expenses as we continue our clinical studies. These include expenses related to:

● continuing the Phase III clinical program for Sci-B-Vac and the Phase I/IIa clinical study of our GBM vaccine immunotherapeutic candidate;

● continuing the research and development of our pipeline candidates, including further developing VBI-1501, our preventative CMV vaccine candidate, and VBI-2601, our Hepatitis B immunotherapeutic candidate;

● modernizing and increasing capacity of our manufacturing facility at Rehovot, Israel;

● commercializing products and dose forms for which we may obtain regulatory approval, including through the use of sub-contractors;

● maintaining, expanding and protecting our intellectual property portfolio;

● hiring additional clinical, manufacturing, and scientific personnel or contractors; and

● implementing operational, financial and management information systems and adding human resources support, including additional personnel, to support our vaccine development

● developing our internal systems and processes for regulatory affairs and compliance.

In addition, we have incurred and will continue to incur significant expenses as a public company, which subjects us to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the NASDAQ Capital Market and the Canadian securities regulators.

Equity Financing Activities

In 2018, we received aggregate gross proceeds of $42.9 million from an underwritten public offering of an aggregate of 30,665,304 common shares at a price of $1.40 per share. After deducting the underwriting discounts and commissions and offering expenses, net proceeds from the offering were $39.8 million. Net proceeds from the offering will be used to support our vaccine development programs, to continue the advancement of our clinical development and research programs and for other general corporate purposes.

On December 4, 2018, we entered into a License Agreement with Brii Bio, whereby we received a total upfront payment of $11 million to collaborate on the development of a hepatitis B recombinant protein based immunotherapeutic in China, Hong Kong, Taiwan and Macau and to conduct a Phase II collaboration clinical trial. The License Agreement specified an allocation of $7 million of this amount as an equity investment in exchange for 2,295,082 common shares. The License Agreement set forth a price of $3.05 per share which was at a premium to the closing market price of $1.58 on the day of issuance, resulting in actual allocation of the fair value of the 2,295,082 shares being $3.6 million. The remaining $7.4 million of the $11 million consideration received was allocated to the sale of the license and research and development services.

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Amended Credit Facility

In 2016, the Company through VBI US assumed the Facility with the Lender, a related party, in the amount of $6,000. On December 6, 2016, the Company amended the Facility by the Amended Credit Facility and raised the Lender’s commitment amount to $13,200, which was combined with the remaining balance from the Facility of $1,800. On July 17, 2018, the Company amended the Amended Credit Facility by the Second Amendment to extend the period the Company is required to pay only the interest on the loan from May 31, 2018 to December 31, 2018 and to extend the expiration date of certain warrants to purchase 363,771 common shares issued to the Lender with an original issue date of July 25, 2014, from July 25, 2019 to December 6, 2021. The Company accounted for this as a debt modification, and as a result of the extension of the warrant expiration date in connection with the Second Amendment, the debt discount was increased by $386. This amount represents the incremental fair value of the modified warrants. On January 31, 2019 we further amended the Amended Credit Facility by the Third Amendment to i) extend the period we are required to pay only the interest on the loan from December 31, 2018 to the Amortization Commencement Date (which is defined as the later of July 31, 2019 and, if Sci-B-Vac Phase III clinical trial endpoints are achieved by June 30, 2019, January 31, 2020); ii) to extend the maturity date of the term loan from December 31, 2019 to June 30, 2020 and iii) reduce the exercise price on certain warrants to purchase common shares issued to the Lender to $2.75 from $4.13 for 363,771 warrants issued on July 25, 2014 and for 363,771 warrants issued on December 6, 2016 and from $3.355 for 1,341,282 warrants issued on December 6, 2016.

Research and Development (“R&D”) Services

Pursuant to an agreement with the Israel Innovation Authority (formerly the Office of the Chief Scientist of Israel), the Company is required to make services available for the biotechnology industry in Israel. These services include relevant activities for development and manufacturing of therapeutic proteins according to international standards and GMP quality level suitable for toxicological studies in animals and clinical studies (Phase I & II) in humans. Service activities include analytics/bio analytics methods for development and process development of therapeutic proteins starting with a candidate clone through the upstream, purification, formulation and filling processes and manufacturing for Phase I & II clinical trials.

These R&D services are primarily marketed to the Israeli research community in academia and Israeli biotechnology companies in the life sciences lacking the infrastructure or experience in the development and production of therapeutic proteins to the standards and quality required for clinical trials for human use. In the first quarter of 2019, the Company provided services to biotechnology companies including analytical development, upstream development process, protein purification and formulation and filling for Phase I clinical studies.

In addition, pursuant to the License Agreement with Brii Bio we provide R&D services to Brii Bio as part of the development of VBI-2601.

Modernization and Capacity Increases of Our Manufacturing Facility

In 2018, we temporarily closed our manufacturing facility in Rehovot, Israel, for modernization and capacity increase. We intend to increase the capacity of our manufacturing facility to be able to supply commercial quantities of Sci-B-Vac upon FDA, and/or EMA and/or Health Canada approval and future clinical supplies of VBI-2601. The construction related to the modernization and the capacity increase is substantially complete. We anticipate receipt of approval from the Israeli Ministry of Healh (“IMoH”) following its review of the modernization and the capacity increase, in the second half of 2019.

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Financial Overview

Overall Performance

The Company had net losses of approximately $14,606 and $12,251 for the three months ended March 31, 2019 and 2018, respectively. The Company has an accumulated deficit of $222,181 at March 31, 2019. The Company had $43,308 of cash at March 31, 2019 and net working capital of approximately $23,598.

Cost of revenues

Cost of revenues consist primarily of costs incurred for manufacturing the Sci-B-Vac vaccine, which includes cost of materials, consumables, supplies, contractors and manufacturing salaries. Certain cost of revenues related to the temporary closure of the manufacturing facility of approximately $348 was allocated to G&A expenses.

Research and Development Expenses

R&D expenses consist primarily of costs incurred for the development of Sci-B-Vac, our CMV candidate, GBM vaccine immunotherapeutic candidate, and VBI-2601, which include:

● the cost of acquiring, developing and manufacturing clinical study materials and other consumables and lab supplies used in our pre-clinical studies;

● expenses incurred under agreements with contractors or Contract Manufacturing Organizations or Contract Research Organizations to advance the vaccines into and through completion of clinical studies; and

● employee-related expenses, including salaries, benefits, travel and stock-based compensation expense.

We expense R&D costs when we incur them.

General and Administrative Expenses

G&A expenses consist principally of salaries and related costs for executive and other administrative personnel and consultants, including stock-based compensation and travel expenses. Other general and administrative expenses include professional fees for legal, patent protection, consulting and accounting services, travel and conference fees, including board and scientific advisory board meeting costs, rent, maintenance of facilities, depreciation, office supplies, information technology costs and expenses, insurance and other general expenses. G&A expenses are expensed when incurred.

We expect that our general and administrative expenses will increase in the future as a result of adding employees and scaling our operations commensurate with advancing clinical candidates, commercializing products and continuing to support a public company infrastructure. These increases will likely include increased costs for insurance, hiring of additional personnel, board committees, outside consultants, investor relations, lawyers and accountants, among other expenses.

Interest Income

Interest income consists principally of interest income earned on cash balances.

Interest Expense

Interest expense is associated with our Amended Credit Facility as discussed in Note 8 of the Notes to the Condensed Consolidated Financial Statements.

24

Results of Operations

Three Months Ended March 31, 2019 Compared to the Three Months Ended March 31, 2018

All dollar amounts stated below are in thousands, unless otherwise indicated.

	Three months ending March 31
	2019			2018			Change $			Change %
Revenues	$	360		$	178		$	182			102	%
Expenses:
Cost of revenue		988			1,413			(425	)		(30	)%
Research and development		9,227			6,964			2,263			32	%
General and administrative		3,964			3,425			539			16	%
Total operating expenses		14,179			11,802			2,377			20	%
Loss from operations		(13,819	)		(11,624	)		(2,195	)		19	%
Interest expense, net		(480	)		(539	)		59			(11	)%
Foreign exchange loss		(307	)		(88	)		(219	)		249	%
Loss before income taxes		(14,606	)		(12,251	)		(2,355	)		19	%
Income tax expense		-			-			-			0	%
NET LOSS	$	(14,606	)	$	(12,251	)	$	(2,355	)		19	%

Revenues

Revenue for the three months ended March 31, 2019 was $360 as compared to $178 for the three months ended March 31, 2018. Revenue increased by $182 or 102% due to R&D services revenues earned pursuant to the License Agreement with Brii Bio offset by a decrease in product revenue due to decreased sales of Sci-B-Vac product on a named patient basis during the three months ended March 31, 2019, compared to the three months ended March 31, 2018.

Revenues by Geographic Region

	Three months ending March 31
	2019		2018		$ Change			% Change
Revenues in Israel	$	99	$	106	$	(7	)		(7	)%
Revenues in China / Hong Kong		261		30		231			770	%
Revenues in Europe		-		42		(42	)		(100	)%
Total Revenues	$	360	$	178	$	182			102	%

Cost of Revenue

Cost of revenue for the three months ended March 31, 2019 was $988 as compared to $1,413 for the three months ended March 31, 2018. The decrease in the cost of revenues of $425, or 30%, was due to the temporary manufacturing facility closure resulting in the allocation of certain cost of revenue of $348 to general and administrative expenses.

Research and Development Expenses

R&D expenses for the three months ended March 31, 2019 were $9,227 as compared to $6,964 for the three months ended March 31, 2018. The increase in R&D expenses of $2,263 or 32%, is a result of the increase in the costs related to the ongoing clinical studies of Sci-B-Vac, which commenced patient dosing in December 2017, and our GBM vaccine immunotherapeutic candidate, which commenced patient dosing in January 2018. This is compared to the three months ended March 31, 2018 during which both the Sci-B-Vac and GBM studies had just commenced.

General and Administrative Expenses

G&A expenses for the three months ended March 31, 2019 were $3,964 as compared to $3,425 for the three months ended March 31, 2018. The G&A expense increase of $539, or 16%, is a result of increased human resource expenses, including stock-based compensation expenses, and the allocation of certain cost of revenues of $348 related to the temporary facility closure, to G&A expenses, as discussed above under “Cost of Revenues.”

25

Net Loss from Operations

The net loss from operations for the three months ended March 31, 2019 was $13,819 as compared to $11,624 for the three months ended March 31, 2018. The $2,195 increase in the net loss from operations resulted from the increased R&D expenses, discussed above.

Interest Expense, net

The interest expense, net of interest income decreased by $59 for the three months ended March 31, 2019 largely resulting from an increase in interest income for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 due to higher interest rates.

Foreign Exchange Loss

The foreign exchange loss of $307 for the three months ended March 31, 2019 and the foreign exchange loss of $88 for the three months period ended March 31, 2018 are a result of the changes in the foreign currency exchange rates (NIS and CAD) in which the foreign currency transactions were denominated for each of those periods.

Net Loss

Net loss of $14,606 for the three months ended March 31, 2019 compared to $12,251 for the three months ended March 31, 2018 is a result of the items discussed above.

Liquidity and Capital Resources

	March 31, 2019			December 31, 2018			$ Change			% Change
Cash	$	43,308		$	59,270		$	(15,962	)		(27	)%
Current Assets		45,796			61,731			(15,935	)		(26	)%
Current Liabilities		22,993			23,377			(384	)		(2	)%
Working Capital		22,803			38,354			(15,551	)		(41	)%
Accumulated Deficit		(222,181	)		(207,575	)		(14,606	)		7	%

As at March 31, 2019, we had cash of $43,308 as compared to $59,270 as at December 31, 2018. As at March 31, 2019, the Company had working capital of $22,803 as compared to working capital of $38,354 at December 31, 2018. Working capital is calculated by subtracting current liabilities from current assets.

The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2018 contains an explanatory paragraph regarding our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern; however, the above conditions raise substantial doubt about our ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. Our long-term success and ability to continue as a going concern is dependent upon obtaining sufficient capital to fund the research and development of our products, to bring about their successful commercial release, to generate revenue and, ultimately, to attain profitable operations or, alternatively, to advance our products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

26

We will require additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch our products, and will need to secure additional financing in the future to support our operations. We base this belief on assumptions that are subject to change, and we may be required to use our available cash resources sooner than we currently expect. Our actual future capital requirements will depend on many factors, including the progress and results of our ongoing clinical trials, the duration and cost of discovery and preclinical development, laboratory testing and clinical trials for our pipeline candidates, the timing and outcome of regulatory review of our products, the modernization and capacity increases of our manufacturing facility in Rehovot, Israel, product sales outside of Israel, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the number and development requirements of other pipeline candidates that we pursue and the costs of commercialization activities, including product marketing, sales and distribution.

We expect to finance our future cash needs through public or private equity offerings, debt financings or structured asset financings, or corporate collaboration and licensing arrangements. Although we are pursuing different opportunities, other than as disclosed in this report, we currently do not have any signed commitments for future external funding. We may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate. We may also decide to raise additional funds even before we need them if the conditions for raising capital are favorable. Additional equity or debt or structured asset financing, grants or corporate collaboration and licensing arrangements may not be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our R&D programs, reduce our planned commercialization efforts or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain pipeline candidates that we might otherwise seek to develop or commercialize independently.

To the extent we raise additional capital by issuing equity securities or obtaining borrowings convertible into equity, ownership dilution to existing stockholders will result and future investors may be granted rights superior to those of existing stockholders. The incurrence of indebtedness or debt financing would result in increased fixed obligations and could also result in covenants that would restrict our operations. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control. The unstable economic environment in Europe, and disruptions in the United States and global financial markets may adversely impact the availability and cost of credit, as well as our ability to raise money in the capital markets. Current economic conditions have been, and continue to be volatile. Continued instability in these market conditions may limit our ability to access the capital necessary to fund and grow our business.

On December 4, 2018, we entered into a License Agreement with Brii Bio, whereby we received a total upfront payment of $11 million to collaborate on the development of a hepatitis B recombinant protein based immunotherapeutic in China, Hong Kong, Taiwan and Macau and to conduct a Phase II collaboration clinical trial. The License Agreement specified an allocation of $7 million of this amount as an equity investment in exchange for 2,295,082 common shares. The License Agreement set forth a price of $3.05 per share which was at a premium to the closing market price of $1.58 on the day of issuance, resulting in actual allocation of the fair value of the 2,295,082 shares being $3.6 million. The remaining $7.4 million of the $11 million consideration received was allocated to the sale of the license and research and development services.

On December 17, 2018, we closed an underwritten public offering of an aggregate of 30,665,304 common shares at a price of $1.40 per share for total gross proceeds of $42,932. The Company incurred $3,152 of issuance costs related to the offering resulting in net cash proceeds of $39,780.

Net cash used by Operating Activities

The Company incurred net losses of $14,606 and $12,251 in the three months ended March 31, 2019 and 2018, respectively. The Company used $14,020 and $8,578 in cash for operating activities during the three months ended March 31, 2019 and 2018, respectively. The increase in cash outflows is largely as a result of increased net losses related to the increased R&D expenses from our ongoing clinical studies of Sci-B-Vac, which commenced patient dosing in December 2017 and our GBM vaccine immunotherapeutic candidate, which commenced patient dosing in January 2018.

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Net cash used by Investing Activities

Cash flows used in investing activities increased from $1,015 for the three months ended March 31, 2018 to $1,896 for the three months ended March 31, 2019. The increase was largely related to the purchase of additional property and equipment in SciVac. As part of modernization and capacity increases of our manufacturing facility, we were, and are continued to be, required to pay for additional manufacturing equipment and information technology equipment, which we expect to be between $800 and $1,000.

Net cash received from Financing Activities

Cash flows related to financing activities were not significant in three months ended March 31, 2019 and 2018.

The Company’s long-term success and ability to continue as a going concern is dependent upon obtaining sufficient capital to fund the research and development of its products, to bring about their successful commercial release, to generate revenue and, ultimately, to attain profitable operations or, alternatively, to advance its products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

To date, the Company has been able to obtain financing as and when it was needed; however, there is no assurance that financing will be available in the future, or if it is, that it will be available at acceptable terms.

Off-Balance Sheet Arrangements

As of March 31, 2019, the Company has no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies during the three months ended March 31, 2019. Critical accounting policies and the significant accounting estimates made in accordance with such policies are regularly discussed with the Audit Committee of the Company’s board of directors. Those policies are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” included in Item 7, as well as in our consolidated financial statements and the footnotes thereto, included in our 2018 10-K.

Trends, Events and Uncertainties

As with other companies that are in the process of commercializing novel vaccines, we will need to successfully manage normal business and scientific risks. Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, other than as discussed in this report, we have no committed source of financing and may not be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

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Other than as discussed above and elsewhere in this Form 10-Q, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Recent Accounting Pronouncements

See Note 3 of Notes to the Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer and Head of Business Development (our principal financial and accounting officer), the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer and Head of Business Development have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer and Head of Business Development, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two actions were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege among other things, defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April, 2011 and seeking damages in a total amount of NIS 1,879,500,000 (not in thousands) ($517,483). The second claim is a civil action brought by two minors and their parents against SciVac and the IMOH alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. The trial of the civil action has been scheduled to begin on September 19, 2019.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) Sales of Unregistered Securities

There have been no unregistered sales of securities during the period covered by this Form 10-Q that have not been previously reported in a current report on Form 8-K. The Company has not made any purchases of its own securities during the time period covered by this Form 10-Q.

c) Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index following the signature page to this Form 10-Q for a list of exhibits filed or furnished with this Form 10-Q, which Exhibit Index is incorporated herein by reference.

30

EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment to Sublease Lease, dated January 15, 2019, by and between Green Power YE and SciVac Ltd. (incorporated by reference to Exhibit 10.64 to the annual report on Form 10-K (SEC File No. 001-37769) filed with the SEC on February 25, 2019).
10.2+	Amendment to Consulting Agreement with F. Diaz-Mitoma Professional Corporation, effective January 1, 2019 (incorporated by reference to Exhibit 10.65 to the annual report on Form 10-K (SEC File No. 001-37769) filed with the SEC on February 25, 2019).
10.3	Waiver Agreement, dated February 14, 2019, by and among Variation Biotechnologies (US), Inc., the Guarantors party thereto, and Perceptive Credit Holdings, LP (incorporated by reference to Exhibit 10.66 to the annual report on Form 10-K (SEC File No. 001-37769) filed with the SEC on February 25, 2019).
10.4	Amendment No. 2 to Amended and Restated Credit Agreement and Guaranty and Amendment to Warrant dated, July 17, 2018, by and among Variation Biotechnologies (US), Inc., the guarantors party thereto and Perceptive Credit Holdings, LP (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K (SEC File No. 001-37769), filed with the SEC on July 19, 2018)
10.5	Amendment No. 3 to Amended and Restated Credit Agreement and Guaranty and Amendment to Warrant, dated January 31, 2019, by and among Variation Biotechnologies (US), Inc., the Guarantors party thereto, and Perceptive Credit Holdings, LP (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K (SEC File No. 001-37769) filed with the SEC on February 5, 2019)
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2*	Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2**	Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

** Furnished herewith.

+ Indicates a management contract or compensatory plan.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 1, 2019	VBI VACCINES INC.
	By:	/s/ Jeffrey Baxter
		Jeffrey Baxter President & Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Christopher McNulty
		Christopher McNulty
		Chief Financial Officer and Head of Business Development (Principal Financial and Accounting Officer)

32

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey Baxter, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2019

/s/ Jeffrey Baxter

Jeffrey Baxter

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Christopher McNulty, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2019

/s/ Christopher McNulty

Christopher McNulty

Chief Financial Officer and Head of Business Development

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 as filed with the Securities and Exchange Commission (the “Report”), I, Jeffrey Baxter, Chief Executive Officer (Principal Executive Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 1, 2019

/s/ Jeffrey Baxter

Jeffrey Baxter

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 as filed with the Securities and Exchange Commission (the “Report”), I, Christopher McNulty, Chief Financial Officer and Head of Business Development (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 1, 2019

/s/ Christopher McNulty

Christopher McNulty

Chief Financial Officer and Head of Business Development

(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 01, 2019
Document And Entity Information
Entity Registrant Name	VBI Vaccines Inc/BC
Entity Central Index Key	0000764195
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		97,661,887
Trading Symbol	VBIV
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 43,308	$ 59,270
Accounts receivable, net	117	56
Inventory, net	1,083	911
Prepaid expenses	708	982
Other current assets	580	512
Total current assets	45,796	61,731
NON-CURRENT ASSETS
Other long-term assets	881	835
Property and equipment, net	9,944	8,525
Right of use assets	1,719
Intangible assets, net	59,465	58,249
Goodwill	8,438	8,265
Total non-current assets	80,447	75,874
TOTAL ASSETS	126,243	137,605
CURRENT LIABILITIES
Accounts payable	5,654	6,055
Other current liabilities	12,552	13,847
Current portion of deferred revenues	2,333	2,375
Current portion of lease liability	795
Current portion of long-term debt, net of debt discount - related party	1,659	1,100
Total current liabilities	22,993	23,377
NON-CURRENT LIABILITIES
Lease liability, net of current portion	924
Long-term debt, net of debt discount - related party	12,443	12,927
Liabilities for severance pay	429	371
Deferred revenues, net of current portion	2,759	2,797
Total non-current liabilities	16,555	16,095
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS' EQUITY
Common shares (unlimited authorized; no par value) (2019 - issued and outstanding 97,661,887; 2018 - issued and outstanding 97,343,777)	246,848	246,417
Additional paid-in capital	64,459	63,449
Accumulated other comprehensive loss	(2,431)	(4,158)
Accumulated deficit	(222,181)	(207,575)
Total stockholders' equity	86,695	98,133
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 126,243	$ 137,605

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, authorized unlimited	Unlimited	Unlimited
Common stock, no par value
Common stock, shares issued	97,661,887	97,343,777
Common stock, shares outstanding	97,661,887	97,343,777

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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Revenues	$ 360	$ 178
Operating expenses:
Cost of revenue	988	1,413
Research and development	9,227	6,964
General and administrative	3,964	3,425
Total operating expenses	14,179	11,802
Loss from operations	(13,819)	(11,624)
Interest expense, net of interest income (including related party - see Note 8)	(480)	(539)
Foreign exchange loss	(307)	(88)
Loss before income taxes	(14,606)	(12,251)
Income tax expense
NET LOSS	$ (14,606)	$ (12,251)
Net loss per share of common shares, basic and diluted	$ (0.15)	$ (0.19)
Weighted-average number of common shares outstanding, basic and diluted	97,481,625	64,179,605
Other comprehensive (loss) income - currency translation adjustments	$ 1,727	$ (1,902)
COMPREHENSIVE LOSS	$ (12,879)	$ (14,153)

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) - Currency Translation Adjustments [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 201,806	$ 60,891	$ 1,065	$ (143,975)	$ 119,787
Balance, shares at Dec. 31, 2017	64,078,781
Stock-based compensation	$ 88	734			822
Stock-based compensation, shares	135,000
Warrant modification in connection with debt amendment
Common shares issued on exercise of stock options	$ 5				5
Common shares issued on exercise of stock options, shares	1,946
Net loss				(12,251)	(12,251)
Currency translation adjustments			(1,902)		(1,902)
Balance at Mar. 31, 2018	$ 201,899	61,625	(837)	(156,226)	106,461
Balance, Shares at Mar. 31, 2018	64,215,727
Balance at Dec. 31, 2018	$ 246,417	63,449	(4,158)	(207,575)	98,133
Balance, shares at Dec. 31, 2018	97,343,777
Stock-based compensation	$ 431	831			1,262
Stock-based compensation, shares	318,110
Warrant modification in connection with debt amendment		179			179
Net loss				(14,606)	(14,606)
Currency translation adjustments			1,727		1,727
Balance at Mar. 31, 2019	$ 246,848	$ 64,459	$ (2,431)	$ (222,181)	$ 86,695
Balance, Shares at Mar. 31, 2019	97,661,887

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (14,606)	$ (12,251)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	124	149
Stock-based compensation	1,262	822
Amortization of debt discount	255	299
Net change in operating working capital items:
Increase in accounts receivable	(59)	(27)
(Increase) decrease in inventory	(143)	1
Decrease in prepaid expenses	327	54
Increase in other current assets	(84)	(106)
Decrease (increase) in other long-term assets	4	(21)
Decrease in operating right of use assets	245
(Decrease) increase in accounts payable	(1,089)	614
(Decrease) increase in deferred revenues	(284)	84
Increase in other current liabilities	273	1,804
Payments made on operating lease liabilities	(245)
Net cash flows used in operating activities	(14,020)	(8,578)
INVESTING ACTIVITIES
Purchase of property and equipment	(1,896)	(1,015)
Net cash flows used in investing activities	(1,896)	(1,015)
FINANCING ACTIVITIES
Proceeds from issuance of common shares for cash, upon exercise of stock options		5
Net cash flows provided by financing activities		5
Effect of exchange rates on cash	(46)	(12)
CHANGE IN CASH FOR THE PERIOD	(15,962)	(9,600)
CASH, BEGINNING OF PERIOD	59,270	67,694
CASH, END OF PERIOD	43,308	58,094
Supplementary information:
Interest paid - related party	518	474
Non-cash investing and financing activities:
Warrant modification in connection with debt amendment	179
Capital expenditures included in accounts payable and other current liabilities	$ 958

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Nature of Business and Continuation of Business

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business and Continuation of Business

1. NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

Corporate Overview

VBI Vaccines Inc. (the “Company” or “VBI”) was incorporated under the laws of British Columbia, Canada on April 9, 1965.

The Company and its wholly-owned subsidiaries, VBI Vaccines (Delaware) Inc., a Delaware corporation (“VBI DE”); VBI DE’s wholly-owned subsidiary, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI US”); Variation Biotechnologies Inc. a Canadian company and the wholly-owned subsidiary of VBI US (“VBI Cda”); SciVac Ltd. an Israeli company (“SciVac”) and SciVac Hong Kong Limited (“SciVac HK”) are collectively referred to as the “Company”, “we”, “us”, “our” or “VBI”.

The Company’s registered office is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 with its principal office located at 222 Third Street, Suite 2241, Cambridge, MA 02142. In addition, the Company has manufacturing facilities located in Rehovot, Israel and research facilities located in Ottawa, Ontario, Canada.

Principal Operations

VBI is a commercial-stage, biopharmaceutical company developing next generation vaccines to address unmet needs in infectious disease and immuno-oncology. We currently manufacture our product, Sci-B-Vac a third generation prophylactic Hepatitis B vaccine for adults, children and newborns, which is approved for use in Israel and 10 other countries. Sci-B-Vac has not yet been approved by the United States Food and Drug Administration (the “FDA”), the European Medicines Agency (the “EMA”) or Health Canada. VBI is currently conducting a global Phase III clinical program to obtain FDA, EMA and Health Canada market approvals for commercial sale of Sci-B-Vac in the United States, Europe, and Canada, respectively. Our wholly-owned subsidiary in Rehovot, Israel, currently manufactures and sells Sci-B-Vac. We are also developing a protein-based immunotherapeutic for treatment of Hepatitis B in collaboration with Brii Biosciences Limited (“Brii Bio”).

We are also developing a pipeline of products that target unmet medical needs in infectious disease and oncology. These programs are developed using VBI’s proprietary technology, the enveloped “Virus Like Particle” or “eVLP” vaccine platform, that allows for the design of enveloped virus-like particle vaccines that closely mimic the target viruses. VBI’s lead eVLP programs are targeting human cytomegalovirus (“CMV”), an infection that can lead to serious complications in; newborns, solid organ transplant recipients, people with weakened immune systems, and is present in glioblastoma (“GBM”), an aggressive form of adult brain cancer.

Liquidity and Going Concern

The Company has a limited operating history and faces a number of risks, including but not limited to, uncertainties regarding the success of the development and commercialization of its products, demand and market acceptance of the Company’s products and reliance on major customers. The Company anticipates that it will continue to incur significant operating costs and losses in connection with the development of its products.

The Company has an accumulated deficit of $222,181 as of March 31, 2019 and cash outflows from operating activities of $14,020 for the three months ended March 31, 2019.

The Company will require significant additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch its products. The Company plans to finance future operations with existing cash reserves. Additional financing, if required, will be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings, and revenues from potential collaborations, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Financial instruments recognized in the condensed consolidated balance sheet consist of cash, accounts receivable, other current assets, accounts payable and other current liabilities. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The Company does not hold any derivative financial instruments.

The carrying amounts of the Company’s long-term assets approximate their respective fair values.

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2018 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 10-K”), as filed with the SEC on February 25, 2019.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: SciVac, VBI DE, VBI US, VBI Cda and SciVac HK. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2018 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2019, other than accounting for leases discussed below.

Leases

The Company determines if an arrangement is a lease at inception.  For the Company’s operating leases, the right-of-use (“ROU”) assets represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. See also Note 3.

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Accounting Changes and Error Corrections [Abstract]

New Accounting Pronouncements

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Leases

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. On January 1, 2019, the Company adopted the new lease standard using the optional transition method under which comparative financial information will not be restated and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reasses the lease classifications or reasses the initial direct costs associated with expired or existing leases.

The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components.

On January 1, 2019, the Company recognized ROU assets and lease liabilities of $1,653 on its consolidated balance sheet.

Compensation – Stock Compensation

In June 2018, the FASB issued ASU 2018-07: Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees, and as a result, the accounting for share-based payments to non-employees will be substantially aligned. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, early adoption is permitted but no earlier than an entity’s adoption date of Topic 606. Our adoption of this ASU, effective January 1, 2019, did not have a material impact on our condensed consolidated financial statements and footnote disclosures.

Recently Issued Accounting Standards, not yet Adopted

Intangibles – Goodwill and Other, Internal-Use Software

In August 2018, the FASB issued ASU 2018-15: Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. This ASU can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this new guidance will have on its condensed consolidated financial statements and related disclosures.

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Inventory, Net

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventory, Net

4. INVENTORY, NET

Inventory is stated at the lower of cost or market and consists of the following:

	March 31, 2019		December 31, 2018
Finished goods	$	60	$	81
Work-in-process		67		64
Raw materials		956		766
	$	1,083	$	911

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Intangibles and Goodwill

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles and Goodwill

5. INTANGIBLES AND GOODWILL

			March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(472	)	$	-		$	18		$	215
IPR&D assets		61,500		-			(300	)		(1,950	)		59,250
	$	62,169	$	(472	)	$	(300	)	$	(1,932	)	$	59,465

			December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(457	)	$	-		$	11		$	223
IPR&D assets		61,500		-			(300	)		(3,174	)		58,026
	$	62,169	$	(457	)	$	(300	)	$	(3,163	)	$	58,249

The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives.

Amortization related to the IPR&D assets will not begin amortizing until the Company commercializes its products.

The change in carrying value for IPR&D assets from December 31, 2018 relates to currency translation adjustments which decreased by $1,217 for the three-month period ended March 31, 2019.

The goodwill is in VBI Cda and the change in carrying value from December 31, 2018 relates to currency translation adjustments which decreased goodwill by $173 for the three-month period ended March 31, 2019.

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Other Current Liabilities

3 Months Ended

Mar. 31, 2019

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

6. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2019		December 31, 2018
Accrued research and development expenses (including clinical trial accrued expenses)	$	10,122	$	9,763
Payroll and employee-related costs		1,179		2,294
Other current liabilities		1,251		1,790
	$	12,552	$	13,847

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Loss Per Share of Common Shares

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Loss Per Share of Common Shares

7. LOSS PER SHARE OF COMMON SHARES

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, and stock options, which would result in the issuance of incremental shares of common shares unless such effect is anti-dilutive. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as their effect would be anti-dilutive. These potentially dilutive securities are more fully described in Note 9, Stockholders’ Equity and Additional Paid-in Capital.

The following potentially dilutive securities outstanding at March 31, 2019 and 2018 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2019		March 31, 2018
Warrants		2,618,824		2,618,824
Stock options and equity awards		7,377,995		3,960,549
		9,996,819		6,579,373

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Long-Term Debt - Related Party

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt - Related Party

8. LONG-TERM DEBT – RELATED PARTY

As at March 31, 2019 and the December 31, 2018, the long-term debt is as follows:

	March 31, 2019			December 31, 2018
Long-term debt, net of debt discount of $1,198	$	14,102		$	14,027
Less: current portion, net of debt discount of $141		(1,659	)		(1,100	)
	$	12,443		$	12,927

On May 6, 2016, the Company through VBI US assumed a term loan facility with Perceptive Credit Holdings, LP, a related party, (the “Lender”) in the amount of $6,000 (the “Facility”). On December 6, 2016, the Company amended the Facility (the “Amended Credit Facility”) and raised the Lender’s commitment amount to $13,200, which was combined with the remaining balance from the Facility of $1,800. On July 17, 2018, the Company amended the Amended Credit Facility (the “Second Amendment”) to extend the period the Company is required to pay only the interest on the loan from May 31, 2018 to December 31, 2018 and to extend the expiration date of certain warrants to purchase 363,771 common shares issued to the Lender with an original expiration date of July 25, 2019 to December 6, 2021. The Company accounted for this as a debt modification, and as a result of the extension of the warrant expiration date in connection with the Second Amended Facility, the debt discount was increased by $386. This amount represents the incremental fair value of the modified warrants.

On January 31, 2019, the Company further amended the Amended Credit Facility (the “Third Amendment”) to i) extend the period the Company is required to pay only the interest on the loan from December 31, 2018 to the Amortization Commencement Date (which is defined as the later of July 31, 2019 and, if Sci-B-Vac Phase III clinical trial endpoints are achieved by June 30, 2019, January 31, 2020), ii) extend the maturity of the term loan to June 30, 2020 and iii) reduce the exercise price on certain warrants to purchase common shares issued to the Lender to $2.75 from $4.13 for 363,771 warrants issued on July 25, 2014 and for 363,771 warrants issued on December 6, 2016 and from $3.355 for 1,341,282 warrants issued on December 6, 2016. The Company has accounted for this as a debt modification, and as result of the amendment to the exercise price in connection with the Third Amendment, the debt discount was increased by $179. This amount represents the incremental fair value of the modified warrants.

The total principal amount of the loan under the Amended Credit Facility outstanding at March 31, 2019, including the $300 exit fee discussed below, is $15,300. The principal amount of the loan made under the Amended Credit Facility accrues interest at an annual rate equal to the greater of (a) one-month LIBOR (subject to a 5.00% cap) or (b) 1.00%, plus the Applicable Margin. The Applicable Margin will be 11.00%. The Company was required to only pay interest initially until May 31, 2018, which date was extended to December 31, 2018, pursuant to the Second Amendment and further extended to the Amortization Commencement Date pursuant to the Third Amendment. The interest rate as of March 31, 2019 was 13.50%. Upon the occurrence of an Event of Default (as defined in the Amended Credit Facility), and during the continuance of an event of default, the Applicable Margin, defined above, will be increased by 4.00% per annum. This term loan facility maturity date has been extended from December 6, 2019 to June 30, 2020 and includes both financial and non-financial covenants, including a minimum cash balance requirement. The Company was in compliance with these covenants as of March 31, 2019. Pursuant to the Amended Credit Facility, the Company agreed that the Lender shall designate an individual who would be appointed to the Company’s board of directors (the “Board”). The Lender’s designee was also a portfolio manager of the Company’s largest shareholder. Effective January 2018, the Lender’s designee resigned from our Board.

The Company’s obligations under the Amended Credit Facility are secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries and are guaranteed by the Company and its subsidiaries. The Amended Credit Facility also contains customary events of default.

The total debt discount of $4,018 is being charged to interest expense using the effective interest method over the term of the debt. As of March 31, 2019, and December 31, 2018, the unamortized debt discount is $1,198 and $1,274, respectively.

At March 31, 2019 and December 31, 2018, the fair value of our outstanding debt, which is considered level 3 in the fair value hierarchy, is estimated to be approximately $15,354 and $14,975, respectively.

Interest expense, net of interest income recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019			2018
Interest expense – related party	$	518		$	474
Amortization of debt discount – related party		255			299
Interest income		(293	)		(234	)
Total interest expense, net of interest income	$	480		$	539

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Third Amendment and exit fee
Remaining 2019	$	1,200
2020		14,100
	$	15,300

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Stockholders' Equity and Additional Paid-In Capital

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity and Additional Paid-In Capital

9. STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

Stock option plans

The Company’s stock option plans are approved by and administered by the Company’s Board and its Compensation Committee. The Board designates, in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates the number of options, exercise price and vesting period of the new options.

2006 VBI US Stock Option Plan

No further options will be issued under the 2006 VBI US Stock Option Plan (the “2006 Plan”). As at March 31, 2019, there were 1,112,696 options outstanding under the 2006 Plan.

2013 Equity Incentive Plan

No further options will be issued under the 2013 Equity Incentive Plan (the “2013 Plan”). As at March 31, 2019, there were 3,460 options outstanding under the 2013 Plan.

2014 Equity Incentive Plan

No further options will be issued under the 2014 Equity Incentive Plan (the “2014 Plan”). As at March 31, 2019, there were 604,474 options outstanding under the 2014 Plan.

2016 VBI Incentive Plan

The 2016 VBI Equity Incentive Plan (the “2016 Plan”) is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding on a non-diluted basis at the time of any grant under the 2016 Plan. The 10% maximum is inclusive of options granted under all equity incentive plans. The 2016 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights (“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted stock or other such award as may be permitted under the 2016 Plan. As at March 31, 2019, there were 5,277,962 options and 379,403 stock awards outstanding under the 2016 Plan.

The aggregate number of common shares remaining available for issuance for awards under the 2016 Plan total 1,396,061 at March 31, 2019.

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2018		3,479,676		$	4.14
Granted		3,570,000		$	1.66
Forfeited		(51,084	)		4.62
Balance outstanding at March 31, 2019		6,998,592		$	2.88
Exercisable at March 31, 2019		2,575,244		$	4.16

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2018		268,570		$	4.13
Granted		330,000		$	1.65
Vested		(219,167	)	$	1.97
Unvested shares outstanding at March 31, 2019		379,403		$	3.22

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2019			2018
Volatility		118.12	%		114.53	%
Risk free interest rate		2.46	%		2.48	%
Expected term in years		5.77			5.77
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.43		$	3.53

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019		2018
Research and development	$	228	$	191
General and administrative		1,017		618
Cost of revenues		17		13
Total stock-based compensation expense	$	1,262	$	822

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Revenues and Deferred Revenue

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenues and Deferred Revenue

10. REVENUES AND DEFERRED REVENUE

Revenue is comprised of the following:

	March 31, 2019		March 31, 2018
Product revenues	$	93	$	164
R&D service revenues		267		14
	$	360	$	178

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2019:

	Total		Remaining 2019		2020 and thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		4,623		2,333		2,290
Total	$	5,092	$	2,333	$	2,759

The following table presents changes in the deferred revenue balance for the year ended December 31, 2018:

Balance at December 31, 2018	$	5,172
Recognition of deferred revenue		(261	)
Currency translation		181
Balance at March 31, 2019	$	5,092
Short Term	$	2,333
Long Term	$	2,759

Collaboration and License Agreement – Brii Bio

On December 4, 2018, we entered into a License Agreement with Brii Bio, whereby:

● the Company and Brii Bio agreed to collaborate on the development of a hepatitis B recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan and Macau (collectively, the “Licensed Territory”), and to conduct a Phase II collaboration clinical trial for the purpose of comparing VBI-2601, which is a recombinant protein-based immunotherapeutic developed by VBI for use in treating chronic hepatitis B, with a novel composition developed jointly with Brii Bio (either being the “Licensed Product”); and

● The Company granted Brii Bio an exclusive royalty-bearing license to perform studies, and regulatory and other activities, as may be required to obtain and maintain marketing approval of the Licensed Product, for the treatment of hepatitis B in the Licensed Territory and to commercialize the Licensed Product for the diagnosis and treatment of chronic hepatitis B in the Licensed Territory

Pursuant to the Collaboration and License Agreement, the Company is responsible for the R&D services and Brii Bio is responsible for costs relating to the clinical trials for the Licensed Territory.

The initial consideration of the Collaboration and License Agreement consisted of a $11 million non-refundable upfront payment. As part of Collaboration and Licences Agreement, the Company and Brii Bio entered into a stock purchase agreement. Under the terms of the stock purchase agreement, the Company issued to Brii Bio 2,295,082 shares of its common stock valued at $3.6 million (based on the Company’s common stock price on December 4, 2018). The remaining $7.4 million, deemed to be the initial transaction price, was allocated to two performance obligations: i) the VBI-2601 license and ii) R&D services. The R&D services were allocated $4.8 million of the transaction price using an estimated selling price based on a expected cost plus a margin approach and the remaining transaction price of $2.6 million was allocated to the VBI-2601 license using the residual method.

In addition, the Company is also eligible to receive an additional $117.5 million in potential regulatory and sales milestone payments, along with royalties on commercial sales in the licensed territory. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Therefore, no variable consideration was included in the initial transaction price and no such amounts have been recognized to date.

On December 4, 2018, the Company recognized the VBI-2601 license when it was transferred and Brii Bio is able to use and benefit from the license, as it was determined to be distinct. The R&D Services will be satisfied over time as services are rendered using the “cost-to-cost” input method as this method represents the most accurate depiction of the transfer of services based on the types of costs expected to be incurred. As at March 31, 2019, R&D services that remain unsatisfied are $4.4 million.

Upon termination of the License Agreement prior to the end of the term, there is no obligation for refund and any amounts in deferred revenue related to unsatisfied performance obligations will be immediately recognized.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

11. INCOME TAXES

The Company operates in U.S., Israel and Canadian tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another.

The Company determines its annual effective tax rate at the end of each interim period based on the year to date period results. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 26.50% in the determination of the estimated annual effective tax rate.

The Company’s effective tax rate on loss before tax for the three months ended March 31, 2019 of 0.00% (0.00% for the three months ended March 31, 2018) differs from the Canadian statutory rate of 26.50% primarily due to recording a valuation allowance on the Canadian deferred tax assets in excess of the remaining Canadian deferred tax liability and the effect of recording a valuation allowance against deferred tax assets in all other jurisdictions.

The Company maintains a valuation allowance on all of its deferred tax assets. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two actions were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege among other things, defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April, 2011 and seeking damages in a total amount of NIS 1,879,500,000 (not in thousands) ($517,483). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. The trial of the civil action has been scheduled to begin on September 19, 2019.

Operating leases

The Company has entered into various non-cancelable lease agreements for its office, lab and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on April 30, 2020, with no option to extend. Our manufacturing facility lease agreement expires on January 31, 2022, which includes one five-year option to extend until January 31, 2027. The lease agreement for our research facility in Canada, which comprises of office and laboratory space, expires on December 31, 2019 with the option to extend the term for two periods of three years.

Options to extend are not recognized as part of the lease liabilities or recognized as right to use assets. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right ofuse assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Three months ended March 31, 2019
Lease cost:
Operating lease costs	$	280
Other information:
Weighted average remaining lease term		2.21 years
Weighted average discount rate		12	%

Operating lease costs are included in general and administrative (“G&A”) expenses in the statement of operation and comprehensive loss.

Operating cash flow supplemental information as of March 31, 2019:

On January 1, 2019, initial right of use ("ROU") assets of $1,653 was recognized as a non-cash asset addition with the adoption of the new lease standard. During the three months ended March 31, 2019, the Company entered into a new lease agreement and recognized a ROU asset of $222.

The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963
Effect of discounting		(244	)
Total lease liability	$	1,719
Less: current portion		(795	)
Long term lease liability	$	924

ASC 840 comparative period disclosure

The future annual minimum payments under these leases is as follows:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

13. SEGMENT INFORMATION

The Company’s Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker. The CEO evaluates the performance of the Company and allocates resources based on the information provided by the Company’s internal management system at a consolidated level. The Company has determined that it has only one operating segment.

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2019		2018
Israel	$	99	$	106
China / Hong Kong		261		30
Europe		-		42
Total	$	360	$	178

There was no revenue attributed to our country of domicile, Canada, for the three months ended March 31, 2019 and 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

14. SUBSEQUENT EVENTS

Subsequent to March 31, 2019, the Company granted 300,000 stock options to new directors and employees pursuant to the 2016 Plan. 200,000 stock options vest on a monthly basis over 36 months and 100,000 stock options vest 25% on the first anniversary of the grant date and the remainder will vest on a monthly basis over 36 months thereafter. The options automatically expire 10 years from grant date.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2018 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 10-K”), as filed with the SEC on February 25, 2019.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: SciVac, VBI DE, VBI US, VBI Cda and SciVac HK. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2018 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2019, other than accounting for leases discussed below.

Leases

Leases

The Company determines if an arrangement is a lease at inception.  For the Company’s operating leases, the right-of-use (“ROU”) assets represents the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Since the lease agreements do not provide an implicit rate, the Company estimated an incremental borrowing rate in determining the present value of the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. See also Note 3.

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Inventory, Net (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory is stated at the lower of cost or market and consists of the following:

	March 31, 2019		December 31, 2018
Finished goods	$	60	$	81
Work-in-process		67		64
Raw materials		956		766
	$	1,083	$	911

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Intangibles and Goodwill (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangibles Assets

			March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(472	)	$	-		$	18		$	215
IPR&D assets		61,500		-			(300	)		(1,950	)		59,250
	$	62,169	$	(472	)	$	(300	)	$	(1,932	)	$	59,465

			December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(457	)	$	-		$	11		$	223
IPR&D assets		61,500		-			(300	)		(3,174	)		58,026
	$	62,169	$	(457	)	$	(300	)	$	(3,163	)	$	58,249

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Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Other Current Liabilities

Other current liabilities consisted of the following:

	March 31, 2019		December 31, 2018
Accrued research and development expenses (including clinical trial accrued expenses)	$	10,122	$	9,763
Payroll and employee-related costs		1,179		2,294
Other current liabilities		1,251		1,790
	$	12,552	$	13,847

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Loss Per Share of Common Shares (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Antidilutive Weighted Average Shares Outstanding

The following potentially dilutive securities outstanding at March 31, 2019 and 2018 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2019		March 31, 2018
Warrants		2,618,824		2,618,824
Stock options and equity awards		7,377,995		3,960,549
		9,996,819		6,579,373

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Long-Term Debt - Related Party (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

As at March 31, 2019 and the December 31, 2018, the long-term debt is as follows:

	March 31, 2019			December 31, 2018
Long-term debt, net of debt discount of $1,198	$	14,102		$	14,027
Less: current portion, net of debt discount of $141		(1,659	)		(1,100	)
	$	12,443		$	12,927

Schedule of Interest Expense

Interest expense, net of interest income recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019			2018
Interest expense – related party	$	518		$	474
Amortization of debt discount – related party		255			299
Interest income		(293	)		(234	)
Total interest expense, net of interest income	$	480		$	539

Schedule of Future Payment of Long-Term Debt

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Third Amendment and exit fee
Remaining 2019	$	1,200
2020		14,100
	$	15,300

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Stockholders' Equity and Additional Paid-In Capital (Tables)

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Schedule of Stock Options Activity

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2018		3,479,676		$	4.14
Granted		3,570,000		$	1.66
Forfeited		(51,084	)		4.62
Balance outstanding at March 31, 2019		6,998,592		$	2.88
Exercisable at March 31, 2019		2,575,244		$	4.16

Schedule of Restricted Stock Units

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2018		268,570		$	4.13
Granted		330,000		$	1.65
Vested		(219,167	)	$	1.97
Unvested shares outstanding at March 31, 2019		379,403		$	3.22

Schedule of Fair Value of Options Granted By Using Black-Scholes Option Pricing Assumptions

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2019			2018
Volatility		118.12	%		114.53	%
Risk free interest rate		2.46	%		2.48	%
Expected term in years		5.77			5.77
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.43		$	3.53

Schedule of Stock-based Compensation Expense

The total stock-based compensation expense recorded in the three months ended March 31, 2019 and 2018 was as follows:

	Three months ended March 31
	2019		2018
Research and development	$	228	$	191
General and administrative		1,017		618
Cost of revenues		17		13
Total stock-based compensation expense	$	1,262	$	822

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Revenues and Deferred Revenue (Tables)

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Summary of Revenue Comprised

Revenue is comprised of the following:

	March 31, 2019		March 31, 2018
Product revenues	$	93	$	164
R&D service revenues		267		14
	$	360	$	178

Summary of Revenue Expected to be Recognized in Future Related to Performance Obligations

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2019:

	Total		Remaining 2019		2020 and thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		4,623		2,333		2,290
Total	$	5,092	$	2,333	$	2,759

Summary of Changes in Deferred Revenue

The following table presents changes in the deferred revenue balance for the year ended December 31, 2018:

Balance at December 31, 2018	$	5,172
Recognition of deferred revenue		(261	)
Currency translation		181
Balance at March 31, 2019	$	5,092
Short Term	$	2,333
Long Term	$	2,759

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Lease Cost and Other Information

The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Three months ended March 31, 2019
Lease cost:
Operating lease costs	$	280
Other information:
Weighted average remaining lease term		2.21 years
Weighted average discount rate		12	%

Summary of Future Undiscounted Cash Payments Reconciled to Lease Liabilities

The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963
Effect of discounting		(244	)
Total lease liability	$	1,719
Less: current portion		(795	)
Long term lease liability	$	924

Schedule of Future Annual Minimum Lease Payments

The future annual minimum payments under these leases is as follows:

Year ending December 31
Remaining 2019	$	760
2020		617
2021		541
2022		45
Total	$	1,963

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Revenue by Geographical Region

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2019		2018
Israel	$	99	$	106
China / Hong Kong		261		30
Europe		-		42
Total	$	360	$	178

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Nature of Business and Continuation of Business (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 222,181		$ 207,575
Cash flows from operating activities	$ 14,020	$ 8,578

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New Accounting Pronouncements (Details Narrative) $ in Thousands	Jan. 02, 2019 USD ($)
Accounting Changes and Error Corrections [Abstract]
ROU assets and lease liabilities	$ 1,653

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Inventory, Net - Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 60	$ 81
Work-in-process	67	64
Raw materials	956	766
Inventory net	$ 1,083	$ 911

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Intangibles and Goodwill (Details Narrative) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Cumulative translation adjustments	$ 173
IPR&D assets [Member]
Cumulative translation adjustments	$ 1,217

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Intangibles and Goodwill - Schedule of Intangibles Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Intangible assets, Gross	$ 62,169	$ 62,169
Accumulated Amortization	(472)	(457)
Cumulative Impairment Charge	(300)	(300)
Cumulative Currency Translation	(1,932)	(3,163)
Intangible assets, Net	59,465	58,249
Patents [Member]
Intangible assets, Gross	669	669
Accumulated Amortization	(472)	(457)
Cumulative Impairment Charge
Cumulative Currency Translation	18	11
Intangible assets, Net	215	223
IPR&D [Member]
Intangible assets, Gross	61,500	61,500
Accumulated Amortization
Cumulative Impairment Charge	(300)	(300)
Cumulative Currency Translation	(1,950)	(3,174)
Intangible assets, Net	$ 59,250	$ 58,026

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Other Current Liabilities - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Other Liabilities Disclosure [Abstract]
Accrued research and development expenses (including clinical trial accrued expenses)	$ 10,122	$ 9,763
Payroll and employee-related costs	1,179	2,294
Other current liabilities	1,251	1,790
Total Other current liabilities	$ 12,552	$ 13,847

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Loss Per Share of Common Shares - Schedule of Antidilutive Weighted Average Shares Outstanding (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive weighted average shares outstanding	9,996,819	6,579,373
Warrants [Member]
Antidilutive weighted average shares outstanding	2,618,824	2,618,824
Stock Options and Equity Awards [Member]
Antidilutive weighted average shares outstanding	7,377,995	3,960,549

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Long-Term Debt - Related Party (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Jan. 31, 2019	Jul. 17, 2018	Dec. 06, 2016	Mar. 31, 2019	Dec. 31, 2018	May 06, 2016	Jul. 25, 2014
Number of warrants issued to purchase common stock shares		363,771
Warrants to purchase common shares original expiration date description		Original expiration date of July 25, 2019 to December 6, 2021.
Increase in debt discount	$ 179	$ 386
Term loan maturity date	Jun. 30, 2020
Exercise price of warrants	$ 2.75
Total debt discount				$ 4,018
Unamortized debt discount				1,198	$ 1,274
Fair value of outstanding debt				$ 15,354	$ 14,975
From $4.13 [Member]
Number of warrants issued to purchase common stock shares			363,771				363,771
Exercise price of warrants			$ 4.13				$ 4.13
From $3.355 [Member]
Number of warrants issued to purchase common stock shares			1,341,282
Exercise price of warrants			$ 3.355
Extended Maturity For Interest [Member]
Debt instrument, extension date, description	December 31, 2018 to the Amortization Commencement Date (which is defined as the later of July 31, 2019 and, if Sci-B-Vac Phase III clinical trial endpoints are achieved by June 30, 2019, January 31, 2020)	May 31, 2018 to December 31, 2018
Perceptive Credit Holdings, LP [Member]
Line of credit maximum borrowing capacity						$ 6,000
Proceeds from line of credit			$ 13,200
Line of credit remaining balance			$ 1,800
Debt instrument, extension date, description				from December 6, 2019 to June 30, 2020
Term loan maturity date				Jun. 30, 2020
Exit fee				$ 300
Long term debt, gross				$ 15,300
Term loan annual interest rate description				The principal amount of the loan made under the Amended Credit Facility accrues interest at an annual rate equal to the greater of (a) one-month LIBOR (subject to a 5.00% cap) or (b) 1.00%, plus the Applicable Margin. The Applicable Margin will be 11.00%.
Term loan interest rate				13.50%
Perceptive Credit Holdings, LP [Member] | Maximum [Member]
Term loan interest rate				4.00%
Perceptive Credit Holdings, LP [Member] | LIBOR [Member]
Variable rate, description				one-month LIBOR
Debt instrument, variable rate				1.00%
Perceptive Credit Holdings, LP [Member] | Interest Cap [Member]
Debt instrument, variable rate				5.00%
Perceptive Credit Holdings, LP [Member] | Applicable Margin [Member]
Debt instrument, variable rate				11.00%

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Long-Term Debt - Related Party - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Long-term debt, net of debt discount of $1,198	$ 14,102	$ 14,027
Less: current portion, net of debt discount of $141	(1,659)	(1,100)
Long-term debt	$ 12,443	$ 12,927

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Long-Term Debt - Related Party - Schedule of Long-Term Debt (Details) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt discount	$ 1,198	$ 1,274
Long-term Debt [Member]
Debt discount	1,198	1,198
Debt discount, current	$ 141	$ 141

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Long-Term Debt - Related Party - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Debt Disclosure [Abstract]
Interest expense - related party	$ 518	$ 474
Amortization of debt discount - related party	255	299
Interest income	(293)	(234)
Total interest expense, net of interest income	$ 480	$ 539

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Long-Term Debt - Related Party - Schedule of Future Payment of Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Total	$ 14,102	$ 14,027
Long-term Debt [Member]
Remaining 2019	1,200
2020	14,100
Total	$ 15,300

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Stockholders' Equity and Additional Paid-In Capital (Details Narrative)	3 Months Ended
	Mar. 31, 2019 shares
Number of common shares available for issuance	1,396,061
2006 VBI US Stock Option Plan [Member]
Number of options outstanding	1,112,696
2013 Equity Incentive Plan [Member]
Number of options outstanding	3,460
2014 Equity Incentive Plan [Member]
Number of options outstanding	604,474
2016 VBI Equity Incentive Plan [Member]
Maximum percentage of common shares issued and outstanding	10.00%
Maximum percentage of options granted	10.00%
Stock Options [Member] | 2016 VBI Equity Incentive Plan [Member]
Number of options outstanding	5,277,962
Stock Awards [Member] | 2016 VBI Equity Incentive Plan [Member]
Number of options outstanding	379,403

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Stockholders' Equity and Additional Paid-In Capital - Schedule of Stock Options Activity (Details) - Stock Options [Member]	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Number of Stock Options Outstanding, Beginning Balance | shares	3,479,676
Number of Stock Options, Granted | shares	3,570,000
Number of Stock Options, Forfeited | shares	(51,084)
Number of Stock Options Outstanding, Ending Balance | shares	6,998,592
Number of Stock Options, Exercisable | shares	2,575,244
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 4.14
Weighted Average Exercise Price, Granted | $ / shares	1.66
Weighted Average Exercise Price, Forfeited | $ / shares	4.62
Weighted Average Exercise Price, Ending Balance | $ / shares	2.88
Weighted Average Exercise Price, Exercisable | $ / shares	$ 4.16

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Stockholders' Equity and Additional Paid-In Capital - Schedule of Restricted Stock Units (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Weighted Average Fair Value at Grant Date, Granted	$ 1.43	$ 3.53
Restricted Stock Units (RSUs) [Member]
Number of Stock Awards, Unvested shares outstanding beginning balance	268,570
Number of Stock Awards, Granted	330,000
Number of Stock Awards, Vested	(219,167)
Number of Stock Awards, Unvested shares outstanding ending balance	379,403
Weighted Average Fair Value at Grant Date, Unvested shares outstanding beginning balance	$ 4.13
Weighted Average Fair Value at Grant Date, Granted	1.65
Weighted Average Fair Value at Grant Date, Vested	1.97
Weighted Average Fair Value at Grant Date, Unvested shares outstanding	$ 3.22

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Stockholders' Equity and Additional Paid-In Capital - Schedule of Fair Value of Options Granted By Using Black-Scholes Option Pricing Assumptions (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stockholders' Equity Note [Abstract]
Volatility	118.12%	114.53%
Risk free interest rate	2.46%	2.48%
Expected term in years	5 years 9 months 7 days	5 years 9 months 7 days
Expected dividend yield	0.00%	0.00%
Weighted average fair value per option	$ 1.43	$ 3.53

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Stockholders' Equity and Additional Paid-In Capital - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Total stock-based compensation expense	$ 1,262	$ 822
Research and Development [Member]
Total stock-based compensation expense	228	191
General and Administrative [Member]
Total stock-based compensation expense	1,017	618
Cost of Revenues [Member]
Total stock-based compensation expense	$ 17	$ 13

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Revenues and Deferred Revenue (Details Narrative) $ in Thousands		3 Months Ended
	Dec. 04, 2018 USD ($) PerformanceObligation shares	Mar. 31, 2019 USD ($)
Remaining performance obligation, deemed to be initial transaction price		$ 5,092
R&D Service Revenues [Member]
Remaining performance obligation, deemed to be initial transaction price		4,623
Collaboration and License Agreement [Member] | R&D Service Revenues [Member]
Payment of termination to previous third party on distribution rights		$ 4,400
Collaboration and License Agreement [Member] | Brii Bio [Member]
Non-refundable upfront payment	$ 11,000
Stock issued for the agreement, shares | shares	2,295,082
Stock issued for the agreement	$ 3,600
Remaining performance obligation, deemed to be initial transaction price	$ 7,400
Number of performance obligations | PerformanceObligation	2
Additional potential regulatory and sales milestone payments	$ 117,500
Collaboration and License Agreement [Member] | Brii Bio [Member] | R&D Services [Member]
Remaining performance obligation, deemed to be initial transaction price	4,800
Collaboration and License Agreement [Member] | Brii Bio [Member] | VBI-2601 [Member]
Remaining performance obligation, deemed to be initial transaction price	$ 2,600

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Revenues and Deferred Revenue - Summary of Revenue Comprised (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 360	$ 178
Product Revenues [Member]
Revenues	93	164
R&D Service Revenues [Member]
Revenues	$ 267	$ 14

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Revenues and Deferred Revenue - Summary of Revenue Expected to be Recognized in Future Related to Performance Obligations (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Revenue remaining performance obligations	$ 5,092
2019 [Member]
Revenue remaining performance obligations	2,333
2020 and Thereafter [Member]
Revenue remaining performance obligations	2,759
Product Revenues [Member]
Revenue remaining performance obligations	469
Product Revenues [Member] | 2019 [Member]
Revenue remaining performance obligations
Product Revenues [Member] | 2020 and Thereafter [Member]
Revenue remaining performance obligations	469
R&D Service Revenues [Member]
Revenue remaining performance obligations	4,623
R&D Service Revenues [Member] | 2019 [Member]
Revenue remaining performance obligations	2,333
R&D Service Revenues [Member] | 2020 and Thereafter [Member]
Revenue remaining performance obligations	$ 2,290

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Revenues and Deferred Revenue - Summary of Changes in Deferred Revenue (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Balance at December 31, 2018	$ 5,172
Recognition of deferred revenue	(261)
Currency translation	181
Balance at March 31, 2019	5,092
Short Term	2,333
Long Term	$ 2,759

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Income Taxes (Details Narrative)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statutory income tax rate	26.50%
Canada [Member]
Statutory income tax rate	26.50%
Federal income tax rate	0.00%	0.00%

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Commitments and Contingencies (Details Narrative) $ in Thousands		3 Months Ended
	Sep. 13, 2018 USD ($) VaccinatedChildren	Mar. 31, 2019 USD ($)	Jan. 02, 2019 USD ($)	Dec. 31, 2018 USD ($)
Operating leases expiration term description		The Company has entered into various non-cancelable lease agreements for its office, lab and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on April 30, 2020, with no option to extend. Our manufacturing facility lease agreement expires on January 31, 2022, which includes one five-year option to extend until January 31, 2027. The lease agreement for our research facility in Canada, which comprises of office and laboratory space, expires on December 31, 2019 with the option to extend the term for two periods of three years.
Initial right of use ("ROU") assets		$ 1,719	$ 1,653
New Lease Agreement [Member]
Initial right of use ("ROU") assets		$ 222
Sci-B-Vac [Member]
Number of children vaccinated | VaccinatedChildren	428,000
Seeking damages	$ 517,483
Sci-B-Vac [Member] | NIS Currency [Member]
Seeking damages	$ 1,879,500

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Commitments and Contingencies - Schedule of Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease costs	$ 280
Weighted average remaining lease term	2 years 2 months 16 days
Weighted average discount rate	12.00%

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Commitments and Contingencies - Summary of Future Undiscounted Cash Payments Reconciled to Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Remaining 2019	$ 760
2020	617
2021	541
2022	45
Total	1,963
Effect of discounting	(244)
Total lease liability	1,719
Less: current portion	(795)
Long term lease liability	$ 924

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Commitments and Contingencies - Schedule of Future Annual Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remaining 2019	$ 760
2020	617
2021	541
2022	45
Total	$ 1,963

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Segment Information (Details Narrative)	3 Months Ended
	Mar. 31, 2019 USD ($) Segment	Mar. 31, 2018 USD ($)
Number of operating segment | Segment	1
Canada [Member]
Revenue | $

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Segment Information - Schedule of Revenue by Geographical Region (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue	$ 360	$ 178
Israel [Member]
Revenue	99	106
China/Hong Kong [Member]
Revenue	261	30
Europe [Member]
Revenue		$ 42

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - New Directors [Member]	1 Months Ended
	May 01, 2019 shares
Employees Pursuant 2016 Plan [Member]
Number of stock options granted	300,000
Options expire term	The options automatically expire 10 years from grant date.
Monthly Basis Over 36 Months [Member]
Stock options vest on monthly basis	200,000
First Anniversary of Grant Date [Member]
Stock options vest on monthly basis	100,000
Percentage of stock options vest	25.00%