SEC Info - Mapi - Pharma Ltd - IPO: ‘F-1/A’ on 4/17/14

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Neither we nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by us or on our behalf. When you make a decision about whether to invest in our ordinary shares, you should not rely upon any information other than the information in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our ordinary shares means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these ordinary shares in any circumstances under which the offer or solicitation is unlawful.

Until and including , 25 days after the date of this prospectus, all dealers that buy, sell or trade our ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions.

For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

This prospectus includes statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we believe that these sources are reliable, we have not independently verified the information contained in such publications.

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

We have incurred net losses since our formation in 2008. In particular, we incurred net losses of $1,492,000 in 2013 and $845,000 in 2012. As of December 31, 2013, our accumulated deficit was $11,258,000. We expect to continue to incur net losses for the foreseeable future, as we continue to invest in research and development and incur additional costs as a result of being a public company. The extent of our future operating losses and the timing of becoming profitable are highly uncertain, and we may never achieve or sustain profitability.

We have a limited operating history and have focused much of our efforts, to date, on the research and development of our products, rather than their commercialization. As such, we cannot provide you with any assurances as to when, if ever, we will generate sufficient revenues to achieve sustained profitability. Our ability to successfully commercialize our products and become profitable is subject to a number of challenges, including, among others:

The occurrence of any one or more of these events may limit our ability to successfully commercialize our products, which in turn could have a material adverse effect on our business, financial condition and results of operations. Consequently, there can be no guaranty of the accuracy of any predictions about our future success or viability.

We may require additional funds to develop our primary pipeline of APIs and LCM products in order to conduct clinical trials and other research and development activities, enter into and perform our obligations under collaborative agreements with third parties and complete construction of our manufacturing plant in Neot Hovav, Israel. Since our inception, we have raised approximately €20,000,000 ($29,654,000 at the closing date) from investors. However, the funds we have raised thus far, as well as the funds we intend to raise from this offering may not be sufficient to finance our long-term operational plans. In addition, our financing needs may increase as a result of our research and development activities, changes in regulatory requirements and increased competition, among other factors.

Furthermore, any additional debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain such additional financing on a timely basis, we may have to curtail our development activities and growth plans and/or be forced to sell assets, perhaps on unfavorable terms, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate, in which event it is unlikely that shareholders would receive any distribution on their shares. Further, we may not be able to continue operating if we do not generate sufficient revenues from operations needed to stay in business.

In addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition.

Our success largely depends on the skill, experience and effort of our senior management. The loss of the service of any of these persons, including Mr. Marom, our chief executive officer and the chairman of our board, Mr. Danon, our executive vice president, or Dr. Rubnov, our vice president of research and development, would likely result in a significant loss in the knowledge and experience that we possess and could significantly delay or prevent successful product development and other business objectives. There is intense competition from numerous pharmaceutical and biotechnology companies, universities, governmental entities and other research institutions, seeking to employ qualified individuals in the technical fields in which we operate, and we may not be able to attract and retain the qualified personnel necessary for the successful development and commercialization of our product candidates.

Our employment agreements generally include covenants not to compete. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work. For example, Israeli courts have required employers seeking to enforce covenants not to compete to demonstrate that the competitive activities of a former employee will harm one of a limited number of material interests of the employer, such as the secrecy of a company’s confidential commercial information or the protection of its intellectual property. If we cannot demonstrate that such an interest will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our competitiveness may be diminished.

Our revenues and operating results may vary significantly from year-to-year and quarter-to-quarter. Variations may result from, among other factors:

Market perceptions of our business are very important to us, especially market perceptions of the safety and quality of our products. If any of our products or similar products that other companies distribute, or third-party products from which our products are derived are subject to market withdrawal or recall or are proven to be, or are claimed to be, harmful to consumers, it could have a material adverse effect on our business. Because our business is dependent on market perceptions, negative publicity associated with product quality, illness or other adverse effects resulting from, or perceived to be resulting from, our products could have a material adverse impact on our business.

Additionally, continuing and increasingly sophisticated studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted by the industry, government agencies and others which can call into question the utilization, safety and efficacy of previously marketed products. In some cases, studies have resulted, and may in the future result, in the discontinuance of product marketing or other costly risk management programs such as the need for a patient registry.

Once the construction of our manufacturing plant in Neot Hovav, Israel is complete, we will be highly dependent on the uninterrupted and efficient operations of the plant. If operations at the plant were to be disrupted as a result of equipment failures, earthquakes and other natural disasters, fires, accidents, work stoppages, power outages, acts of war or terrorism or other reasons, our business could be materially adversely affected. Our plant’s location in Israel may increase the likelihood of such events impacting us (see “Risks related to our operations in Israel”). Lost sales or increased costs that we may experience during the disruption of operations may not be recoverable under our insurance policies, and longer-term business disruptions could result in a loss of customers. If this were to occur, our business could be materially negatively impacted.

Third parties could illegally distribute and sell counterfeit versions of our products, which do not meet the rigorous manufacturing and testing standards that our products undergo. Counterfeit products are frequently unsafe or ineffective, and can be life-threatening. Counterfeit medicines may contain harmful substances, the wrong dose of the API or no APIs at all. However, to distributors and users, counterfeit products may be visually indistinguishable from the authentic version.

Reports of adverse reactions to counterfeit drugs similar to our products or increased levels of counterfeiting such products could materially affect patient confidence in our authentic products. It is possible that adverse events caused by unsafe counterfeit products will mistakenly be attributed to our authentic products. In addition, thefts of our inventory at warehouses, plants or while in-transit, which are not properly stored and which are sold through unauthorized channels could adversely impact patient safety, our reputation and our business.

Public loss of confidence in the integrity of our pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect on our business, financial position and results of operations.

The development, approval and potential commercialization of our products will require additional cash to fund expenses. As such, our strategy includes selectively partnering or collaborating with other pharmaceutical companies to assist us in furthering development and potential commercialization of our products, in some or all jurisdictions. Although we are currently aware of numerous potential third party partners for the development or commercialization of our products, we may not be successful in entering into new collaborations with third parties on acceptable terms, or at all. In addition, if we fail to negotiate and maintain suitable development and/or commercialization agreements, we may have to limit the size or scope of our activities or we may have to delay one or more of our development or commercialization programs. Any failure to enter into development or commercialization agreements with respect to the development, marketing and commercialization of any products or our failure to develop, market and commercialize such product independently will have an adverse effect on our business, financial condition and results of operation.

Our existing and anticipated collaborative arrangements require us to rely on external consultants, advisors, and experts for assistance in several key functions, including clinical development, manufacturing, regulatory and intellectual property. We do not control these third parties, but we rely on them to achieve results, which may be significant to us. Relying upon collaborative arrangements to develop and commercialize our products subjects us to a number of risks, including:

If any of these scenarios materialize, they could have adverse effect on our business, financial condition or results of operations.

The manufacture of pharmaceutical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. We and our contract manufacturers must comply with current good manufacturing practices (“cGMP”) regulations and guidelines. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and contamination controls. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if microbial, viral or other contaminations are discovered in our products or in the manufacturing facilities in which our products are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

We cannot assure you that any stability or other issues relating to the manufacture of any of our product candidates or products will not occur in the future. Additionally, we and our third party manufacturers may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments. If we or our third party manufacturers were to encounter any of these difficulties, our ability to provide any product candidates to patients in clinical trials and products to patients, once approved, would be jeopardized. Any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely. Any adverse developments affecting clinical or commercial manufacturing of our product candidates or products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Accordingly, failures or difficulties faced at any level of our supply chain could materially adversely affect our business and delay or impede the development and commercialization of any of our products and could have a material adverse effect on our business, prospects, financial condition and results of operations.

We outsource certain functions, tests and services to clinical research organizations, medical institutions and collaborators as well as outsourcing manufacturing to collaborators and/or contract manufacturers, and we rely on third parties for quality assurance, clinical monitoring, clinical data management and regulatory expertise. We also have engaged, and may in the future engage, a clinical research organization to run all aspects of a clinical trial on our behalf. There is no assurance that such individuals or organizations will be able to provide the functions, tests, biologic supply or services as agreed upon or in a quality fashion and we could suffer significant delays in the development of our products or processes.

In some cases there may be only one or few providers of such services, including clinical data management or manufacturing services. In addition, the cost of such services could be significantly increased over time. We rely on third parties and collaborators as mentioned above to enroll qualified patients and conduct, supervise and monitor our clinical trials. Our reliance on these third parties and collaborators for clinical development activities reduces our control over these activities. Our reliance on these parties, however, does not relieve us of our regulatory responsibilities, including ensuring that our clinical trials are conducted in accordance with current good clinical practices regulations and the investigational plan and protocols contained in the regulatory agency applications. In addition, these third parties may not complete activities on schedule or may not manufacture under cGMP conditions. Preclinical or clinical studies may not be performed or completed in accordance with Good Laboratory Practices regulatory requirements or our trial design. If these third parties or collaborators do not successfully carry out their contractual duties or meet expected deadlines, obtaining regulatory approval for manufacturing and commercialization of our product candidates may be delayed or prevented. We rely substantially on third-party data managers for our clinical trial data. There is no assurance that these third parties will not make errors in the design, management or retention of our data or data systems. There is no assurance these third parties will pass FDA or regulatory audits, which could delay or prohibit regulatory approval.

Our business exposes us to significant potential product liability risks that are inherent in the development, manufacturing and marketing of our products. Product liability claims could delay or prevent completion of our development programs. If we succeed in commercializing our products, such claims could result in a recall of our products or a change in the approved indications for which they may be used. While we intend to maintain product liability insurance that we believe is adequate for our operations upon commercialization of our products, we cannot be sure that such coverage will be adequate to cover any incident or all incidents. Furthermore, product liability insurance is becoming increasingly expensive. As a result, we may be unable to maintain sufficient insurance at a reasonable cost to protect us against losses that could have a material adverse effect on our business. These liabilities could prevent or interfere with our product development and commercialization efforts.

Undesirable side effects caused by our product candidates could result in the delay, suspension or termination of clinical trials by us, our collaborators, the FDA or other regulatory authorities for a number of reasons. If we elect or are required to delay, suspend or terminate any clinical trial of any product candidates that we develop, the commercial prospects of such product candidates will be harmed and our ability to generate product revenues from any of these product candidates will be delayed or eliminated. Serious adverse events observed in clinical trials could hinder or prevent market acceptance of the product candidate at issue. Any of these occurrences may harm our business, prospects, financial condition and results of operations significantly.

Our financial results depend upon our ability to introduce and commercialize additional complex APIs, formulations and LCM products in a timely manner. Generally, revenue from new generic products is highest immediately following launch and then declines over time, as new competitors enter the market. Furthermore, the greatest revenue is generally experienced by the company that is able to bring its product to the market first. Our continued growth is therefore dependent upon our ability to continue to successfully introduce and commercialize new complex APIs, formulations and LCM products.

The FDA and other regulatory authorities may not approve our product applications at all or in a timely fashion for our products under development. Additionally, we may not successfully complete our development efforts for other reasons, such as poor results in clinical trials or a lack of funding to complete the required trials. Even if the FDA approves our products, we may not be able to market them successfully or profitably. Our future results of operations will depend significantly upon our ability to timely develop, receive FDA approval for, and market new pharmaceutical products or otherwise develop new products or acquire the rights to other products.

The pharmaceutical industry is highly competitive and many of our competitors have longer operating histories and substantially greater financial, research and development, marketing, and other resources. In addition, pharmaceutical manufacturers’ customer base consists of an increasingly limited number of large pharmaceutical wholesalers, chain drug stores that warehouse products, mass merchandisers and mail order pharmacies. Our competitors may be able to obtain cheaper raw materials and/or API supplies and develop cheaper production processes or other polymorphs for their products and delivery technologies competitive with or more effective or less expensive than our own for many reasons, including that they may have:

With respect to generic pharmaceutical products, the FDA approval process often results in the FDA granting final approval to a number of ANDAs for a given product at the time a patent claim for a corresponding brand product or other regulatory and/or market exclusivity expires. Thus, we expect, in accordance with the standard practices in the industry, to face immediate competition when we introduce a generic product into the market. As competition from other manufacturers intensifies, selling prices and gross profit margins often decline. Accordingly, the level of market share, revenue and gross profit attributable to a particular generic product that we develop is generally related to the number of competitors in that product’s market and the timing of that product’s regulatory approval and launch, in relation to competing approvals and launches. Additionally, ANDA approvals often continue to be granted for a given product subsequent to the initial launch of the generic product. These circumstances generally result in significantly lower prices and reduced margins for generic products compared to brand products. New generic market entrants generally cause continued price and margin erosion over the generic product life cycle.

In addition to the competition we face from other generic manufacturers, we face competition from brand-name manufacturers related to our generic products. Branded pharmaceutical companies often sell their branded products as “authorized generics” (an industry term that describes instances when a brand-name manufacturer licenses another company, such as a subsidiary or a generic manufacturer, to market the brand product under the licensee’s name and registration at typical generic discounts). Further, branded pharmaceutical companies may seek to delay FDA approval of our ANDAs or reduce generic competition by, for example, obtaining new patents on drugs whose original patent protection is about to expire, filing patent infringement suits that automatically delay FDA approval of generics, developing new versions of their products to obtain FDA market exclusivity, filing “citizen petitions” contesting FDA approvals of generics such as on alleged health and safety grounds, developing “next generation” versions of products that reduce demand for generic versions we are developing, changing product claims and labeling, and seeking approval to market as over-the-counter (“OTC”) branded products.

We believe that our principal competitors in the generic pharmaceutical products and LCM markets are Teva Pharmaceutical Industries Ltd. (NYSE: TEVA), Impax Laboratories, Inc. (Nasdaq: IPXL), Alkermes Plc (Nasdaq: ALKS), Momenta Pharmaceuticals, Inc. (Nasdaq: MNTA), Mallinckrodt plc. (NYSE: MNK) and Par Pharmaceutical Companies, Inc., a private U.S. company.

We conduct research and development primarily to enable us to manufacture and market pharmaceuticals in accordance with FDA regulations as well as other regulatory authorities. We spent approximately $2,079,000 and $2,481,000 on research and development activities during the years ended December 31, 2013, and 2012, respectively. We are required to obtain FDA approval before marketing our drug products in the United States. The FDA approval process is costly, time consuming and inherently risky.

Our bioequivalence studies, clinical trials and/or other data may not result in FDA approval to market our products. While we believe that the FDA’s 505(b)(2) NDA and ANDA procedures will apply to our products, including our extended-release drugs, these drugs may not be suitable for, or approved as part of, that 505(b)(2) NDA or ANDA pathway. Furthermore, the FDA could disagree with our decision to submit an ANDA for a particular product and require an NDA (or vice versa). Also, for reasons to be discussed below, it is possible that our application could be blocked for approval due to a competitor’s patent or market exclusivity protection. In addition, even if our products are suitable for FDA approval by filing under a 505(b)(2) NDA or an ANDA, these applications are costly and time consuming to complete. After we submit a 505(b)(2) NDA or ANDA, the FDA may require that we conduct additional studies, and as a result, we may be unable to reasonably determine in advance the total research and development costs to develop a particular product. Also, for products pending approval, we may obtain raw materials or produce batches of inventory to be used in anticipation of the product’s launch. In the event that FDA approval is denied or delayed, we could be exposed to the risk of this proposed product or inventory becoming obsolete. Finally, we cannot be certain that any investment made in developing products or product-delivery technologies will be recovered, even if we are successful in commercialization. To the extent that we expend significant resources on research and development efforts and are not able to introduce successful new products or new delivery technologies as a result of those efforts, we will be unable to recover those expenditures.

Competition in the biotechnology industry is intense. Brand name products face competition on numerous fronts as technological advances are made or new products are introduced. As new products are approved that compete with the reference brand product to our complex APIs, formulations and LCM products, sales of the reference brand products may be significantly and adversely impacted and the reference brand product may be rendered obsolete. In addition, brand product companies may pursue life cycle management as well as patent extension strategies that also impact the marketability and profitability of our generic or LCM products.

For example, we anticipate current injectable treatments commonly used to treat MS, including Copaxone, which is the Glatiramer Acetate brand product and is currently being marketed by Teva, to experience competition from a number of novel drug products, including oral therapies. These novel drugs may offer patients a more convenient form of administration than Copaxone and may provide increased efficacy. On January 29, 2014, Teva announced that it received FDA approval for a Supplemental NDA for a 40mg, thrice-weekly dosage of Copaxone. Teva’s 40mg, thrice-weekly version of Copaxone was approved following a single phase III pivotal trial, which we believe validates our regulatory and research and development strategy of a single pivotal trial under the FDA’s 505(b)(2) regulatory pathway. Teva’s 40mg thrice-weekly version of Copaxone has the potential to delay the anticipated erosion of the Glatiramer Acetate market, which is expected to be brought on by possible generic competitors that are developing the once-daily dosage of Glatiramer Acetate. In addition, the efforts of Teva, the current industry leader, that are invested in a formulation with a lesser frequency of injections for Copaxone may be indicative of the shift in the RRMS market toward longer-acting depot formulations of Glatiramer Acetate. If the market for the reference brand product is impacted, we in turn may lose significant market share or market potential for our APIs or LCM product candidates, and the value for our APIs or LCM products pipeline could be negatively impacted. As a result, our business, including our financial results and our ability to fund future discovery and development programs, would suffer.

There are a number of risks and uncertainties associated with clinical trials. The results obtained from clinical trials may not be indicative of results that would be obtained from large scale testing. Clinical trials are often conducted with patients having advanced stages of disease and, as a result, during the course of treatment these patients can die or suffer adverse medical effects for reasons that may not be related to the pharmaceutical agents being tested, but which nevertheless affect the clinical trial results. In addition, side effects experienced by the patients may cause a delay of approval or limited profile of an approved product. Moreover, our clinical trials may not demonstrate sufficient safety and efficacy to obtain FDA approval.

Failure can occur at any time during the clinical trial process, the results from early clinical trials may not be predictive of results obtained in later and larger clinical trials and product candidates in later clinical trials may fail to show the desired safety or efficacy despite having progressed successfully through earlier clinical testing. In the future, the completion of clinical trials for our product candidates may be delayed or halted for many reasons, including:

In addition, our product candidates could be subject to competition for clinical study sites and patients from other therapies under development which may delay the enrollment in or initiation of our clinical trials.

The FDA or foreign regulatory authorities may require us to conduct unanticipated additional clinical trials, which could result in additional expense and delays in bringing our product candidates to market. Any failure or delay in completing clinical trials for our product candidates would prevent or delay the commercialization of our product candidates. We cannot assure you that our expenses related to clinical trials will lead to the development of products that will generate revenues in the near future, or ever. Delays or failure in the development and commercialization of our products could have a material adverse effect on our results of operations, liquidity, financial condition, and our growth prospects.

Various governmental authorities and private health insurers and other organizations, such as HMOs, provide reimbursement to consumers for the cost of certain pharmaceutical products. Demand for our products depends in part on the extent to which such reimbursement is available. In addition, third-party payers are attempting to control costs by limiting the level of reimbursement for medical products, including pharmaceuticals, and increasingly challenge the pricing of these products, which may adversely affect the pricing of our products. Moreover, health care reform has been, and is expected to continue to be, an area of national and state focus, which could result in the adoption of measures that could adversely affect the pricing of pharmaceuticals or the amount of reimbursement available from third-party payers for our products.

In some countries, particularly the countries of the European Union, the pricing and/or reimbursement of prescription pharmaceuticals are subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

Even if we are able to obtain and maintain regulatory approvals for our new LCM products, the success of those products is also dependent upon market acceptance. Levels of market acceptance for our new products could be affected by several factors, including:

Some of these factors are not within our control, and our products may not achieve expected levels of market acceptance.

We generally begin our development activities for an API for a product expected to become generic several years in advance of the patent expiration date of the brand-name drug equivalent. The development process, including drug formulation (where applicable), testing, and FDA review and approval, often takes three or more years. This process requires that we expend considerable capital to pursue activities that do not yield an immediate or near-term return. Also, because of the significant time necessary to develop a product, the actual market for a product at the time it is available for sale may be significantly less than the originally projected market for the product. If this were to occur, our potential return on our investment in developing the product, if approved for marketing by the FDA, would be adversely affected and we may never receive a return on our investment in the product. It is also possible for the manufacturer of the brand-name product for which we are developing a generic drug to obtain approvals from the FDA to switch the brand-name drug from the prescription market to the OTC market. If this were to occur, we would be prohibited from marketing our product other than as an OTC drug, in which case revenues could be substantially less than we anticipated.

The FDA may institute changes to its ANDA approval requirements, which may make it more difficult or expensive for us to obtain approval for our new generic products. For instance, in July 2012, the Generic Drug User Fee Amendments of 2012 (“GDUFA”) was enacted into law. The GDUFA legislation implemented fees for new ANDAs, Drug Master Files, product and establishment fees and a one-time fee for back-logged ANDAs pending approval as of October 1, 2012. In return, the program is intended to provide faster and more predictable ANDA reviews by the FDA and increased inspections of drug facilities. Under GDUFA, generic product companies face significant penalties for failure to pay the new user fees, including rendering an ANDA not “substantially complete” until the fee is paid. It is currently uncertain the effect the new fees will have on our ANDA process and business, however, any failure by us or our suppliers to pay the fees or to comply with the other provisions of GDUFA may impact or delay our ability to file ANDAs, obtain approvals for new generic products, generate revenues and thus may have a material adverse effect on our business, results of operations and financial condition.

Some abbreviated application procedures for products, including those related to our ANDA filings, are or may also become the subject of petitions filed by brand-name drug manufacturers seeking changes from the FDA in the approval requirements for particular drugs, which can delay or make development of generic drugs more difficult. We cannot predict whether the FDA will make any changes to its abbreviated application requirements as a result of these petitions, or the effect that any changes may have on us. Any changes in FDA requirements as a result of these petitions or otherwise may similarly make it more difficult for us to file ANDAs or obtain approval of our ANDAs and generate revenues and thus could have a material adverse effect on our business, results of operations and financial condition.

We operate globally and develop and manufacture products in our research and manufacturing facilities in multiple countries. Consequently, we face complex legal and regulatory requirements in multiple jurisdictions, which may expose us to certain financial and other risks. International sales and operations are subject to a variety of risks, including:

International markets are also affected by economic pressure to contain reimbursement levels and healthcare costs. Profitability from international operations may be limited by risks and uncertainties related to regional economic conditions, regulatory and reimbursement approvals, competing products, infrastructure development, intellectual property rights protection and our ability to implement our overall business strategy. We expect these risks will increase as we pursue our strategy to expand operations into new geographic markets. We may not succeed in developing and implementing effective policies and strategies in each location where we conduct business. Any failure to do so may harm our business, results of operations and financial condition.

Because certain of our products are and will be manufactured at our facilities located in China and Germany, in addition to our facilities in Israel, our operations are subject to risk inherent in doing business internationally. Such risks include the adverse effects on operations from corruption, war, international terrorism, civil disturbances, political instability, governmental activities, deprivation of contract and property rights and currency valuation changes.

Since 1978, the Chinese government has been reforming its economic and political systems, and we expect this to continue. Although we believe that these reforms have had a positive effect on the economic development of China and have improved our ability to successfully operate our facility in China, we cannot assure you that these reforms will continue or that the Chinese government will not take actions that impair our operations or assets in China.

In May 2010, our subsidiary Mapi Pharma Germany GmbH obtained approval from ILB for a grant of €500,000 (approximately $659,000), of which it received €435,000 (approximately $564,000). This grant expired in accordance with its terms in October 2013. Mapi Pharma Germany GmbH has filed two follow-up applications with ILB, one research and development grant application and one grant application for the establishment of a cGMP production facility in Germany. These two grant applications were approved, however, as of the date of this prospectus, we have not accepted these grants or subjected ourselves to any of the conditions associated with the grants. If we and Mapi Pharma Germany GmbH decide to accept these grants, certain obligations will be imposed upon us, primarily pertaining to the recruitment of a local employee for every €250,000 (approximately $326,000) received through the grants. If we fail to comply, we may be required to repay the grant funds.

The global economy has recently undergone a period of significant volatility which has led to diminished credit availability, declines in consumer confidence and increases in unemployment rates. There remains caution about the stability of the U.S. economy following the global financial crisis, and we cannot assure you that a new deterioration in the financial markets will not occur. Adverse economic conditions have, in the past, and could again in the future, lead to reduced consumer spending related to healthcare in general and pharmaceutical products in particular.

In addition, we are and will be exposed to many different industries and counterparties, including our partners under our alliance and collaboration agreements, suppliers of raw chemical materials, subcontractors that are performing research and development work for us or consulting us, clinical research organizations performing clinical trials work for us, and in the future, drug wholesalers and other customers that may be affected by an unstable economic environment. Any economic instability may affect these parties’ ability to fulfill their respective contractual obligations to us or cause them to limit or place burdensome conditions upon future transactions with us, each of which could materially and adversely affect our business, results of operations and financial position.

Furthermore, the capital and credit markets have experienced extreme volatility. Disruptions in the credit markets could make it harder and more expensive for us to obtain funding at times when we need additional capital to sustain or grow our business. The availability of additional financing will depend on a variety of factors such as market conditions and the general availability of credit. Future debt financing may not be available to us when required or may not be available on acceptable terms, and as a result we may be unable to grow our business, take advantage of business opportunities, or respond to competitive pressures.

Our success depends, in part, on our ability to obtain patent protection for our products, maintain the confidentiality of our trade secrets and know how, operate without infringing on the proprietary rights of others and prevent others from infringing our proprietary rights. We try to protect our proprietary position by, among other things, filing U.S., European, and other patent applications related to our products, inventions and improvements that may be important to the continuing development of our products. However, we cannot assure you that:

Because the patent position of pharmaceutical companies involves complex legal and factual questions, we cannot predict the validity and enforceability of patents with certainty. Our issued patents may not provide us with any competitive advantages, may be held invalid or unenforceable as a result of legal challenges by third parties or could be circumvented. Our competitors may also independently develop formulations, processes and technologies or products similar to ours or design around or otherwise circumvent patents issued to, or licensed by, us. Thus, any patents that we own or license from others may not provide any protection against competitors. Our pending patent applications, those we may file in the future or those we may license from third parties may not result in patents being issued. If these patents are issued, they may not provide us with proprietary protection or competitive advantages. The degree of future protection to be afforded by our proprietary rights is uncertain because legal means afford relatively limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

Patent rights are territorial; thus, the patent protection we do have will only extend to those countries in which we have issued patents. Even so, the laws of certain countries do not protect our intellectual property rights to the same extent as do the laws of the United States and the European Union. Competitors may successfully challenge our patents, produce similar drugs or products that do not infringe our patents, or produce drugs in countries where we have not applied for patent protection or that do not respect our patents. Furthermore, it is not possible to know the scope of claims that will be allowed in published applications and it is also not possible to know which claims of granted patents, if any, will be deemed enforceable in a court of law.

After the completion of development and registration of our patents, third parties may still act to manufacture and/or market products in infringement of our patent protected rights. Such manufacture and/or market of products in infringement of our patent protected rights is likely to cause us damage and lead to a reduction in the prices of our products, thereby reducing our anticipated profits.

In addition, due to the extensive time needed to develop, test and obtain regulatory approval for our products, any patents that protect our products may expire early during commercialization. This may reduce or eliminate any market advantages that such patents may give us. Following patent expiration, we may face increased competition through the entry of competing products into the market and a subsequent decline in market share and profits.

In addition to filing patents, we generally try to protect our trade secrets, know-how and technology by entering into confidentiality or non-disclosure agreements with parties that have access to it, such as our development and/or commercialization partners, employees, contractors and consultants. We also enter into agreements that purport to require the disclosure and assignment to us of the rights to the ideas, developments, discoveries and inventions of our employees, advisors, research collaborators, contractors and consultants while we employ or engage them. However, these agreements can be difficult and costly to enforce or may not provide adequate remedies. Any of these parties may breach the confidentiality agreements and willfully or unintentionally disclose our confidential information, or our competitors might learn of the information in some other way. The disclosure to, or independent development by, a competitor of any trade secret, know-how or other technology not protected by a patent could materially adversely affect any competitive advantage we may have over any such competitor.

To the extent that any of our employees, advisors, research collaborators, contractors or consultants independently develop, or use independently developed, intellectual property in connection with any of our projects, disputes may arise as to the proprietary rights to this type of information. If a dispute arises with respect to any proprietary right, enforcement of our rights can be costly and unpredictable and a court may determine that the right belongs to a third party.

The development, manufacture, use, offer for sale, sale or importation of our products may infringe on the claims of third-party patents or other intellectual property rights. The nature of claims contained in unpublished patent filings around the world is unknown to us and it is not possible to know which countries patent holders may choose for the extension of their filings under the Patent Cooperation Treaty, or other mechanisms. We may also be subject to claims based on the actions of employees and consultants with respect to the usage or disclosure of intellectual property learned at other employers. The cost to us of any intellectual property litigation or other infringement proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation or defense of intellectual property litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Intellectual property litigation and other proceedings may also absorb significant management time. Consequently, we are unable to guarantee that we will be able to manufacture, use, offer for sale, sell or import our products in the event of an infringement action.

In the event of patent infringement claims, or to avoid potential claims, we may choose or be required to seek a license from a third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be non-exclusive, which could potentially limit our competitive advantage. Ultimately, we could be prevented from commercializing a product or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement or other claims, we are unable to enter into licenses on acceptable terms. This inability to enter into licenses could harm our business significantly.

At times we may seek approval to market generic products before the expiration of patents for those products, based upon our belief that such patents are invalid, unenforceable, or would not be infringed by our products. As a result, we may be involved in patent litigation, the outcome of which could materially adversely affect our business. Based upon a complex analysis of a variety of legal and commercial factors, we may elect to market a generic product even though litigation is still pending. This could be before any court decision is rendered or while an appeal of a lower court decision is pending. To the extent we elect to proceed in such a manner, if the final court decision is adverse to us, we could be required to cease the sale of the infringing products and face substantial liability for patent infringement. These damages may be significant as they may be measured by a royalty on our sales or by the profits lost by the patent owner and not by the profits earned. Because of the discount pricing typically involved with generic pharmaceutical products, patented brand products generally realize a significantly higher profit margin than generic pharmaceutical products. In the case of a willful infringer, the definition of which is not precise and depends on judicial determination, these damages may even be trebled.

Furthermore, there may be risks involved in entering into in-licensing arrangements for products, which are often conditioned upon the licensee’s sharing in the patent-related risks.

For business reasons, we will continue to examine such product opportunities (i.e., involving non-expired patents) going forward and this could result in patent litigation and adverse judicial determinations, the outcomes of which may impact our profitability.

Our ability to achieve continued growth and profitability through sales of generic pharmaceuticals is dependent on our success in challenging patents, developing non-infringing products or developing products with increased complexity to provide launch opportunities with U.S. market exclusivity or limited competition. The failure to continue to develop such opportunities could adversely affect our sales and profitability.

To the extent that we succeed in being the first to market a generic version of a significant product, and particularly if we are the only company authorized to sell during the 180-day period of exclusivity in the U.S. market, as provided under the Hatch-Waxman Act, our sales, profits and profitability can be substantially increased in the period following the introduction of such product and prior to a competitor’s introduction of an equivalent product. Even after the exclusivity period ends, there is often continuing benefit from being the first generic product in the market.

The number of significant new generic products for which Hatch-Waxman exclusivity is available, and the size of those product opportunities, vary significantly over time and are expected to decrease over the next several years in comparison to those available in the past. Patent challenges have become more difficult and costly in recent years. Additionally, we increasingly expect to share the 180-day exclusivity period with other generic competitors, which diminishes the commercial value of the exclusivity.

The 180-day market exclusivity period is triggered by commercial marketing of the generic product after approval or, in certain cases, can be triggered by a final court decision that is no longer subject to appeal holding the applicable patents to be invalid, unenforceable or not infringed. However, the exclusivity period can be forfeited by our failure to launch a product following such a court decision. The Hatch-Waxman Act also contains other forfeiture provisions that may deprive the first “Paragraph IV” filer of exclusivity if certain conditions are met, some of which may be outside our control. Accordingly, we may face the risk that any exclusivity period we obtain is triggered or forfeited before we are able to commercialize a product, and therefore we may not be able to exploit a given exclusivity period for one or more specific products. It is important to recognize there is no guarantee we will obtain such exclusivity in any situation. In fact, a competitor might obtain exclusivity that would block our 505(b)(2) NDA or ANDA if the competitor obtains approval first.

The pharmaceutical industry is subject to regulation by various governmental authorities. The FDA, European Medicines Agency and other healthcare regulators enforce strict standards with respect to the development, manufacturing, labeling, and marketing of pharmaceutical products and the facilities in which such pharmaceutical products are tested and manufactured. Our plant currently under construction in Neot Hovav, Israel must be registered with the FDA as well as regulators outside the United States, and our products manufactured in the plant must be made in a manner consistent with cGMP. Failure to comply with these requirements may lead to financial penalties, compliance expenditures, total or partial suspension of production and/or distribution, suspension of the applicable regulator’s review of a company’s submissions, enforcement actions, product recalls, injunctions and even criminal prosecution, any of which could materially and adversely affect our business, financial condition and results of operations.

Our research and development and manufacturing involve the use of hazardous materials and chemicals and related equipment. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures and the handling of biohazardous materials. Insurance may not provide adequate coverage against these potential liabilities and we do not maintain insurance for environmental liability claims that may be asserted against us. Moreover, additional foreign and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with such regulations and pay substantial fines or penalties if we violate any of these laws or regulations.

With respect to environmental, safety and health laws and regulations, we cannot accurately predict the outcome or timing of future expenditures that we may be required to make in order to comply with such laws as they apply to our operations and facilities. We are also subject to potential liability for the remediation of contamination associated with both present and past hazardous waste generation, handling, and disposal activities. We will be periodically subject to environmental compliance reviews by environmental, safety, and health regulatory agencies. Environmental laws are subject to change and we may become subject to stricter environmental standards in the future and face larger capital expenditures in order to comply with environmental laws which could have a material adverse effect on our business.

Healthcare costs have risen significantly over the past decade. On March 23, 2010, President Obama signed the “Patient Protection and Affordable Care Act” (P.L. 111-148) and on March 30, 2010, the President signed the “Health Care and Education Reconciliation Act” (P.L. 111-152), collectively commonly referred to as the “Healthcare Reform Law” which, among other things, requires most individuals to have health insurance, effective January 1, 2014, establishes new regulations on health plans (with the earliest changes for certain benefits beginning with plan years commencing after September 23, 2010), creates insurance exchanges (effective January 2014) and imposes new requirements and changes in reimbursement or funding for healthcare providers, device manufacturers and pharmaceutical companies (with the earliest changes effective on March 23, 2010) and other changes staged in thereafter. The Healthcare Reform Law imposes additional requirements and obligations upon our company, which, to a certain extent, will depend upon the mix of products we sell. These changes include, among other things:

While the aforementioned Healthcare Reform Law may increase the number of patients who have insurance coverage for our products, the Healthcare Reform Law also restructures payments to Medicare managed care plans and reduces reimbursements to many institutional customers. Accordingly, the timing on the insurance mandate, the change in the Medicaid rebate levels, the additional fees imposed upon our company if it markets branded drugs, other compliance obligations, and the reduced reimbursement levels to institutional customers may result in a loss of revenue and could adversely affect our business. In addition, the Healthcare Reform Law contemplates the promulgation of significant future regulatory action which may also further affect our business.

Our business and operation will be directly influenced by the political, economic and military conditions affecting Israel at any given time. A change in the security and political situation in Israel and in the economy could impede the raising of the funds required to finance our research and development plans and to create joint ventures with third parties and could otherwise have a material adverse effect on our business, operating results and financial condition. Although Israel has entered into various agreements with Egypt, Jordan and the Palestinian Authority, there have been times since October 2000 when Israel has experienced an increase in unrest and terrorist activity. The establishment in 2006 of a government in the Palestinian Authority by representatives of the Hamas militant group has created additional unrest and uncertainty in the region.

During the Second Lebanon War of 2006, between Israel and Hezbollah, a militant Islamic movement, thousands of rockets were fired from Lebanon up to 50 miles into Israel. In January 2009, Israel attacked, during three weeks, Hamas strongholds in the Gaza strip, in reaction to rockets that were fired from Gaza up to 25 miles into Israel. In November 2012, Israel launched a seven-day operation against Hamas operatives in the Gaza strip in response to Palestinian groups launching over 100 rockets at Israel over a 24-hour period. Major hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could result in damage to our facilities and likewise have a material adverse effect on our business, operating results and financial condition.

Popular uprisings in various countries in the Middle East and North Africa are affecting the political stability of those countries. Such instability may lead to deterioration in the political and trade relationships that exist between the State of Israel and these countries. Furthermore, several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in the region continue or intensify. Such restrictions may seriously limit our ability to sell our products to customers in those countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or significant downturns in the economic or financial condition of Israel, could adversely affect our operations and product development, cause our revenues to decrease and adversely affect the share price of publicly traded companies having operations in Israel, such as us. Similarly, Israeli corporations are limited in conducting business with entities from several countries.

Strikes and work-stoppages occur relatively frequently in Israel. If Israeli trade unions threaten additional strikes or work-stoppages and such strikes or work-stoppages occur, those may, if prolonged, have a material adverse effect on the Israeli economy and on our business, including our ability to deliver products to our customers and to receive raw materials from our suppliers in a timely manner.

All of our executive officers and key employees of our business reside in Israel and although most of the management team is no longer required to perform reserve duty, some may be required to perform annual military reserve duty and may be called for active duty under emergency circumstances at any time. Our operations could be disrupted by the absence for a significant period of time of one or more of these officers or key employees due to military service. Any such disruption could adversely affect our business, results of operations and financial condition.

In the future, we expect that a substantial portion of our revenues will be generated in U.S. dollars, Euros and other foreign currencies, although we currently incur a significant portion of our expenses in currencies other than U.S. dollars, and mainly in NIS. Our financial records are maintained, and will be maintained, in U.S. dollars, which is our functional currency. As a result, our financial results may be affected by fluctuations in the exchange rates of currencies in the countries in which our prospective products may be sold.

The ability of an Israeli company to pay dividends is governed by Israeli law, which provides that cash dividends may be paid only out of retained earnings as determined for statutory purposes in Israeli currency. In the event of a devaluation of the Israeli currency against the U.S. dollar, the amount in U.S. dollars available for payment of cash dividends out of prior years’ earnings will decrease.

The Israeli government currently provides major tax and capital investment incentives to domestic companies, as well as grant and loan programs relating to research and development and marketing and export activities. In recent years, the Israeli Government has reduced the benefits available under these programs and the Israeli Governmental authorities have indicated that the government may in the future further reduce or eliminate the benefits of those programs. We currently take advantage of these programs. There is no assurance that such benefits and programs would continue to be available in the future to us. If such benefits and programs were terminated or further reduced, it could have an adverse effect on our business, operating results and financial condition.

We have received royalty-bearing grants from the government of Israel through the OCS, for the financing of a portion of our research and development expenditures in Israel. When know-how is developed using OCS grants, the Encouragement of Industrial Research and Development Law 5744-1984 (the “R&D Law”), as well as the terms of these grants restrict our ability to manufacture particular products and transfer particular technology and know-how, which were developed as part of the OCS’s programs, outside of Israel. Transfer of know-how outside of Israel where the transferring company remains an operating Israeli entity or where the transferring company ceases to exist as an Israeli entity, requires pre-approval by the OCS, which may at its sole discretion grant such approval and impose certain conditions, including requirement of payment of a redemption fee (referred to in the law as the “Base Amount”) calculated according to the formula provided in the R&D Law which takes into account the consideration for such know-how paid to us in the transaction in which the technology is transferred. In 2012, new regulations were promulgated which establish a maximum payment of the redemption fee paid to the OCS under the formulas provided in the R&D Law and differentiates between certain situations, as further detailed in such regulations. In addition, the products may be manufactured outside Israel by us or by another entity only if prior approval is received from the OCS (such approval is not required for the transfer of less than 10% of the manufacturing capacity in the aggregate). As a condition for obtaining approval to manufacture outside Israel, we would be required to pay increased royalties, as defined under the R&D Law. The total amount to be repaid to the OCS would be adjusted to an amount which constitutes 120% to 300% of the grants, depending on the manufacturing volume that is performed outside Israel. These restrictions may impair our ability to enter into agreements for those products or technologies without the approval of the OCS. We cannot be certain that any approval of the OCS will be obtained on terms that are acceptable to us, or at all. Furthermore, in the event that we undertake a transaction involving the transfer to a non-Israeli entity of technology developed with OCS funding pursuant to a merger or similar transaction, the consideration available to our shareholders may be reduced by the amounts we are required to pay to the OCS. Any approval, if given, will generally be subject to additional financial obligations. Failure to comply with the requirements under the R&D Law may subject us to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to criminal proceedings. See “Business – Government regulations – Regulations in Israel.”

We are incorporated in Israel. All of our executive officers and directors reside in Israel and most of our assets reside outside of the United States. Therefore, a judgment obtained against us or any of these persons in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It may also be difficult to effect service of process on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel.

Even if an Israeli court agrees to hear such a claim, it may determine that Israeli, and not U.S., law is applicable to the claim. Under Israeli law, if U.S. law is found to be applicable to such a claim, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would be governed by Israeli law. There is little binding case law in Israel addressing these matters. See “Enforceability of Civil Liabilities” for additional information on your ability to enforce civil claim against us and our executive officers and directors.

Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions. These provisions of Israeli law may delay, prevent or make difficult an acquisition of us, which could prevent a change of control and therefore depress the price of our shares.

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders, especially for those shareholders whose country of residence does not have a tax treaty with Israel which exempts such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.

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

Some of our operations in Israel, referred to as “Preferred Enterprises,” will entitle us to certain tax benefits under the Law for the Encouragement of Capital Investments, 5719-1959, or the Investment Law, once we being to produce revenues. If we do not meet the requirements for maintaining these benefits, they may be reduced or cancelled and the relevant operations would be subject to Israeli corporate tax at the standard rate, which is set at 26.5% for 2014 and thereafter. In addition to being subject to the standard corporate tax rate, we could be required to refund any tax benefits that we have already received, plus interest and penalties thereon. Even if we continue to meet the relevant requirements, the tax benefits that our current “Preferred Enterprise” is entitled to may not be continued in the future at their current levels or at all. If these tax benefits were reduced or eliminated, the amount of taxes that we pay would likely increase, as all of our operations would consequently be subject to corporate tax at the standard rate, which could adversely affect our results of operations. Additionally, if we increase our activities outside of Israel, for example, by way of acquisitions, our increased activities may not be eligible for inclusion in Israeli tax benefits programs. See “Taxation and government programs – Israeli tax considerations and government programs – Tax benefits under the 2011 Amendment” for additional information concerning these tax benefits.

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

The initial public offering price of our ordinary shares will substantially exceed the net tangible book value per share of our ordinary shares immediately after this offering. Therefore, based on an assumed public offering price of $14.00 per share, the midpoint of the initial public offering price range set forth on the cover page of this prospectus, if you purchase our ordinary shares in this offering, you will suffer, as of December 31, 2013, immediate dilution of $10.74 per share, or $10.48 if the underwriters exercise their option to purchase additional ordinary shares, in net tangible book value after giving effect to the sale of 2,857,143 ordinary shares in this offering at an initial public offering price of $14.00 per share less underwriting discounts and commissions and the estimated expenses payable by us, and the application of the net proceeds as described in “Use of proceeds.” As a result of this dilution, as of December 31, 2013, investors purchasing ordinary shares from us in this offering will have contributed 57.43% of the total amount of our total gross funding to date but will own only 18.60% of our equity. In addition, if outstanding options to purchase our ordinary shares are exercised in the future, you will experience additional dilution. See “Dilution.”

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

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

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

The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our business. The price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

As of April 15, 2014, Allegro, together with the Marom Group, beneficially own 100% of our ordinary shares. We have been informed that Allegro and the Marom Group intend to enter into a voting agreement pursuant to which they will agree to vote for each other’s nominees for our board of directors provided that each party maintains their shareholdings above certain thresholds. As a result of this concentration of share ownership and voting agreement, Allegro and the Marom Group, acting together, will have the ability to control all matters submitted to our shareholders for approval, including the election of directors and approval of any merger or consolidation. This concentration of voting power could delay or prevent an acquisition of our company on terms that other shareholders may desire. In addition, as the interests of Allegro and the Marom Group may not always coincide with the interests of our minority shareholders, this large concentration of voting power may lead to shareholder votes that are inconsistent with the best interests of our minority shareholders or the best interest of us as a whole.

In addition, as a foreign private issuer, we will be exempt from the rules and regulations under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual, quarterly and current reports and financial statements with the Securities and Exchange Commission (“SEC”) as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.

We currently intend to use the net proceeds from this offering to expand our clinical development program, finance the completion of our manufacturing plant in Neot Hovav, Israel, continue the development and commercialization plan of our complex API products; and for general corporate purposes, including working capital requirements. For more information, see “Use of Proceeds.” However, our management will have broad discretion in the application of the net proceeds. Our shareholders may not agree with the manner in which our management chooses to allocate the net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income.

As a public company whose ordinary shares are listed in the United States, we will incur accounting, legal and other expenses that we did not incur as a private company, including costs associated with our reporting requirements under the Exchange Act. We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as rules implemented by the SEC and the Nasdaq Capital Market, and provisions of Israeli corporate law applicable to public companies. We expect that these rules and regulations will increase our legal and financial compliance costs, introduce new costs such as investor relations and stock exchange listing fees, and will make some activities more time-consuming and costly. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

As an “emerging growth company,” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the SEC thereunder). When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

Pursuant to Section 404 of the Sarbanes-Oxley Act and the related rules adopted by the SEC and the Public Company Accounting Oversight Board, starting with the second annual report that we file with the SEC after the closing of this offering, our management will be required to report on the effectiveness of our internal control over financial reporting. In addition, once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above and depending on our status as per Rule 12b-2 of the Exchange Act, our independent registered public accounting firm may also need to attest to the effectiveness of our internal control over financial reporting under Section 404. We have not yet commenced the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in our existing internal controls. This process will require the investment of substantial time and resources, including by our chief financial officer and other members of our senior management. As a result, this process may divert internal resources and take a significant amount of time and effort to complete. In addition, we cannot predict the outcome of this determination and whether we will need to implement remedial actions in order to implement effective controls over financial reporting. The determination and any remedial actions required could result in us incurring additional costs that we did not anticipate, including the hiring of outside consultants. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. As a result, we may experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. If we are unable to implement any of the required changes to our internal control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could adversely affect our operations, financial reporting and/or results of operations and could result in an adverse opinion on internal controls from our independent auditors.

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

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements that are applicable to other public companies that are not “emerging growth companies.” Most of such requirements relate to disclosures that we would only be required to make if we also ceased to be a foreign private issuer in the future, for example, the requirement to hold stockholder advisory votes on executive and severance compensation and executive compensation disclosure requirements for U.S. companies. However, as a foreign private issuer, we would still be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We are exempt from such requirement for as long as we remain an emerging growth company, which may be up to five fiscal years after the date of this offering. We will remain an emerging growth company until the earliest of: (a) the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the closing of this offering; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. When we are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.

The JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. This means that an “emerging growth company,” such as us, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to utilize this exemption and, therefore, until we cease to be an emerging growth company, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies until those standards apply to private companies. In addition, as a result of this election, our future financial statements may not be comparable to those of public companies that are not emerging growth companies and are required to comply with the public company effective dates for new or revised accounting standards.

After this offering, there will be 15,357,143 ordinary shares outstanding. Sales by us or our shareholders of a substantial number of our ordinary shares in the public market following this offering, or the perception that these sales might occur, could cause the market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities. Of our issued and outstanding shares, all of the ordinary shares sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

Following completion of this offering, approximately 12,500,000 of our outstanding ordinary shares will be beneficially owned by shareholders that have agreed with the underwriters that, subject to limited exceptions, for a period of 180 days after the date of this prospectus, they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any ordinary shares or any securities convertible into or exercisable or exchangeable for ordinary shares, or in any manner transfer all or a portion of the economic consequences associated with the ownership of ordinary shares, or cause a registration statement covering any ordinary shares to be filed, without the prior written consent of Aegis Capital Corp, which may, in their sole discretion and at any time without notice, release all or any portion of the shares subject to the corresponding lock-up agreements. After the expiration of the lock-up period, these shares can be resold into the public markets in accordance with the requirements of Rule 144, subject to certain volume limitations. In addition, starting nine months after the closing of this offering, the Marom Group and Allegro are entitled to require that we register their shares under the Securities Act for resale into the public markets. All shares sold pursuant to an offering covered by such registration statement will be freely transferable.

In addition, we intend to file one or more registration statements on Form S-8 with the SEC covering all of the ordinary shares issuable under our 2014 Equity Incentive Plan or any other incentive plan that we may adopt, and such shares will be freely transferable, except for any shares held by “affiliates,” as such term is defined in Rule 144 under the Securities Act. The market price of our ordinary shares may drop significantly when the restrictions on resale by our existing shareholders lapse and these shareholders are able to sell our ordinary shares into the market.

Upon the filing of the registration statements and following the expiration of the lock-up restrictions described above, the number of ordinary shares that are potentially available for sale in the open market will increase materially, which could make it harder for the value of our ordinary shares to appreciate unless there is a corresponding increase in demand for our ordinary shares. This increase in available shares could result in the value of your investment in our ordinary shares decreasing.

In addition, a sale by the company of additional ordinary shares or similar securities in order to raise capital might have a similar negative impact on the share price of our ordinary shares. A decline in the price of our ordinary shares might impede our ability to raise capital through the issuance of additional ordinary shares or other equity securities, and may cause you to lose part or all of your investment in our ordinary shares.

We do not anticipate paying any cash dividends on our ordinary shares for at least the next several years following this offering. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our ordinary shares will be the investors’ sole source of gain for the next several years. In addition, Israeli law limits our ability to declare and pay dividends, and may subject us to certain Israeli taxes.

We make forward-looking statements in this prospectus that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

You should review carefully the risks and uncertainties described under the heading “Risk Factors” in this prospectus for a discussion of these and other risks that relate to our business and investing in our ordinary shares. The forward-looking statements contained in this prospectus are expressly qualified in their entirety by this cautionary statement. Except as required by law, we undertake no obligation to update publicly any forward-looking statements after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

We estimate that our net proceeds from this offering will be approximately $35.5 million, or approximately $41 million if the underwriters exercise in full their option to purchase additional ordinary shares, based upon an assumed initial public offering price of $14.00 per share (the midpoint of the initial public offering price range set forth on the cover page of this prospectus), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed public offering price would increase (decrease) the net proceeds we receive from this offering by $2.6 million, assuming that the number of ordinary shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses.

The primary purposes of this offering are to raise additional capital, create a U.S. public market for our ordinary shares, allow potential future access to the U.S. public markets should we need more capital in the future, increase the profile and prestige of our company with existing and possible strategic partners and make our shares more valuable and attractive to our employees and potential employees for compensation purposes.

We expect to use the net proceeds from this offering as follows: (i) approximately $12 million to expand our clinical development program, specifically with respect to Glatiramer Acetate Depot and Risperidone LAI, as well as other products; (ii) approximately $ 7 million to finance the completion of our manufacturing plant in Neot Hovav, Israel; (iii) approximately $3 million to continue the development and commercialization of our complex API and formulation products; and (iv) the balance of the net proceeds for general corporate purposes, including working capital requirements. We believe that based on the anticipated size of this offering, the net proceeds from the offering, together with our current cash reserves, should be sufficient to complete Phase II trials in both Europe and Israel and a Phase III trial for Glatiramer Acetate Depot and a bioequivalence trial for Risperidone LAI in India.

Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with certainty any or all of the particular uses for the net proceeds to be received upon the completion of this offering, or the amounts, if any, that we will actually spend on the uses set forth above. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors, including our ability to obtain additional financing, the progress, cost and results of our preclinical and clinical development programs, and whether we are able to enter into future product development partnerships and technology license arrangements. As a result, our management will have broad discretion in the application of the net proceeds, which may include uses not set forth above, and investors will be relying on our judgment regarding the application of the net proceeds from this offering.

Pending their use, we plan to invest the net proceeds from this offering in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government or to hold such proceeds as cash.

We have never declared or paid any cash dividends on our ordinary shares and we anticipate that, for the foreseeable future, we will retain any future earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends for at least the next several years.

The distribution of dividends may also be limited by the Companies Law, which permits the distribution of dividends only out of retained earnings or earnings derived over the two most recent fiscal years, whichever is higher, provided that there is no reasonable concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become due. Our articles of association provide that dividends will be paid at the discretion of, and upon resolution by, our board of directors, subject to the provision of the Companies Law.

The following table sets forth our capitalization as of December 31, 2013 on:

You should read this table in conjunction with our audited consolidated financial statements and related notes as of December 31, 2013 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

The following table illustrates the immediate increase in our consolidated net tangible book value of $ per ordinary share and the immediate pro forma dilution to new investors:

A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per ordinary share (the midpoint of the range on the cover of this prospectus) would increase (decrease) the consolidated net tangible book value attributable to this offering by $0.93 per ordinary share, the consolidated net tangible book value after giving effect to this offering by $0.17 per ordinary share and the dilution per ordinary share to new investors in this offering by $11.11, assuming that the number of ordinary shares offered remains the same and after deducting underwriting discounts and commissions and estimated offering expenses.

If the underwriters’ over-allotment option to purchase additional shares from us is exercised in full, and assuming an initial public offering price of $14.00 per ordinary share (the midpoint of the range on the cover of this prospectus), the consolidated net tangible book value attributable to this offering would be $11.61 per ordinary share, the consolidated net tangible book value after giving effect to this offering would be $3.52 per ordinary share and the dilution per ordinary share to new investors in this offering would be $10.48, after deducting underwriting discounts and commissions and estimated offering expenses.

The table below summarizes, as of December 31, 2013, the differences for our existing shareholders and new investors in this offering, with respect to the number of ordinary shares purchased from us, the total consideration paid and the average per ordinary share price paid before deducting fees and offering expenses.

The following table sets forth our selected consolidated financial data, which is derived from our consolidated financial statements, which have been prepared in accordance with IFRS. The selected consolidated statement of financial position data as of December 31, 2013 and 2012 and our selected statement of comprehensive loss data for the years ended December 31, 2013 and 2012 is derived from our audited consolidated financial statements presented elsewhere in this prospectus. You should read this selected financial data in conjunction with, and it is qualified in its entirety by, reference to our historical financial information and other information provided in this prospectus including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. The historical results set forth below are not necessarily indicative of the results to be expected in future periods.

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of the prospectus contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. See “Special Note Regarding Forward-Looking Statements.”

We are a development stage pharmaceutical company, engaged in the development of high-barrier-to-entry and high-added value generic drugs that include complex APIs, formulations and LCM products that target large markets.

We are currently developing two LCM products for the treatment of MS and neuropathic pain, a portfolio of 13 complex APIs, five of which we intend to develop formulations for, a generic version of Risperdal Consta, Johnson & Johnson’s long acting injection of Risperidone for the treatment of schizophrenia and bipolar disorder, and an NCE, a novel pentapolymer developed for treating autoimmune diseases such as MS.

We currently do not have any products approved for sale in any jurisdiction. Our operations have been funded, to date, primarily from a single round of financing completed in 2008, research and development grants we received from the OCS and grants from ILB. We have incurred operating losses each year since our inception. As of December 31, 2013, we had an accumulated deficit of approximately $11.3 million.

The following is a description of each of our primary sources of funding, other than the offering to which this prospectus relates.

As of December 31, 2013, we have not generated revenues from the sale of any product. We have generated only non-material income from research and development milestone payments by our co-development partner under the collaborative agreement related to the development and manufacture of Pregabalin ER. We expect to generate revenues starting in 2015, mainly from more significant research and development milestone payments by our co-development partner under the collaborative agreement related to the development and manufacture of Pregabalin ER and thereafter from royalty payments once our products are sold. In addition, we believe we will be able to launch our complex API and formulation products once their reference listed products go off patent, starting in 2016, and expect to launch our LCM products when we have completed development of and received regulatory approval for such products. We anticipate that we will be able to begin selling our LCM products starting in 2018.

We are currently building a development and manufacturing plant in the industrial park Neot Hovav, Israel. The plant will be an organic synthesis facility, designed for the production of APIs and intermediates. The plant is expected to be operational in the second half of 2014. As of December 31, 2013, we invested a total of $4,316,000 (net of $515,000 in grants received or receivable) in the plant and related equipment out of the $15,000,000 we estimate will be required to complete construction and purchasing equipment. We expect to use $8 million of the net proceeds from this offering to finance the completion of construction.

Our current revenues consist of research and development milestone payments received from our co-development partner under the collaborative agreement related to the development and manufacture of Pregabalin ER.

Our current operating expenses consist of two components: research and development expenses and general and administrative expenses.

Our research and development expenses consist primarily of salaries and related personnel expenses, cost of third party consultants, raw materials, costs related to conducting preclinical studies, patent costs and travel expenses.

We estimate that the costs for developing each API will be from $250,000 to $500,000. For our Glatiramer Acetate Depot and Risperidone LAI products, we expect costs to be significantly higher, and the overall expenses for each of these products until reaching clinical trials is estimated to be approximately $1.5 million to $2.0 million. We estimate that the cost to conduct clinical trials will be approximately $2 million for Risperidone LAI and approximately $30 million for the Glatiramer Acetate Depot. We intend to engage with a partner in order to conduct these clinical trials. The development costs for our Pregabalin ER, which we estimate will total approximately $ , have been partially paid and will continue to be paid by our partner pursuant to the development milestones under the collaborative agreement. For more information, see “Collaborative Agreements - Pregabalin manufacturing agreement.” Part of our research and development expenses have been and, we believe will continue to be, financed by our OCS and ILB grants.

The following table shows the breakdown of our research and development expenses for the periods indicated:

We expect our research and development expenses to increase significantly as our current products reach more advanced and expensive stages of development and as we increase the number of products in our pipeline. We also plan to initiate several clinical trials, starting in the first half of 2014.

General and administrative expenses consist primarily of salaries and related personnel expenses, professional service fees for accounting, legal, bookkeeping, facilities costs and depreciation expenses.

The following table shows the breakdown of our general and administrative expenses for the periods indicated:

We expect that our general and administrative expenses, particularly salaries, accounting and legal fees, will increase when we become subject to U.S. public reporting requirements as a result of the associated compliance and disclosure costs.

Financing expenses and income consist mainly of interest income on bank deposits and trading securities, change in the fair value of trading securities and foreign currencies gains or losses. In addition, financing expenses and income include the change in the fair value of an anti-dilution derivative held by our majority shareholder and exchange rate differences on our obligations related to a put option held by our majority shareholder. These rights will be terminated upon the closing of this offering.

The following table shows the breakdown of our financing income (expenses) for the periods indicated:

We describe our significant accounting policies and estimates more fully in Note 2 and Note 3 to our consolidated financial statements as of and for the year ended December 31, 2013 contained elsewhere in this prospectus. We believe that the accounting policies and estimates below are critical in order to fully understand and evaluate our financial condition and results of operations.

We prepare our consolidated financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB.

In preparing these consolidated financial statements, management has made judgments, estimates and assumptions that affect the application of our accounting policies and the reported amounts recognized in our consolidated financial statements. Actual results may differ from these estimates.

We measured the fair value of the derivative associated with the anti-dilution right held by our majority shareholder using the Monte Carlo simulation. The Monte Carlo simulation yields a numerical solution that considers the various terms of the agreement, our equity value, the shareholder’s investment and the number of our shares held by the shareholder for each of the valuation dates. Measurement inputs include our equity fair value estimation less the value of the put option right embedded in the redeemable shares, expected term of the derivative, expected volatility, expected dividends and the risk-free interest rate.

The parameters used to calculate the fair values of the derivative are as follows:

On April 5, 2012, the JOBS Act was signed into law. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to utilize this exemption and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. In addition, as a result of this election, our future financial statements may not be comparable to those of public companies that are not emerging growth companies and are required to comply with public company effective dates for new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we also elected or may elect to rely on other exemptions, including without limitation, not (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the closing of this offering; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act.

Below is a summary of our results of operations for the periods indicated:

During the year ended December 31, 2013, we generated $ $13,000 in income upon the achievement of a research and development milestone under the collaborative agreement related to the commercialization of Pregabalin ER (for more information, see “Business – Collaborative agreements – Pregabalin manufacturing agreement”), compared to $ $194,000 for the year ended December 31, 2012, which was also due to the achievement of a research and development milestone under the same agreement.

Our research and development expenses amounted to $ 2,079,000 for the year ended December 31, 2013, a decrease of $402,000, or 16%, compared to $2,481,000 for the year ended December 31, 2012. The decrease was primarily due to a decrease in usage of materials, subcontractors and consultants. See the table set forth under “Financial overview - Operating expenses – Research and development expenses” above for a breakdown of each component of our research and development expenses during the periods.

During the year ended December 31, 2013, we recognized $294,000 and $0 from the OCS and ILB, respectively, compared to $215,000 and $309,000 from the OCS and ILB, respectively, for the year ended December 31, 2012. The grants received from the OCS and ILB are recognized when we are entitled to receive them.

Our general and administrative expenses totaled $2,113,000 for the year ended December 31, 2013, an increase of $202,000, or 11%, compared to $1,911,000 for the year ended December 31, 2012. See the table set forth under “Financial Overview – Operating expenses – General and administrative expenses” above for a breakdown of each component of our general and administrative expenses during the periods.

As a result of the foregoing, our operating loss for the year ended December 31, 2013 was $4,179,000, similar to the operating loss of $4,198,000 for the year ended December 31, 2012.

We recognized financing income of $2,708,000 for the year ended December 31, 2013, a decrease of $666,000 compared to financing income of $3,374,000 for the year ended December 31, 2012. The decrease in the financing income was mainly due to changes in the fair value of the anti-dilution derivative held by our majority shareholder and changes in the fair value of our investment in trading securities. See the table set forth under “Financial overview – Financing expenses and income” above for a breakdown of each component of our financing income during the periods.

Primarily as a result of the foregoing, our loss for the year ended December 31, 2013 was $1,492,000, as compared to a loss of $845,000 for the year ended December 31, 2012, an increase of $647,000, or 77%. The increase in the net loss is mainly due to the decrease in financing income.

See the table set forth under “Results of operations” above for a breakdown of each component of our net loss during the periods.

From our inception through December 31, 2013, we have funded our operations principally from a single round of financing completed in 2008 in the amount of $ 29,654,000and grants received from the OCS and ILB in the aggregate amount of $1,132,000. As of December 31, 2013, we had $2,305,000 in cash and cash equivalents and an additional $6,179,000 in trading securities.

The table below shows our cash flow activities for the periods indicated:

Net cash used in operating activities of $3,102,000 during the year ended December 31, 2013 was primarily used for payments of approximately $741,000 to research and development advisors and subcontractors, approximately $248,000 for patent registration costs and fees and approximately $2,640,000 for salaries, less approximately $779,000 of grants received from the OCS and ILB and interest received from our investing activities. The remaining amount was used for travel, rent and other miscellaneous expenses.

Net cash used in operating activities of approximately $2,907,000 during the year ended December 31, 2012 was primarily used for payments of approximately $1,226,000 to research and development advisors and subcontractors, approximately $380,000 for patent registration costs and fees and approximately $2,480,000 for salaries, offset by approximately $1,288,000 of grants and interest received. The remaining amount was used for travel, rent and other miscellaneous expenses.

Net cash provided by investing activities of $1,356,000 and $4,441,000 during the year ended December 31, 2013 and 2012, respectively, derived mainly from the sale of trading securities to finance operating activities in the amount of $3,077,000 and $1,870,000, respectively, less cash invested in fixed assets of approximately $4,436,000 and $6,315,000, respectively. Of the cash invested in fixed assets during the year ended December 31, 2013, we invested a net amount of $4,316,000, in our production plant in Neot Hovav. The plant was granted a “Preferred Enterprise” status by the Israeli government, which entitles us to cash grants of 20% of the amount of the approved investment in the plant (which may be increased by an additional 4%). In addition, depending on the fulfillment of certain conditions, income generated from products manufactured at the plant will be entitled to a reduced tax rate of 9% (compared to a 26.5% corporate income tax rate in 2014).

We have financed our operations to date primarily through proceeds from a single financing round in 2008 and grants received from the OCS and ILB. We have incurred operating losses and generated negative cash flows from operations since inception. To date, we have not generated any revenue from the sale of products.

As of December 31, 2013, our cash, cash equivalents, short term deposits and investment in trading securities totaled $8,484,000. We believe that these resources will be adequate to meet our capital expenditure requirements and liquidity needs for the next year.

We also believe that our existing cash resources and the net proceeds from this offering will be sufficient to fund our projected cash requirements approximately through 2016. Depending on the progress of our development program and its success, we may require additional financing in the future to fund our operations.

Our future capital requirements will depend on many factors, including:

Our future capital needs may require us to raise additional capital. We may be unable to raise sufficient additional capital when we require it or upon terms favorable to us. In addition, the terms of any securities we issue in future financings may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then outstanding. If we are unable to obtain adequate funds on reasonable terms, we will need to curtail operations significantly, including possibly postponing anticipated clinical trials or entering into financing agreements with unattractive terms.

The following table summarizes our significant contractual obligations at December 31, 2013:

In addition, we have contractual obligations in respect to an anti-dilution right and a put option held by our majority shareholder which as at December 31, 2013 amount to $103,000 and $4,133,000, respectively, which will be terminated upon the closing of this offering and pursuant to a previous engagement with an investment banker, we may be required to pay a tail fee of $300,000 in connection with the offering.

We currently do not have any off-balance sheet arrangements.

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Accordingly, a substantial majority of our financial resources are held in deposits and securities that bear interest. Given the current low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of foreign currency exchange rates, which is discussed in detail in the following paragraph.

Our results of operations and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. As discussed above, the vast majority of our liquid assets are held in U.S. dollars, and a certain portion of our expenses is denominated in NIS. For instance, in 2013, approximately 57% of our operating expenses were denominated in NIS. Changes of 3% and 5% in the U.S. dollar/NIS exchange rate would have increased/decreased operating expenses by 2% and 3%, respectively, during 2013. However, these historical figures may not be indicative of future exposure, as we expect that the percentage of our NIS denominated expenses will materially decrease in the near future, therefore reducing our exposure to exchange rate fluctuations.

We do not hedge our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

We are a development stage pharmaceutical company, engaged in the development of high-barrier to entry and high-added value generic drugs that include complex APIs, formulations and LCM products that target large markets.

Our LCM portfolio focuses on big-market products, consisting of (i) Glatiramer Acetate Depot, a once-monthly injection for the treatment of MS, (ii) Pregabalin ER, extended release capsules for the treatment of neuropathic pain and epilepsy, and (iii) Risperidone LAI, a depot formulation of Risperdal Consta. We are developing Pregabalin ER currently only in Latin America, although further development in the U.S. and the European Union is expected to be either under the ANDA or 505(b)(2) shortened regulatory pathway. We expect that Risperidone LAI will also be developed under either the ANDA or 505(b)(2) shortened regulatory pathway.

Our current API portfolio consists of 13 complex APIs and formulations scheduled to launch between 2017 and 2028, with early pre-patent expiration quantities of registration batches to be supplied to generic pharmaceutical companies beginning in 2014.

We plan to market our complex APIs and formulations through two channels. The first will be by licensing out the APIs to pharmaceutical companies that will manufacture the formulations and commercialize them into the market. The second will be by developing the APIs and the respective formulations ourselves and ultimately selling or licensing them, in certain cases using regulatory pathways that enable a period of exclusivity and a first generic positioning. For our LCM products, we plan to seek co-development partnerships with large pharmaceutical companies and enter into co-development arrangements at the manufacturing and/or marketing stages. At present, we do not plan to develop our own sales organization, but rather to focus on business development activities, co-development and product sales partnerships.

Our intellectual property includes assigned patents, pending patent applications, trade secrets and know-how, some of which may be the subject of future patent applications. Our intellectual property is strategically focused on the following areas: (i) process and polymorph patents for FDA-approved drugs that can facilitate the early launch of certain products after expiration of the basic composition of matter patents, and (ii) application of long-acting depot technology on “blockbuster” drugs.

We have incurred operating losses each year since our formation in 2008. We incurred net losses of $1,492,000 and $845,000 in 2013 and 2012, respectively. As of December 31, 2013, our accumulated deficit was $11,258,000. Our operating losses are mostly due to expenses incurred in connection with product development. We expect to continue to incur significant expenses and increasing operating losses for at least the next two years as of the date of this prospectus.

We currently do not have any products approved for sale in any jurisdiction. Our operations have been funded, to date, primarily from a single round of financing completed in 2008, from research and development grants we received from the OCS and from grants from ILB.

Our objective is to develop, in a cost-efficient manner, complex APIs, formulations and LCM products for which we believe there are high barriers to entry and which we believe have high value for customers due to the complexity of the manufacturing process and the difficulty of obtaining sufficiently pure pharmaceutical ingredients. We select products that we believe are potentially applicable to large patient markets, involve proven therapeutics and for which we believe there is and will be limited competition. As described in more detail below, we intend to obtain FDA approval through the 505(b)(2) and ANDA regulatory pathways, which are streamlined approval processes in comparison to an original New Drug Application and which permit use of certain reference-listed drug information like safety and toxicity data. For a discussion of the 505(b)(2) and the ANDA processes, see “– Government regulations.” We believe this business model mitigates the risks associated with the development of new and unproven drugs.

Our business strategy is to:

LCM products are new forms of marketed drugs, which may offer advantages over existing formulations, such as improved patient compliance or reduced side effects, and allow developers to extend patent and regulatory exclusivity of a marketed drug due to different formulations of product components. Our LCM products seek to add value to off-patent products by integrating the off-patent APIs with our formulations, resulting in a final combination that is patentable.

Our LCM portfolio focuses on big-market products, consisting of (i) Glatiramer Acetate Depot, a once-monthly injection for the treatment of MS and (ii) Pregabalin ER, extended release capsules for the treatment of neuropathic pain and epilepsy We are developing Glatiramer Acetate Depot under the shortened regulatory registration pathway of 505(b)(2). We are developing Risperidone LAI under the ANDA pathway. We are developing Pregabalin ER currently only in Latin America, although further development in the U.S. and the European Union is expected to be either under the ANDA or 505(b)(2) pathway. We are scheduled to commence clinical trials for these three LCM products in 2014.

Market overview for Pregabalin (Lyrica®). Worldwide sales for Lyrica, Pfizer’s Pregabalin-based drug, reported by Pfizer in their annual report for the year 2012 were $4.158 billion, representing an increase of 13% compared to sales in 2011. U.S. revenue increased by 10%, but was affected by increased generic competition. Lyrica revenue worldwide increased by 14% due to a focus on increasing neuropathic pain diagnosis and treatment, the European Union re-launch of the general anxiety disorder indication and physician education regarding neuropathic pain in Japan. As of November 2009, Pfizer was also investigating a controlled-release formulation of Pregabalin, developed for the treatment of epilepsy. In August 2012, a Phase III clinical trial of the formulation as an adjunctive therapy in partial onset epilepsy was completed. In November 2012, Pfizer announced that their controlled-release formulation failed to meet the primary endpoint of epilepsy, but had a statistically significant positive effect compared to placebo in the chronic pain indication. Pfizer announced it would wait for the results from the third and final ongoing Phase III trial in post-herpetic neuralgia patients to ascertain the potential use of Pregabalin as a once-a-day therapy. Pfizer’s basic product patent which covers the drug, expires in 2018 in the U.S. Pfizer’s patent covering the use of Pregabalin in the treatment of pain, expires in 2018 in the European Union.

Glatiramer Acetate Depot, as well as our Risperidone LAI generic product, use our long-acting depot technology. Currently, the daily administration of injections is the most common delivery method of drugs that otherwise have poor bioavailability (meaning that a low quantity of the ingested dose actually reaches systemic circulation). This route triggers a rapid increase in systemic drug level followed by a rapid decline. Treatment is generally most effective when systemic drug levels are maintained within the therapeutically effective concentration range for as long as the specific treatment requires. In order to maintain such effective concentration range, frequent injections are required, which lead to patient discomfort and increased treatment burden.

Depot technology is designed to provide a maintained systemic drug level for patients over an extended period of time by a single administration of the drug. The depot drug delivery system is comprised of a biodegradable polymer that encapsulates the API and disintegrates over an extended period of time, releasing the API gradually. This method requires less frequent injections, with increased patient convenience and compliance and reduced treatment burden, leading to better efficacy and therapeutic effects.

In the last decade, depot technology has also been introduced to replace orally administered small molecules. Products such as Risperidone, Paliperidone, Olanzepine and Naltrexone, which were previously delivered orally, were converted into long acting injections administered once or twice per month, and in such form, each product attained a significant market share. Most of these drugs are central nervous system drugs, for which compliance and adherence to treatment protocols is of crucial importance to efficacy.

Our depot technology is based on combining biodegradable polymers, with or without additional excipients (additives). Our product-tailored technology provides extensive know-how and non-infringing generic solutions to the currently marketed long-acting drugs. Currently, we do not plan to apply for a patent for the depot formulation technology, as we are using non-proprietary depot technology. However, we were granted a U.S. patent with respect to Glatiramer Acetate Depot for the combination of the API and any depot formulation.

Long-acting drugs are often technologically complex, protected by formulation patents and subject to high regulatory barriers and unique development challenges and manufacturing requirements. As a result of these barriers, we believe competition from other companies developing these generic products tends to be more limited, and we expect less price erosion in the off-patent stage in the foreseeable future. We believe that providing generic long-acting drugs is an important need that has not been fully met in this niche market.

Our product list is comprised primarily of low to medium volume (ranging from several kilograms up to one-hundred metric tons annually) complex APIs and formulations which are difficult to develop. The complex nature of these APIs creates a high barrier to entry into the market and may minimize the number of competitors. Therefore, we expect price erosion of our APIs in the off-patent stage to be less than the price erosion of non-complex APIs. Our current portfolio consists of 13 complex APIs and seven formulations scheduled to launch between 2017 and 2028, with early pre-patent expiration quantities of registration batches to be supplied to generic pharmaceutical companies beginning in 2014. The manufacture of APIs and formulations is scheduled to commence at the facilities of future partners and is expected to shift to our plant in Israel upon its completion. We believe that utilizing in-house expertise, which we believe will be possible upon the completion of the plant, will shorten development time and reduce financial risks and other risks associated with development and operations by allowing for greater internal control over the entire development process. For certain of our APIs, we will file an ANDA containing a Paragraph IV certification, potentially providing us 180 days of first-to-file or co-exclusivity. These products are expected to be launched as a later stage of our product development, which will potentially accelerate our revenue growth. For a discussion of the ANDA process and Paragraph IV certification, see “– Government regulations – Abbreviated New Drug Application.”

The table below provides a brief description of the three LCMs that we are currently developing:

Glatiramer Acetate is used to treat RRMS. Our investigational Glatiramer Acetate Depot formulation is designed to allow RRMS patients currently treated with daily subcutaneous injections of Glatiramer Acetate to receive a once-monthly intramuscular injection (by a healthcare professional). Our Glatiramer Acetate Depot is intended to have the fewest periodic administrations among all currently approved parenteral treatments (treatments via a route other than the mouth) of RRMS, so as to offer the greatest convenience and lowest treatment burden of all treatment options. For example, our Glatiramer Acetate Depot formulation is intended to be administered 12 times per year, while other currently approved parenteral treatments and their administration times per year (according to the FDA’s prescribing information for each product) are as follows: Copaxone - 365; Extavia® - 182; Betaseron® - 182; Rebif® - 156; Avonex® - 52; Plegridy™ (under development) - 26.

An in-vitro release profile of Glatiramer Acetate Depot, taken from in-house studies we have conducted, demonstrated sustained drug release over a 30-day period, as noted in the graph below.

* EAE model in mice simulating MS conditions. MOG-induced (Myelin Oligodendrocyte Glycoprotein, a glycoprotein believed to be important in the process of myelinization of, or adding a protective sheath around, nerves in the central nervous system) chronic EAE in C57BL/6 female mice (number=10/group), for 15 days. Clinical scoring has been assessed on a daily basis for each mouse and the mean disease score was determined for the treatment groups compared the control group. The clinical indicates the severity of the effects of the disease (i.e., a score of 0 reflects no overt sign of disease and a score of 5 reflects moribund state).

The benefits of our Glatiramer Acetate Depot product with respect to patient compliance are expected to be significant. According to a study conducted in 2010, based on the medication possession ratio, Copaxone-treated patients are currently administering the drug at a 70% compliance rate (Kleinman NL, Beren IA, Rajagopalan K, et al. “Medication adherence with disease modifying treatments for multiple sclerosis among US employees” J. Med. Econ. 2010). A study conducted in 2011 found that patients with a medication possession ratio (a measure of compliance) that was greater than 70% had significantly lower odds of a relapse than those patients whose medication possession ratios were 70% or lower (MerriKay Oleen-Burkey et al, “The relationship between alternative medication possession ratio thresholds and outcomes evidence from the use of Glatiramer Acetate,” Journal of Medical Economics, 2011). Assuming that our Glatiramer Acetate Depot, by enabling a reduction in the number of administered treatments and ensuring closer medical supervision, is able to increase administration above the 70% compliance rate, we believe that it should significantly improve overall patient health.

We believe that the benefits of our Glatiramer Acetate Depot over the generic competition, which is administered daily, will enable premium pricing, which is still expected to be lower than brand parenterals and new oral competitors. We currently expect to commercialize Glatiramer Acetate Depot by the end of 2018, after completion of our pivotal Phase III trial and filing of our 505(b)(2) NDA with the FDA.

In February 2013, we were granted a patent for depot systems comprising Glatiramer or a pharmacologically acceptable salt thereof, which is valid until August 2030.

Risperdal is an anti-psychotic drug developed and launched by Janssen, a subsidiary of Johnson & Johnson. Risperdal Consta, developed by Alkermes plc, a development partner of Johnson & Johnson, is a sustained-release version of Risperdal. Risperdal Consta is a two-week long-acting depot intramuscular injectable formulation prescribed for the treatment of schizophrenia and for the maintenance treatment of bipolar disorder as an alternative to daily oral Risperidone. This depot formulation has improved patient compliance, which has reduced hospitalizations and treatment costs. Alkermes plc’s patent exclusivity over the formulation technology of Risperdal Consta expires in 2023 in the U.S. and in 2021 - 2022 in the European Union.

Our development in this field is Risperidone LAI (long acting injection), a generic version of Risperdal Consta using our depot technology, which we believe we will be able to commercialize in 2018, up to five years prior to expiration of the Alkermes plc patent in the U.S. and up to three years prior to the expiration of the Alkermes plc patent in the European Union. We intend to be able to commercialize Risperidone LAI prior to the expiration of Alkermes’s plc patent due to our depot formulation, which we believe does not infringe on the U.S. patents for Risperdal Consta which expires after 2018. We are pursuing Risperidone LAI under the generic regulatory pathway. For more information, see “Government Regulations.” We are not aware of any other ANDA application for a generic version of Risperdal Consta, and if our ANDA is accepted and approved, and our non-infringement challenge succeeds, we might receive first-to-file exclusivity for our Risperidone LAI ANDA. With or without exclusivity, we believe that the number of competitors in the time period between now and launch, and as a result, price erosion, will be minimal.

Like Risperdal Consta, Risperidone LAI will require a single injection only once every two weeks. We plan to start evaluating Risperidone LAI in a pilot human bioequivalence study in the first half of 2014.

Pregabalin (Lyrica), a gamma-aminobutyric acid alpha-2-delta subunit agonist, was developed and launched by Pfizer Inc. The product is prescribed for the oral management of neuropathic pain associated with diabetic peripheral neuropathy, postherpetic neuralgia and spinal cord injury, as well as adjunctive therapy for adults with partial onset seizures and, in Europe, for the treatment of generalized anxiety disorder. The composition of matter patent covering the drug is held by Pfizer Inc. and Northwestern University and expires in 2018 in the United States and 2017 in Canada. This patent was divided into five Pregabalin-related divisional patents, relating to different uses of Pregabalin, and all such patents are in the joint names of Northwestern University and Pfizer Inc. Pfizer Inc. submitted a patent application covering the extended release formulation technology in 2006 (according the U.S. Patent and Trademark Office (the “U.S. PTO.”)), which, if granted, to our estimation, will expire in 2026. As of December 2013, no corresponding patent had yet been granted in any Latin American country.

Our Pregabalin extended release capsule is being co-developed with a large pharmaceutical company, primarily for the Latin American market. We expect to receive royalties from product sales in Latin America and to later pursue our rights to develop and market the product in the U.S. and China, potentially as a generic version to Pfizer Inc.’s extended release formulation of Pregabalin, once Pfizer Inc.’s extended release product has launched and exclusivity thereof has expired. For further information, see “Collaborative agreements” below.

Entecavir

Entecavir (BARACLUDE® tablets) is an oral antiviral drug used in the treatment of hepatitis B infection. In 2011 we initiated a research and development program exploring the possibility of developing an Entecavir injectable sustained release formulation via biodegradable microparticles technology for intramuscular administration, aimed at providing extended release of the drug for two to four weeks. We investigated 35 prototypes, however, only two prototypes showed sustained release profiles of approximately two weeks and relatively low initial burst types. Subsequently, we decided not to continue pursuing the development of Entecavir since its development of the release profile did not meet our expectations.

The table below provides a brief description of the 13 complex APIs that we are developing:

Deferasirox (Exjade®) is used to treat chronic iron overload due to blood transfusions in adult and pediatric patients over two years of age, and for the treatment of chronic iron overload in patients with non-transfusion-dependent thalassemia syndromes. Deferasirox is under development by the NDA-holder, Novartis AG, for the potential treatment of iron overload associated with hereditary hemochromatosis, a genetic disease that causes the body to absorb and store too much iron. The drug is also being tested for the potential treatment of myelodysplastic syndrome, a medical condition that involves ineffective production of blood cells.

The patent for the active ingredient in Deferasirox expires in 2017 in Canada, in 2019 in the U.S. and in 2021 in other markets. In January 2013, Novartis AG reported that a generic company had challenged the compound patent in the U.S. as part of a Paragraph IV ANDA submission. We currently do not have any further information on this challenge. Deferasirox was granted orphan drug status in March 2002 in the U.S. and Europe and in May 2005 in Australia. An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition. It is generally easier to gain marketing approval for an orphan drug, and there may be other financial incentives, such as extended exclusivity periods. The Deferasirox orphan drug exclusivity expired in late 2012.

In April 2014, a PCT patent was allowed for a process for the preparation of Deferasirox and Deferasirox polymorphs that we developed. The national stages of this application are currently under review in the U.S., the European Union and Israel. We expect to commence commercial sales of Deferasirox during 2014 in territories other than the U.S. and the European Union, where patent coverage for Deferasirox is either expired or non-existent.

Currently known processes for production of Deferasirox are technologically cumbersome, involve high temperatures and are expensive to execute. We believe that we have developed a process, however, in which no significant heating is required and in which the formation of impurities, in particular genotoxic impurities (impurities that have been demonstrated cause deleterious changes in genetic material) and corrosive and hazardous gases such as hydrogen chloride, is minimized or altogether avoided. We are currently in pilot scale production. Commercial scale production is planned for 2014.

Darunavir (Prezista®) is an oral HIV-1 protease inhibitor. In the U.S., Darunavir is a drug used for the treatment of HIV-1 infection. A subsidiary of Johnson & Johnson currently holds the patent for the active ingredient Darunavir, which is set to expire in November 2017, and also holds a patent in the U.S. for Darunavir ethanolate, a solvate form of Darunavir used in the marketed Prezista, which is set to expire in June 2027. We have a proprietary production process and have developed a solid state form of Darunavir that is a different form than that covered by Johnson & Johnson’s solvate form patent, which we believe may permit us to launch a generic version in the U.S. as early as 2017 when Johnson & Johnson’s U.S. compound patent expires, if approved by the FDA.

In December 2009, we filed a PCT patent application for polymorphs of Darunavir. In January 2011, we filed a patent application for the process of preparing Darunavir in the U.S. In February 2014, a processes patent was allowed in the European Union and in April 2014 it was allowed in the U.S. The remaining application is currently under review in Israel. We included a Paragraph IV certification in our U.S. ANDA application to seek early launch of our generic version of Darunavir before the later Johnson & Johnson patent expires. We intend to take advantage of our development of the new solid state form by also developing a generic dossier (similar to an ANDA, outside the U.S.) or applying for generic regulatory approval rights, as applicable, for the finished product in Israel and the European Union, potentially with a marketing partner.

We are developing and intend to develop and manufacture both the API and the formulation of this product, with the aim that our production process will be fully vertically integrated, potentially increasing production efficiency and profit margins.

Alogliptin Benzoate (Nesina®; Vipidia®) is a small-molecule dipeptidyl peptidase IV (DPP IV) inhibitor used for the oral treatment of type-2 diabetes. The U.S. patent covering Alogliptin Benzoate, held by Takeda Pharmaceutical Company Limited, will expire in June 2028 and the patent in the European Union will expire in December 2024. Additionally, Takeda Pharmaceutical Company Limited has a patent covering the marketed crystal form of Alogliptin Benzoate which is set to expire in September 2026 in the European Union. Takeda Pharmaceutical Company Limited has also filed a PCT patent application claiming a process for preparing Alogliptin Benzoate and the application has thus far been granted in the U.S. with an expiration date of September 2026.

In November 2010, we filed a PCT patent application for polymorphs of Alogliptin Benzoate. In March 2010, we filed a PCT patent application for the process of the preparation of Alogliptin Benzoate. The national stages of both PCT applications are currently under review in the U.S., the European Union and Israel.

We have developed a proprietary production process, and a proprietary polymorph that we believe will enable us to market generic Alogliptin Benzoate outside of the U.S. after expiration of the product patent. We believe both technologies will enable launch of a generic version in the European Union, either as an API with a unique solid state form or as a fully integrated formulation, that we expect to launch in 2025 in the European Union and Japan and in 2028 in the U.S. Earlier sales may be possible for markets not under patent coverage such as Latin America and Russia.

Febuxostat (Uloric®; Feburic®) is an oral, non-purine selective inhibitor of xanthine oxidase, which is used for the treatment of chronic hyperuricemia in gout. In Japan, the product is also used for the treatment of hyperuricemia without symptoms of gout. Teijin Ltd. is the current holder of patents pertaining to Febuxostat in various territories, including the U.S., the European Union, Canada and Japan. The exclusivity of Febuxostat’s basic patent is set to expire in March 2019 in the U.S. and Teijin Ltd.’s patent covering the marketed crystal form and the formulation comprising it is set to expire in the U.S. in March 2024.

In March 2011, we filed a PCT patent application for the process and intermediates for the preparation of Febuxostat and other substituted 2-arylthiazolecarboxylic acids. The national stage of the patent application is currently under review in the U.S., the European Union and Israel.

We have developed a proprietary production process that we believe overcomes problems associated with existing methods for making Febuxostat, including, among others, low yields, prolonged reaction times and the use of problematic reagents (substances added to bring about a chemical reaction). Some of these reagents are not commercially available or possess hazardous properties. Our production process has been demonstrated in both the lab and pilot scale facilities to be safe, cost-effective, and industrially feasible.

We have also developed a solvate form, which we believe is distinct from the form claimed in Teijin Ltd.’s patent expiring in 2024 and which we believe will allow the early launch of a formulation before this patent expires. The formulation comprising of our solvate form has been developed and can ultimately be sold by us as a drug product. We hope to locate a partner to launch this formulation.

Tapentadol (Nucynta®) is an opioid pain medication used as an immediate-release (“IR”) tablet formulation for the oral treatment of moderate-to-severe acute pain. It is a schedule II controlled substance, regulated under the Controlled Substances Act, meaning it has a high potential for abuse, has a currently accepted medical use in treatment in the U.S., and abuse of the drug or other substances may lead to severe psychological or physical dependence. The product is marketed in various regions by Grünenthal Group and the Johnson & Johnson subsidiaries Janssen Pharmaceutical, Janssen Pharmaceuticals and Janssen. Grünenthal Group and Johnson & Johnson also market an extended-release Tapentadol formulation. Grünenthal Group and Johnson & Johnson currently hold the patents pertaining to Tapentadol in various territories, including the U.S., the European Union, Canada and Israel. The regulatory exclusivity granted by the FDA expired in November 2013 according to the FDA Orange Book. Johnson & Johnson has patents covering Tapentadol, which are set to expire in the U.S. in August 2022 (basic patent) and June 2025 (polymorph patent).

In December 2010, we filed a PCT patent application for new intermediate compounds obtained in our synthesis process, and the process for the preparation of Tapentadol. The national stage of this patent has been granted in the U.S. with an expiration date of December 2030. The national stage applications are under review in the European Union and Israel.

Several processes have been patented by various companies for Tapentadol. However, all of these involve sophisticated reaction conditions and separation techniques which we believe make them commercially less viable than our process. Their main disadvantage is their use of complex separation and expensive reagents, which require special equipment, extra dry solvents, inert atmosphere and other safety measures.

We believe that our proprietary API production process, using our innovative chemical technology and as pursued in our patent application noted above, overcomes these problems and significantly reduces the process complexity and cost to make this API. In addition, the API is not listed in the Israeli Ministry of Health’s narcotic list, which makes it easier to handle and commercialize in Israel than in the U.S., where it is regulated as a controlled substance.

Dronedarone (Multaq®) is a calcium, potassium and sodium channel blocker with anti-adrenergic properties developed by Sanofi-Aventis. The product is approved for use in reducing the risk of cardiovascular hospitalization in patients with paroxysmal or persistent atrial fibrillation or atrial flutter, who have had a recent episode, associated cardiovascular risk factors, and are in sinus rhythm or will be cardioverted. In the European Union, Dronedarone is used in clinically stable adult patients with a history of, or with current non-permanent, atrial fibrillation to prevent recurrence or to lower ventricular rate.

The initial patents for Dronedarone expired in the European Union and Japan in 2011. In the U.S., the patent was due to expire in July 2013 and was extended to July 2016. The drug is protected by later filed formulation patents in the U.S. and the European Union until June 2018 and June 2023, respectively. Regulatory exclusivity expires in July 2014 in the U.S. and November 2019 in the European Union.

We have developed a process, which we evaluated at lab and pilot production scale, that we believe avoids granted process patents for this product and is industrially feasible with a low cost of goods. We have also developed a formulation that, we believe, based on internal studies conducted with our advisors, avoids patent limitations imposed by Sanofi-Aventis’s patent that expires in 2018, enabling potential product launch as early as 2016. We believe that our API production process will reduce the process complexity and cost to make this API. We intend to sell the API with a support technical package for the formulation as well as know-how that we have developed, which we believe will make it easier for a partner to register the product.

Lurasidone (Latuda®) is a product developed by Dainippon Sumitomo Pharma Company Ltd. (formerly Sumitomo) (“Dainippon”) which is prescribed for the treatment of schizophrenia and bipolar I disorder. In February 2011, Lurasidone was launched for schizophrenia in the U.S. by Dainippon’s U.S. subsidiary, Sunovion Pharmaceuticals Inc. In June 2013, Lurasidone was approved in the U.S. for treatment of bipolar I disorder. The drug was approved in Switzerland in August 2013 for the treatment of schizophrenia. As of November 2013, the filing was still under review in the European Union. Development is also ongoing for other psychiatric indications, including major depressive disorder and autism which, if completed, are expected to significantly increase Lurasidone’s market share.

Sunovion Pharmaceuticals Inc. has clinical data exclusivity over Lurasidone, which expires in October 2015. The patent that covers the product component is set to expire in July 2018.

In June 2012, we filed a PCT patent application for intermediate compounds and a process for the preparation of Lurasidone. The application is awaiting review in the U.S., the European Union and Israel. In order to avoid Dainippon’s patent limitations imposed on Lurasidone, we have developed and claimed a proprietary, cost-effective production process. In addition, we have developed know-how for manufacturing the key starting materials required for the production of Lurasidone, which we believe will enable a full vertical integration and major reduction in cost of goods of the product. Upon expiration of the patent exclusivity in July 2018, we intend to sell the API without developing a formulation at this stage.

Fingolimod (Gilenia®; Gilenya; Imusera®) is a synthetic derivative of myriocin that facilitates lymphocyte homing developed and launched by Novartis AG and Mitsubishi Tanabe Pharma. The product is prescribed for the first-line treatment of relapsing forms of MS to reduce the frequency of clinical exacerbations and delay the accumulation of physical disability. Fingolimod is also being developed for the potential treatment of chronic inflammatory demyelinating polyneuropathy, optic neuritis and uveitis.

Fingolimod is protected by a family of patents, the earliest of which expires in February 2019 and relates to the Fingolimod itself. Patent protection for the commercial formulation of Fingolimod is set to expire in most major markets, including the European Union and Japan, in 2024 and in the U.S. in 2026. In October 2013, a further patent application for the commercial formulation was granted in the U.S. (due to expire in 2028). In Europe, Novartis AG also has regulatory exclusivity for the data generated for Fingolimod approval until 2021, with a possible one-year extension.

In October 2011, we filed a PCT patent application for intermediate compounds and a process for the preparation of Fingolimod. The national stage of this application is pending and awaiting review in the U.S., the European Union and Israel.

We intend to complete our development of Fingolimod API during the first half of 2014, producing the key starting material at our China facility and the final API at a sub-contractor facility in India.

Additionally, we plan to develop a formulation for this product at a sub-contracted facility in Israel, where the product’s exclusivity is the first to expire worldwide in April 2017. We intend to market the product in Israel in other territories outside the U.S. and European Union starting in 2017, and in 2019 and onwards in the regulated markets, e.g., the U.S., the European Union and Australia, following expiration of limiting patents and exclusivities.

Indacaterol Maleate (Onbrez® Breezhaler®; Arcapta® Neohaler®) is a long-acting beta-2 agonist (LABA) and bronchodilator developed and launched by Novartis AG, currently delivered with an inhaler. The product is prescribed for maintenance bronchodilator treatment of airflow obstruction in adults with chronic obstructive pulmonary disease (COPD), including chronic bronchitis and/or emphysema. Patent protection for Indacaterol Maleate is expected to expire in 2025 in the U.S. (including patent term extension), 2024 in the European Union (including extensions) and in 2020 in other markets.

We are developing Indacaterol as a fully vertically integrated API, with key starting materials manufactured at our China facility. The API production is planned to be conducted at our new plant in Israel. We have developed know-how and trade secrets to manufacture this API and its starting materials. We believe this approach will significantly lower costs and enable our Indacterol Maleate to have a competitive market position. In addition, due to the low commercial volume (worldwide forecasted quantity below 100Kg), the number of generic API developers is expected to be low. Indacaterol Maleate is a highly complex API with significant process hurdles (such as high-level impurities that require removal during processing, chiral purity to isolate one isomer from the rest and multiple production steps). We intend to sell the API to a partner with expertise in generic inhalation dosage forms, starting by 2020 when the patents described above begin to expire.

Abiraterone Acetate (Zytiga®) is an oral selective inhibitor of 17 alpha-hydroxylase available in a tablet formulation developed and launched by Johnson & Johnson under license from BTG. The product is prescribed for treatment of prostate cancer in men who have received prior chemotherapy containing docetaxel.

Abiraterone Acetate has regulatory exclusivity in the U.S. that expires in April 2016. The U.S. patent covering Abiraterone Acetate is set to expire in December 2016 and in the European Union the relevant patent is expected to expire in March 2018 (following patent extension). BTG also has patents that cover processes for production of Abiraterone Acetate and its intermediates.

We are developing Abiraterone Acetate as a fully integrated product, with its key starting material to be manufactured at our China facility or another sub-contracted site. We believe that the vertical integration of the starting material would serve as a major cost saving factor.

In July 2013, we filed a PCT patent application for intermediate compounds and a process for the preparation of Abiraterone Acetate, which is comprised of innovative routes of synthesis and purification and in our view, avoids the BTG process patents.

In addition, we intend to complete the development of a generic version of Abiraterone Acetate, manufactured in Israel for the Israeli, U.S. and European Union markets. The generic product dossier is expected to be ready for submission during 2015 for the Israeli market and during the second quarter of 2016 for the U.S. market.

Perampanel (Fycompa®) is a selective AMPA-type glutamate receptor antagonist used for the oral treatment of epilepsy. The drug is prescribed in Europe and the U.S. as an adjunctive treatment of partial-onset seizures, with or without secondarily generalized seizures, in individuals with epilepsy aged 12 years and older. Perampanel was first claimed in a patent granted to Eisai Co. Ltd. (“Eisai”), which enjoys protection in the European Union, Canada and Japan until June 2021 and in the U.S. until April 2022. Several further related patents are also assigned to Eisai claiming acid salts, and amorphous and crystalline forms of Perampanel. These patents are expected to expire in April 2027 and December 2026, respectively, and are currently not listed in the FDA’s Orange Book.

In January 2013, we filed a PCT patent application for polymorphs of Perampanel. The proprietary limitations on the polymorphs of Perampanel provide us with the opportunity to prepare for a launch of the generic product as early as 2021 in Canada and the following year in the U.S. and European Union. Our Perampanel crystal form might enable us to submit our generic product through the Paragraph IV regulatory pathway and possibly pursue a first-to-file right in the U.S. if our testing is complete and our ANDA is filed to obtain this exclusivity. In addition, we intend to launch our generic product in the European Union once marketing exclusivity expires in May 2022.

Dapagliflozin Propanediol (Forxiga®; Appebb®; Edistride®; Empliciti®) is an orally active sodium glucose cotransporter type 2 inhibitor developed and launched by Bristol-Myers Squibb Company (“BMS”) and AstraZeneca PLC. The product is prescribed in Europe and the U.S. for the once-daily treatment of type 2 diabetes, in combination with other glucose-lowering medicinal products, including insulin, or as a monotherapy in metformin-intolerant patients.

BMS’s composition of matter patent coverage for Dapagliflozin expires in the U.S. in October 2020. The patent expires in May 2023 in the European Union. Additionally, BMS has a patent covering the Propanediol solvate forms, which expires in June 2026 in the U.S.

The proprietary limitations on the polymorph of Dapagliflozin provide us with the opportunity to prepare for a launch of the generic product upon the expiration of the patent in the U.S. in 2020. In December 2013, we filed a PCT patent application for co-crystals of Dapagliflozin. We expect that our Dapagliflozin co-crystal form will enable us to submit a generic product through the Paragraph IV regulatory pathway and could enable us to enjoy first-to-file exclusivity in the U.S. if our testing is complete and our ANDA is filed and successfully approved so as to obtain this exclusivity. In addition, we intend to launch our generic product in the European Union once marketing exclusivity expires in November 2022.

Glatiramer Acetate (Copaxone) is a product which serves as a decoy for myelin, drawing autoreactive T cells away from nerve cells prescribed for reduction of the frequency of relapses in patients with RRMS, including patients who have experienced a first clinical episode and have MRI features consistent with MS, developed and launched by Teva Pharmaceuticals Ltd. Teva Pharmaceuticals Ltd.’s patent relating to Glatiramer Acetate is expected to expire in May 2014 in the U.S. We are aware of three companies that have submitted ANDAs for the generic form of Glatiramer Acetate, namely Mylan Inc./Natco Pharma Ltd., Sandoz B.V./Momenta Pharmaceuticals, Inc. and Synthon Biopharmaceuticals. As of December 2013, all applications are pending approval from the FDA.

We have developed know how and trade secrets to manufacture the Glatiramer Acetate and, pending the release of guidelines from the FDA on generic requirements, we intend to manufacture this API at our plant in Israel, and potentially as a generic formulation.

We are developing a new chemical entity which is a novel pentapolymer for treating autoimmune diseases such as MS. The product is in pre-clinical studies and we plan to invest approximately $200,000 in its development throughout the next two years. Preliminary studies have shown that the therapeutic efficacy for treatment of MS by this novel pentapolymer may be superior to that of Glatiramer Acetate.

In January 2012, we reached an agreement with a major international pharmaceutical manufacturer to jointly develop and manufacture Pregabalin ER in dosages of 150mg and 300mg, with a current term expiring in January 2016. Our partner will obtain regulatory approval required in its territory of Latin America, and we will be responsible for obtaining regulatory approval for our territory, which consists of the U.S. and China. The parties will split all industrial and other intellectual property rights outside of each party’s territory. As of the date of this prospectus, the expected schedule of the product development and identification of a manufacturing site has not yet been determined.

As of December 31, 2013, we received €150,000 (approximately $194,000) from our partner after satisfactory results of preliminary development milestones and we currently expect to receive an additional €100,000 (approximately $130,000) after satisfactory results of stability and bio-equivalence tests sufficient to submit a generic drug application to the governmental drug regulatory authorities. Our partner has also undertaken to pay us 5% royalties of their net sales for the first five years following commercialization of the products in our partner’s territory and 3% from the sixth year through the tenth year.

In January 2014, we entered into a manufacture and commercialization agreement for Risperidone LAI and the Risperidone slow release tablet with a major Chinese pharmaceutical manufacturer. The established milestones in the agreement require our partner to complete the pertinent studies and provide a prepared dossier of the product to be submitted to the China Food and Drug Administration within 24 months of the commencement of the agreement, which may be extended upon events set forth in the agreement up to a maximum of 36 months. Upon launch, our partner will be required to pay us a semi-annual royalty payment equal to the greater of 5% of our partner’s net sales of the products or 35% of its net profit from the sales of the products for each semi-annual period. After five years, the semi-annual royalty payments will be reduced to the greater of 3% of our partner’s net sales or 30% of its net profit. The agreement is set to expire on the eighth anniversary of the commencement of sales of the products by our partner, unless extended by the parties.

We plan to pursue further co-development partnerships in order to accelerate the clinical development and maximize the market potential for some of our APIs, Glatiramer Acetate Depot and Risperidone LAI. We hope to further partner with large pharmaceutical companies that possess market know-how and marketing capabilities for marketing purposes with respect to Glatiramer Acetate Depot and Risperidone LAI.

In June 2011, we entered into an agreement for co-development and marketing of certain complex generic products with a large pharmaceutical manufacturer to manufacture the formulation products. We intend to provide the preliminary development plan for the products and the manufacturer will carry out the remaining development work with our assistance. Our partner will have the right to manufacture and sell the products in the territory of China, and we will have the right to manufacture and sell the products in any territory other than China. Each party will transfer to the other party 50% of the gross profit generated from the sales in its respective territories.

We have three fully operational research and development facilities for complex APIs and formulations with headquarters in Israel and laboratories in Nanjing, China and Luckenwalde, Germany. Our current patent portfolio contains about 20 patent applications for complex APIs, formulations, polymorphs, and routes of synthesis, many of which were submitted during the 12 months prior to the completion of this offering.

The pharmaceutical industry is highly competitive and is affected by new technologies, new developments, government regulations, health care legislation, availability of financing, and other factors. Many of our competitors have longer operating histories and substantially greater financial, research and development, marketing, and other resources than we have. We compete with numerous other companies that currently operate, or intend to operate, in the pharmaceutical industry, including companies that are engaged in the development of controlled-release drug delivery technologies and products, and other manufacturers that may decide to undertake development of such products. We view our principal competitors in the generic pharmaceutical products and LCM markets as Teva Pharmaceutical Industries Ltd., Impax Laboratories, Inc., Alkermes Plc., Momenta Pharmaceuticals, Inc., and Andrx Corporation, a private U.S. company. Due to their size, in general our competitors may have significant advantages over us. For a discussion of some of these advantages and the competitive risks we face, see “Risk Factors – We face intense competition from both brand-name and generic manufacturers for our complex APIs, formulations and LCM products.”

We anticipate current injectable treatments commonly used to treat MS, including Copaxone, which is the Glatiramer Acetate brand product, to experience competition from a number of novel drug products, including oral therapies. These novel drugs may offer patients a more convenient form of administration than Copaxone and may provide increased efficacy. In addition, Teva Pharmaceutical Industries Ltd. has received for FDA approval for a Supplemental NDA for a 40mg, thrice-weekly dosage of Copaxone. Teva’s thrice-weekly dosage of Copaxone has the potential to delay the anticipated erosion of the Glatiramer Acetate market, which is expected to be brought on by possible generic competitors that are developing the once-daily dosage of Glatiramer Acetate. In addition, the efforts of Teva, the current industry leader, that are invested in a formulation with a lesser frequency of injections for Copaxone may be indicative of the shift in the RRMS market toward longer-acting depot formulations of Glatiramer Acetate.

Due to our focus on relatively hard to replicate controlled-release products, our competition in the generic pharmaceutical market is expected to be limited to those competitors who possess appropriate drug delivery technology or partner with those who have it. We believe the principal competitive factors in the generic pharmaceutical market are:

Our Israeli development and manufacturing plant in Neot Hovav, Israel will be an organic synthesis facility, designed for the production of APIs and intermediates. The plant is expected to be operational in the second half of 2014. The plant is designed as a multipurpose facility with mid-size industrial production reactors of varying capacities of up to 4,000 liters. The plant’s scalable design should enable us to expand capacity with limited expenditure. The plant is expected to hold two pilot facilities for smaller scale production to support the production scale-up process and initial sales of registration quantities. The manufacturing operations in the plant are subject to regulatory inspections and approvals. We leased the land on which the plant is built for 49 years in accordance with a development agreement with Israel Land Authority, dated September 13, 2012. Due to the nature of this long term lease, we have made a single payment in the amount of NIS 428,000 (approximately $106,000) which is based on the current property valuation. Such payment may need to be supplemented, in accordance with the agreement, subject to the appreciation of the property value. The plant also qualifies as a “Preferred Enterprise” under the Investment Law, which entitles us to cash grants of 20% of the amount of the approved investment in the plant (which may be increased by an additional 4%). In addition, depending on the fulfillment of certain conditions, income generated from products manufactured at the plant will be entitled to a reduced tax rate of 9% (compared to a 26.5% corporate income tax rate in 2014). As of December 31, 2013, we invested a total of $4,316,000 (net of grants) in the plant and related equipment out of the $15,000,000 we estimate will be required to complete construction and purchasing equipment. We expect to use $ of the net proceeds from this offering to finance the completion of construction.

Our manufacturing facilities are located on the following properties:

Our operations are subject to many governmental regulations. We are required to receive regulatory approvals to conduct clinical trials and upon completion of such clinical trials, submit further regulatory applications. Once we have received the requisite approvals, we may then manufacture and market the respective product. The marketing of each product is conditioned upon obtaining the consent of health authorities in each of the countries in which it will be marketed, including the FDA, the European Agency for the Evaluation of Medicinal Products and the China Food and Drug Administration. In order to market our products outside of the U.S., we have to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in countries outside of the U.S. might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed below regarding FDA approval as well as other risks. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others.

The manufacturing and distribution of pharmaceutical products are subject to extensive regulation by the federal government, primarily through the FDA and sometimes additionally the Drug Enforcement Administration (“DEA”), and to a lesser extent by state and local governments. The Food, Drug, and Cosmetic Act, Controlled Substances Act and other federal statutes and regulations govern or influence the manufacture, labeling, testing, storage, record keeping, approval, advertising and promotion of our products. Facilities used in the manufacture, packaging, labeling and repackaging of pharmaceutical products must be registered with the FDA and are subject to compliance with cGMP and FDA inspection to ensure that drug products are manufactured in accordance with cGMP. Noncompliance with applicable requirements can, e.g., result in product recalls, seizure of products, injunctions, suspension of production, refusal of the government to enter into supply contracts or to approve drug applications or delays in entering such contacts or granting such approvals, civil penalties and criminal fines, and disgorgement of profits.

FDA approval is required before any “new drug” may be marketed, including new formulations, strengths, dosage forms, and generic versions, of previously approved drugs. Generally, the following two types of applications are used to obtain FDA approval of a “new drug.”

For a drug product containing an active ingredient not previously approved by the FDA, a prospective manufacturer must submit a complete application containing the results of clinical studies supporting the drug product’s safety and efficacy. A shorter form of an NDA under the FDA’s 505(b)(2) regulatory pathway is also required for a drug with a previously approved active ingredient if the drug will be modified in some way, e.g., used to treat an indication for which the drug was not previously approved or if the dosage form, strength or method of delivery is changed. The process required by the FDA before a pharmaceutical product may be approved for marketing in the U.S. generally involves the steps listed below, which could take from approximately three to more than ten years to complete.

As noted above, the submission of an NDA is no guarantee that the FDA will find it complete and accept it for filing. The FDA reviews all NDAs submitted before it accepts them for filing. It may refuse to file the application and instead request additional information, in which case, the application is delayed and must be resubmitted with the supplemental information. After the application is deemed filed by the FDA, FDA staff will review an NDA to determine, among other things, whether a product is safe and efficacious for its intended use.

If, after reviewing the NDA, the FDA determines that the application cannot be approved in its current form, the FDA sends the NDA applicant a Complete Response Letter identifying all outstanding deficiencies that preclude final approval. The FDA then halts its review until the applicant resubmits the NDA with new information designed to address the deficiencies. An applicant receiving a Complete Response Letter may resubmit the application with data and information addressing the FDA’s concerns or requirements, withdraw the application without prejudice to a subsequent submission of a related application or request a hearing on whether there are grounds for denying approval of the application. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, among other limits, which could restrict the commercial value of the product. For our 505(b)(2) products, FDA also may require a boxed warning (i.e., black box warning), a Risk Evaluation and Mitigation Strategy (REMS) program, or both, to address a specific safety concern. A boxed warning is used to highlight serious or life-threatening potential adverse events or other safety concerns. A REMS program may be required when FDA believes specific measures are necessary to ensure that the benefits of the drug outweigh its risks. Among other requirements, the REMS may include a patient medication guide, patient package insert, and regular assessments of the drug’s risks versus its benefits. The imposition of a boxed warning or REMS program could significantly affect the commercial value of the product. In addition, for our ANDA submissions, if the innovator product has a black box warning or a REMS program, we likely will be required to adopt such a boxed warning or risk program.

In addition, the FDA may require an applicant to conduct Phase IV testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require complex and costly surveillance programs to monitor the safety of approved products which have been commercialized. Once issued, the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety or efficacy questions are raised after the product reaches the market. The agency may also impose requirements that the NDA holder conduct new studies, make labeling changes, implement Risk Evaluation and Mitigation Strategies, and take other corrective measures.

For a generic version of an approved drug — a drug product that contains the same active ingredient as a drug previously approved by the FDA and is in the same dosage form and strength, utilizes the same method of delivery and will be used to treat one or more of the same indications as the approved product — the FDA requires only an ANDA that ordinarily need not include clinical studies demonstrating safety and efficacy. An ANDA typically requires only data demonstrating that the generic formulation is bioequivalent to the previously approved “reference listed drug,” indicating that the rate of absorption and levels of concentration of the generic drug in the body do not show a significant difference from those of the reference listed drug. In July 2012, the Generic Drug User Fee Amendments Act of 2012 was enacted into law. The GDUFA legislation implemented fees for new ANDA applications, Drug Master Files, product and establishment fees and a one-time fee for back-logged ANDA applications pending approval as of October 1, 2012. In return, the program is intended to provide faster and more predictable ANDA reviews by the FDA and increased inspections of drug facilities. Under GDUFA, generic product companies face significant penalties for failure to pay the new user fees, including rendering an ANDA application not “substantially complete” until the fee is paid.

Under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the “Hatch-Waxman Act,” which established the procedures for obtaining approval of generic drugs in the U.S., an ANDA filer must make certain patent certifications that can result in significant delays in obtaining FDA approval. If the applicant intends to challenge the validity or enforceability of an existing patent covering the reference listed drug or asserts that its proposed drug does not infringe such patent, the applicant files a so called “Paragraph IV” certification with the FDA and is required to properly notify the patent holder that it has done so, explaining the basis for its belief that each such certified patent is not infringed, or is invalid or unenforceable. If the patent holder initiates a patent infringement suit within 45 days after receipt of the Paragraph IV Certification, the FDA is automatically prevented from approving an ANDA until the earlier of 30 months after the date the Paragraph IV litigation is initiated by the patent holder, expiration of the patents involved in the certification, or when the infringement case is decided in the ANDA applicant’s favor. In addition, the first company to file an ANDA for a given drug containing a Paragraph IV certification can be awarded 180 days of market exclusivity following approval of its ANDA, during which the FDA may not approve any other ANDAs for that drug product. Co-exclusivity among multiple ANDA applicants is becoming more common, and in such cases these co-filers who file their ANDA on the same day and who each are ultimately approved will share the 180 days of market exclusivity.

During any period in which the FDA is required to withhold its approval of an ANDA due to a statutorily imposed non-approval period, the FDA may grant tentative approval to an applicant’s ANDA. A tentative approval reflects the FDA’s preliminary determination that a generic product satisfies the substantive requirements for approval, subject to the expiration of all statutorily imposed non-approval periods. This can include expiration of brand company patents that are listed in the Orange Book but not certified against under Paragraph IV in the ANDA. A tentative approval does not allow the applicant to market the generic drug product.

The Hatch-Waxman Act contains additional provisions that can delay the launch of generic products. A five year marketing exclusivity period is provided for new chemical compounds, and a three year marketing exclusivity period is provided for approved NDAs, such as under the 505(b)(2) regulatory pathway, containing new clinical investigations essential to an approval, such as a new indication for use, or new delivery technologies, or new dosage forms. The three year marketing exclusivity period applies to, among other things, the development of a novel drug delivery system, as well as a new use. In addition, companies can obtain six additional months of exclusivity if they perform pediatric studies of a reference listed drug product. The marketing exclusivity provisions apply to both patented and non-patented drug products. The Act also provides for patent term extensions to compensate for patent protection lost due to time taken in conducting FDA required clinical studies and during FDA review of NDAs before a commercial product can be marketed.

These provisions may therefore block approval of company products until the non-patent market exclusivity provisions expire.

The Generic Drug Enforcement Act of 1992 establishes penalties for wrongdoing in connection with the development or submission of an ANDA. In general, the FDA is authorized to temporarily bar companies, or temporarily or permanently bar individuals, from submitting or assisting in the submission of an ANDA, and to temporarily deny approval and suspend applications to market generic drugs under certain circumstances. In addition to debarment, the FDA has numerous discretionary disciplinary powers, including the authority to withdraw approval of an ANDA or to approve an ANDA under certain circumstances and to suspend the distribution of all drugs approved or developed in connection with certain wrongful conduct. The FDA may also withdraw product approval or take other correct measures if ongoing regulatory requirements are not met or if safety or efficacy questions are raised after the product reaches the market.

We must obtain the approval of the FDA to market any drugs developed in the U.S., as well as adhere to other U.S. and state regulations. If we seek to market new drugs, we will be required to file a new drug application or abbreviated new drug application and obtain FDA approval. FDA regulations govern the following activities that we may perform, or have performed on our behalf, to ensure that any drugs that we develop are safe and effective for their intended uses:

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

The first step to obtaining FDA approval of a new drug involves development, purification and pre-clinical testing of a pharmaceutically active agent in laboratory animals. Once sufficient pre-clinical data has been collected to demonstrate that the drug is reasonably safe for initial use in humans, an IND can be prepared and submitted to the FDA for review. In the IND review process, FDA physicians and scientists evaluate the proposed clinical trial protocol, chemistry and manufacturing control, pharmacologic mechanisms of action of the drug and toxicological effects of the drug in animals and in vitro. Within 30 days of the IND’s submission, the drug review division of the FDA may contact the filer regarding potential concerns and, if necessary, implement a clinical hold until certain issues are resolved satisfactorily. If it does not take any action, the filer may proceed with clinical trials on the 31st day.

Clinical trials represent the ultimate pre-market testing ground for unapproved drugs, generally taking several years to complete. Before testing can begin, an institutional review board (“IRB”) must have reviewed and approved the use of human subjects in the clinical trial. During clinical trials, an investigational compound is administered to humans and evaluated for its safety and effectiveness in treating, preventing or diagnosing a specific disease or condition. The clinical trials consist of Phase I, Phase II, and Phase III testing. During clinical trials, the FDA and IRB closely monitor the studies and may suspend or terminate trials at any time for a number of reasons, such as finding that patients are being exposed to an unacceptable health risk. The results of clinical trials comprise the single most important factor in the approval or disapproval of a new drug.

After a drug is approved for marketing and enters the marketplace, numerous regulatory requirements continue to apply. These include, but are not limited to:

After a drug receives approval, any modification in conditions of use, active ingredient(s), route of administration, dosage form, strength or bioavailability, will require a new approval, for which it may be possible to submit a 505(b)(2), accompanied by additional clinical data necessary to demonstrate the safety and effectiveness of the product with the proposed changes. Additional clinical studies may be required for proposed changes.

A variety of U.S. federal and state laws apply to the sale, marketing and promotion of drugs that are paid for, directly or indirectly, by U.S. federal or state healthcare programs such as Medicare and Medicaid. The restrictions imposed by these laws are in addition to those imposed by the FDA, the U.S. Federal Trade Commission and corresponding state agencies. Some of these laws significantly restrict or prohibit certain types of sales, marketing and promotional activities by drug manufacturers. Violation of these laws may result in significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties and exclusion or debarment from U.S. federal and state healthcare and other programs. Many private health insurance companies also prohibit payment to entities that have been sanctioned, excluded or debarred by U.S. federal agencies.

The U.S. federal anti-kickback statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending of a good or service, for which payment may be made in whole or in part under a U.S. federal healthcare program such as the Medicare and Medicaid programs. The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts, the furnishing of supplies or equipment, payments of cash and waivers of payments. Several courts have interpreted the statute’s intent requirement to mean that, if any one purpose of an arrangement involving remuneration is to induce referrals or otherwise generate business involving goods or services reimbursed in whole or in part under U.S. federal healthcare programs, the statute has been violated. Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other U.S. federal healthcare programs. In addition, some kickback allegations have been claimed to violate the U.S. False Claims Act (as discussed below). The reach of the anti-kickback Statute was broadened by the Affordable Care Act, which, among other things, amends the intent requirement of the federal anti-kickback statute. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. The Affordable Care Act further provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (discussed below) or the Civil Monetary Penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

The U.S. federal anti-kickback statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Recognizing that the statute is broad and may technically prohibit many innocuous or beneficial arrangements, the Office of Inspector General of the Department of Health and Human Services, or OIG, has issued a series of regulations, known as the “safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the anti-kickback statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarily mean that it is illegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy an applicable safe harbor may result in increased scrutiny by government enforcement authorities such as the OIG or the U.S. Department of Justice.

Many states have adopted laws similar to the U.S. federal anti-kickback statute. Some of these state prohibitions are broader than the U.S. federal statute, and apply to the referral of patients and recommendations for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs. Government officials have focused certain enforcement efforts on marketing of healthcare items and services, among other activities, and have brought cases against individuals or entities with sales personnel who allegedly offered unlawful inducements to potential or existing physician customers in an attempt to procure their business.

The U.S. False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the U.S. federal government or knowingly making, or causing to be made, a false statement in order to have a false claim paid. The U.S. federal government’s interpretation of the scope of the law has in recent years grown increasingly broad. Most states also have statutes or regulations similar to the U.S. False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. Sanctions under these U.S. federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines and imprisonment. Several drug manufacturers have been prosecuted under the false claims laws for allegedly providing free drugs to physician customers with the expectation that the physician customers would bill U.S. federal programs for the product. In addition, several recent cases against drug manufacturers have alleged that the manufacturers improperly promoted their products for “off-label” use, outside of the scope of the FDA-approved labeling.

The U.S. Health Insurance Portability and Accountability Act of 1996, or HIPAA, created a new U.S. federal healthcare fraud statute that prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payers. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government-sponsored programs. Among other things, HIPAA also imposes new criminal penalties for knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services, along with theft or embezzlement in connection with a healthcare benefits program and willful obstruction of a criminal investigation involving a U.S. federal healthcare offense.

We have obtained three patents in the U.S. and have applied for several others in the U.S., covering certain products and product candidates, and we are also considering development of brand names and trademarks for other products and product candidates. Generally, the brand pharmaceutical business relies upon patent protection to ensure market exclusivity for the life of the patent. We consider the overall protection of our patents, trademarks and contractual rights with partners to be of material value and act to protect these rights from infringement and misappropriation. Our business is not dependent, however, upon any single patent, trademark or contract.

In the branded pharmaceutical industry, the majority of a branded drug’s commercial value is usually realized during the period in which the product has market exclusivity. In the U.S. and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales. The rate of this decline varies by country and by therapeutic category, and the number of generic competitor entrants to the market, among other factors; however, following patent expiration, branded products often continue to have market viability based upon the goodwill of the product name, which typically benefits from trademark protection.

A brand product’s market exclusivity is generally determined by two forms of intellectual property: patent rights held by the brand company and any regulatory forms of exclusivity to which the NDA-holder is entitled.

Patents are a key determinant of market exclusivity for most branded pharmaceuticals. Patents provide the brand company with the right to exclude others from practicing an invention related to the medicine. Patents may cover, among other things, the active ingredient(s), various uses of a drug product, pharmaceutical formulations, drug delivery mechanisms and processes for (or intermediates useful in) the manufacture of products, and polymorphs. Protection for individual products extends for varying periods in accordance with the expiration dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country.

Market exclusivity is also sometimes influenced by regulatory exclusivity rights. Many developed countries provide certain non-patent incentives for the development of medicines. For example, the U.S., the European Union and Japan each provide for a minimum period of time after the approval of a new drug during which the regulatory agency may not rely upon the data of the original party who developed the drug to approve a competitor’s generic copy. Regulatory exclusivity rights are also available in certain markets as incentives for research on new indications, on orphan drugs and on medicines useful in treating pediatric patients. Regulatory exclusivity rights are independent of any patent rights and can be particularly important when a drug lacks broad patent protection. Most regulatory forms of exclusivity, however, do not prevent a competitor from gaining regulatory approval prior to the expiration of regulatory data exclusivity on the basis of the competitor’s own safety and efficacy data on its drug, even when that drug is identical to that marketed by the innovator.

We estimate the likely market exclusivity period for each of our 505(b)(2) products on a case-by-case basis. It is not possible to predict the length of market exclusivity for any of our branded products with certainty because of the complex interaction between patent and regulatory forms of exclusivity, and inherent uncertainties concerning patent litigation. There can be no assurance that a particular product will enjoy market exclusivity for the full period of time that we currently estimate or that the exclusivity will be limited to the estimate.

Sales of our products in the United States may depend, in part, on the extent to which the costs of the products will be covered by third-party payers, such as government health programs, commercial insurance and managed health care organizations. These third-party payers are increasingly challenging the prices charged for medical products and services. Additionally, the containment of health care costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The United States government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. If these third-party payers do not consider our products to be cost-effective compared to other available therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, (the “MMA”), imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries and included a major expansion of the prescription drug benefit under Medicare Part D. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payers.

On February 17, 2009, President Obama signed into law The American Recovery and Reinvestment Act of 2009. This law provides funding for the federal government to compare the effectiveness of different treatments for the same illness. A plan for the research will be developed by the Department of Health and Human Services, the Agency for Healthcare Research and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures will be made to Congress. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or private payers, it is not clear how such a result could be avoided and what if any effect the research will have on the sales of our product candidates, if any such product or the condition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness research demonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. Decreases in third-party reimbursement for our products or a decision by a third-party payer to not cover our products could reduce physician usage of the products and have a material adverse effect on our sales, results of operations and financial condition.

On March 23, 2010, President Obama signed into legislation the Patient Protection and Affordable Care Act (the “Affordable Care Act”), which was subsequently amended by the Healthcare and Education Reconciliation Act. The Affordable Care Act, as amended, will result in sweeping changes across the health care industry. The primary goal of this comprehensive legislation is to extend health insurance coverage to currently uninsured legal U.S. residents through a combination of public program expansion and private sector health insurance reforms. To fund the expansion of insurance coverage, the Affordable Care Act contains measures designed to promote quality and cost efficiency in health care delivery and to generate budgetary savings in the Medicare and Medicaid programs. The Affordable Care Act’s provisions are designed to encourage providers to find cost savings in their clinical operations. Pharmaceuticals represent a significant portion of the cost of providing care. Through modified reimbursement rates and other incentives, the U.S. government is requiring that providers identify the most cost-effective services, supplies and pharmaceuticals. This environment has caused changes in the purchasing habits of providers and resulted in specific attention to the pricing negotiation, product selection and utilization review surrounding pharmaceuticals. This attention may result in our products being chosen less frequently or the pricing being substantially lowered. Additionally, the Affordable Care Act is expected to expand and increase industry rebates for drugs covered under Medicaid programs and make changes to the coverage requirements under the Medicare D program. We cannot predict the impact of the Affordable Care Act on pharmaceutical companies as many of the Affordable Care Act reforms require the promulgation of detailed regulations implementing the statutory provisions which has not yet occurred. The legislation also includes significant provisions that encourage state and Federal law enforcement agencies to increase activities related to preventing, detecting and prosecuting those who commit fraud, waste and abuse in federal healthcare programs, including Medicare, Medicaid and Tricare. Since the enactment of the Affordable Care Act, numerous regulations have been issued providing further guidance on its requirements. State and Federal legislators in the United States continue to be deeply divided over the efficacy of the Affordable Care Act. The division resulted in a shutdown of many Federal government activities in September of 2013. The Affordable Care Act continues to be implemented through regulation and government activity but is subject to possible amendment, additional implementing regulations and interpretive guidelines. Several states have decided not to expand their Medicaid programs and are seeking alternative reimbursement models to provide care to the uninsured. The manner in which these issues are resolved could materially affect the extent to which and the amount at which pharmaceuticals are reimbursed by government programs such as Medicare, Medicaid and Tricare.

In Europe, a company must obtain authorization from the European Agency for the Evaluation of Medicinal Products, commonly known as the European Medicines Evaluation Agency (EMEA) before marketing medicinal products. Authorization can be obtained through either the (i) “centralized” procedure, with applications made directly to the EMEA leading to the grant of a European marketing authorization by the European Commission, or (ii) “mutual recognition” procedure, in which applications are made to one or more Member States leading to national marketing authorizations mutually recognized by other Member States. Even after a company receives marketing authorization, European Union law regulates the distribution, classification for supply, labeling and packaging, and advertising of medicinal products for human use. The European Union also regulates the manufacture of medicinal products, requiring cGMP set forth in the Quality System regulation. European Union pharmacovigilance directives and regulations require a company to establish post-market surveillance systems that include individual adverse reaction case reports, periodic safety update reports, and company-sponsored post-authorization safety studies. If a medicinal product’s overall risk and benefit profile is found to have changed significantly for any reason, it may be required to be varied, withdrawn, or have its use suspended.

Our clinical operations in Israel also are subject to approval by Israel’s Ministry of Health and the Helsinki Committee of each medical institution in which a clinical study is conducted. All phases of clinical studies conducted in Israel must be conducted in accordance with the Public Health Regulations (Medical Studies Involving Human Subjects, 1980), including amendments and addenda thereto, the Guidelines for Clinical Trials in Human Subjects issued by the Israel Ministry of Health (the “Guidelines”) and the International Conference for Harmonized Tripartite Guideline for Good Clinical Practice. The regulations and the Guidelines stipulate that a medical study on humans will only be approved after the Helsinki Committee at the hospital intending to perform the study has approved the medical study and notified the relevant hospital director in writing. In addition, certain clinical studies require the approval of the Ministry of Health. The Helsinki Committee will not approve the performance of the medical study unless it is satisfied that it has advantages to the study participants and society at large that justify the risk and inconvenience for the participants and that the medical and scientific information justifies the performance of the requested medical study. The relevant hospital director, and the Ministry of Health, if applicable, also must be satisfied that the study is not contrary to the Helsinki Declaration or to other regulations. The Ministry of Health also licenses and regulates the marketing of pharmaceuticals in Israel, requiring the relevant pharmaceutical to meet internationally recognized cGMP standards.

Under the R&D Law, recipients of grants from the OCS, or “Recipient Company(ies),” are subject to certain obligations under the R&D Law. The pertinent obligations are as follows: (i) the Recipient Company, is obligated to pay the OCS royalties from the revenues generated from the sale of products (and related services) or services developed (in all or in part) according to, or as a result of, a research and development program funded by the OCS (at rates which are determined under the R&D Law (currently a yearly rate of 3% to 5% on sales of products or services developed under the approved programs), up to the aggregate amount of the total grants received by the OCS, plus annual interest (as determined in the R&D Law); (ii) Products developed as a result of OCS funded R&D must, as a general matter, be manufactured in Israel. The Recipient Company is prohibited from manufacturing products developed using these OCS grants outside of the State of Israel without receiving the OCS prior approval (except for the transfer of less than 10% of the manufacturing capacity in the aggregate). If the Recipient Company receives approval to manufacture the products developed with government grants outside of Israel, it will be required to pay an increased total amount of royalties to OCS, up to 300% of the grant amounts plus interest, depending on the manufacturing volume that is performed outside of Israel, as well as at a possibly increased royalty rate. A Recipient Company also has the option of declaring in its OCS grant application its intention to exercise a portion of the manufacturing capacity abroad, thus avoiding the need to obtain additional approval. On January 6, 2011, the Knesset (the Israeli Parliament) passed an Amendment to the R&D Law (the “Amendment”), under which it is clarified that even in the case where approval has been granted to manufacture outside Israel within the framework of approval of an R&D plan and in the case of the transfer of manufacturing at a rate that does not require the approval of the research committee (i.e. at a rate of up to 10%), a company is obligated with regard to the transfer of manufacturing outside of Israel, to pay increased royalties to the State of Israel, at the rates set forth in the R&D Law; (iii) under the R&D Law, the Recipient Company is prohibited from transferring OCS-financed technologies and related intellectual property rights outside of the State of Israel except under limited circumstances, and only with the approval of the Research Committee of the OCS and subject to certain payment to the OCS calculated according to formulae provided under the R&D Law (as further detailed below); and (iv) any change of control in the Recipient Company and any change of ownership of the Recipient Company’s ordinary shares that would make a non-Israeli citizen or resident an “interested party,” as defined in the R&D Law, requires a prior written notice to the OCS.

We have received grants from the OCS. Therefore, we are subject to the restrictions under the R&D Law, which will continue to apply even after we pay the full amount of royalties payable pursuant to the grants.

In general, the Research Committee may approve transfer of know-how created in whole or in part in connection with OCS funded project to third party outside of Israel, in limited circumstances, as follows:

The State of Israel does not own intellectual property rights in technology developed with OCS funding and there is no restriction on the export of products manufactured using technology developed with OCS funding. The technology is, however, subject to transfer of technology and manufacturing rights restrictions as described above. OCS approval is not required for the export of any products resulting from the research or development. In addition, the OCS is in the process of exploring the possibility of promulgating regulations, including the consideration due to the State of Israel for the granting of licenses to use know-how developed as a result of research financed by the OCS. Such regulations may have an effect on us in respect of the amount of our payments to the OCS for the grant of sub-licenses to third parties. As of the date of this prospectus, we are unable to assess the effect, if any, of the promulgation of such regulations on us.

We may not receive the required approvals for any actual proposed transfer and, if received, we may be required to pay the OCS a portion of the consideration that we receive upon any sale of such technology to a non-Israeli entity. The scope of the support received, the royalties that we have already paid to the OCS, the amount of time that has elapsed between the date on which the know-how was transferred and the date on which the OCS grants were received and the sale price and the form of transaction will be taken into account in calculating the amount of the payment to the OCS (as further detailed above).

We are subject to comprehensive environmental laws and regulations that govern, among other things, air polluting emissions, waste water discharges, solid and hazardous waste disposal, and the remediation of contamination associated with current or past generation handling and disposal activities. We are subject periodically to environmental compliance reviews by various environmental regulatory agencies. While it is impossible to predict accurately the future costs associated with environmental compliance and potential remediation activities, compliance with environmental laws is not expected to require significant capital expenditures and has not had, and is not expected to have, a material adverse effect on our business, operations or financial condition.

As of April 15, 2014, we had 32 employees, who are based in Israel, Germany and China. We expect this number to increase primarily at our new manufacturing plant in Neot Hovav, Israel, following its completion and commencement of operations. The following table shows the breakdown of our global workforce by category of activity as of December 31 for the past three years:

Israeli labor laws govern the length of the workday, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws and other conditions of employment. Subject to certain exceptions, Israeli law generally requires severance pay upon the retirement, death or dismissal of an employee, and requires us and our employees to make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Our employees have pension plans in accordance with the applicable Israeli legal requirements.

None of our employees work under any collective bargaining agreements. Extension orders issued by the Israeli Ministry of Industry, Trade and Labor apply to us and affect matters such as cost of living adjustments to salaries, length of working hours and week, recuperation pay, travel expenses, and pension rights. Employees work in three separate shifts, seven days a week.

We have never experienced labor-related work stoppages or strikes and believe that our relations with our employees are satisfactory.

Currently, we are not a party to any legal proceedings.

The following table sets forth the name, age and position of each of our executive officers, directors and director nominees as of the date of this prospectus.

Ehud Marom is one of our founders and has served as our chief executive officer and as chairman of our board of directors since our inception in January 2008. Mr. Marom has over 40 years of management and operational experience in the life sciences industry. Prior to our founding, Mr. Marom served in various senior positions at multinational pharmaceutical companies, including as vice president of two divisions at Teva Pharmaceutical Industries Ltd. from 1992 to 1995, where he launched Copaxone (with current sales of $4 billion per year) and was the head of the Copaxone global operation team and headed the global operations of Teva Pharmaceutical Industries Ltd.’s chemical division. From 2000 to 2002, Mr. Marom served as president of Peptor Ltd., where he led the pharmaceutical development of the innovative diabetes product, DiaPep. From 2002 to 2004, Mr. Marom served as chief executive officer of Gamida-Cell Ltd., a stem cell development company. From 2005 to 2007, Mr. Marom served as chief executive officer of Makhteshim, a company with annual sales of $1 billion and the world’s leader in branded off-patent crop protection solutions (which later became Makhteshim-Agan Industries Ltd. and has since been acquired by China National Agrochemical Corporation, a subsidiary of China National Chemical Corporation). Mr. Marom served as vice president of supply of Makhteshim-Agan Industries Ltd. from 2005 to 2009. He currently serves also as the chairman of Pharma Two B as well as chief executive officer and chairman of Stem Cell Medicine Ltd. (“Stem Cell”). Ehud has a B.Sc in chemical engineering with honors, from the Technion, Israel.

Nir Bernstein has served as our chief financial officer since November 2013. From October 2010 until October 2013, Mr. Bernstein served as vice president of accounting and controller of Ampal-American Israel Corp Inc., a public company (Nasdaq: AMPL) that acquires interests in businesses located or operating in Israel. From August 1997 until September 2010, Mr. Bernstein worked as a senior manager at PriceWaterhouseCoopers, an international accounting firm. Mr. Bernstein holds a B.A. in management and accounting from the College of Management and a B.Sc. in physics from the Hebrew University of Jerusalem, Israel.

Uri Danon has served as our executive vice president since October 2013. For an accumulated five years ending in 2012, Mr. Danon served as president and later as chief executive officer of BioCancell Therapeutics Inc. (TASE: BICL), a clinical stage anti-cancer drug development company. He also previously served as chief executive officer of Atox Bio Ltd., a clinical stage drug development company focused on the treatment of severe infections and served as the company’s chairman of the board of directors from 2009 until November 2013. He previously managed international projects for Teva Pharmaceutical Industries Ltd., including the development of Copaxone in solution in pre-filled syringes (which has current sales of $4 billion per year), from 1994 to 2000, and was chief executive officer of Epigenesis, Ltd., a cell therapy development company, from 2001 to 2003. Mr. Danon holds an MBA in marketing from Bar Ilan University, Israel, and a B.Sc. in industrial engineering and management from Tel Aviv University, Israel.

Shai Rubnov, PhD has served as our vice president of research and development since 2009. From 2007 to 2009, Dr. Rubnov served as head of chemistry, manufacturing and control, quality assurance and regulatory affairs at Therapix Bioscience Ltd. (formerly NasVax Ltd.), an Israeli drug development company. From 2002 to 2007, Dr. Rubnov served as a director of chemistry, manufacturing and control at DeveloGen AG., a German-Israeli biotechnology company, where he gained extensive experience in investigational new drug development and medicinal chemistry. Dr. Rubnov holds a PhD in medicinal chemistry and a BPharm from the Hebrew University in Jerusalem, Israel. Dr. Rubnov has completed his post-doctoral training at the French National Center for Scientific Research in Paris.

Alex Mogle has served as our vice president of corporate development since June 2012. Mr. Mogle has over 15 years of executive experience in the life science and chemical industries. From 2003 until 2012, Mr. Mogle served in several capacities, including as the head of the supply chain of Makhteshim Agan Industries Ltd., and was responsible for sales planning and inventory management which is valued at over $1 billion. Prior to Makhteshim Agan Industries Ltd., Mr. Mogle served as business development manager of the digital video division of Nice Systems Ltd., and as an economist in the Israeli Ministry of Finance. He currently serves also as the vice president of strategy of Stem Cell. Mr. Mogle has a B.A., with honors, in economics and an MBA, majoring in finance and accounting, both from the Hebrew University of Jerusalem, Israel.

Safi Landskroner has served as our vice president of business development and regulatory affairs since October 2013. Ms. Landskroner has experience in developing new business and a proven track record in international regulatory affairs. From 2012 until 2013, Ms. Landskroner served as the head of the procurement division of Meuhedet Sick Fund. From 2009 until 2011, Ms. Landskroner served as business development consultant (a vice president position) of Neopharm Ltd. Ms. Landskroner currently serves as a director of Therapix Biosciences Ltd. (TASE:TRPX). Ms. Landskroner previously served as research development project manager and later as vice president of business development and regulatory affairs, of Dexcel Pharma Ltd. Ms. Landskroner holds an MBA from Bradford University, UK, and a BPharm from the Hebrew University in Jerusalem, Israel.

David Leonov, PhD has served as our head of API development since February 2011. From June 2005 to February 2011, Dr. Leonov was employed at Makhteshim Agan Industries Ltd., where he served as the chief scientist in charge of the company’s generic and innovative products and served as the leader of the company’s research and development expansion into India. Prior to that, Dr. Leonov was employed at Teva Pharmaceutical Industries Ltd. for 27 years, where in his last position he served as the head of global research and development in Israel, India, the United States and Hungary. Dr. Leonov earned his PhD in chemistry from the Weitzman Institute of Science in Rehovot and continued his post-doctoral training at the University of Chicago.

Yoram Sela, PhD has served as our head of formulations since our incorporation in January 2008 and will join our board of directors upon the completion of this offering. Dr. Sela has over 24 years of experience in development of formulations and drug delivery systems. Previously, Dr. Sela founded and for a period of nine years managed the drug-delivery unit at Teva Pharmaceutical Industries Ltd. In addition, Dr. Sela co-founded and served as a director of Karma-Pharm Ltd. and as a vice president of research and development of Lycored Ltd. From 2008 to 2010, Dr. Sela served as vice president of research and development at Nesher Solutions, Israel. In December 2010, Dr. Sela founded GC group Ltd. and serves as its chief executive officer. Dr. Sela earned his PhD and M.Sc. in chemistry and a B.Sc. in agriculture from the Hebrew University of Jerusalem, Israel.

Itamar Borowitz, PhD has served as a director since May 2009. Dr. Borowitz served as the chief executive officer of Israel’s third largest insurance company, Phoenix Insurance Company Ltd., from 1992 to 2001. This position marked the culmination of his 27 year career within the Phoenix Group, during which he held a variety of senior management positions. Since 2009, Dr. Borowitz has served as the chief executive officer of BIT Enterprises Ltd., an advisor to Generali Financial Holdings – Sub-Fund 2, a Specialised Investment Fund governed by the Luxemboug law of 13 February 2007, which invests, inter-alia, in Israeli hi-tech companies. From 2005 to 2008, Dr. Borowitz served as an advisor to the Post of Israel. Since 2001, Dr. Borowitz serves as a member of the advisory board and a representative to Israel of GLL Real Estate Partners GmBH. Previously, Dr. Borowitz served as the chief executive officer of Dolev Insurance Co. Ltd., as the chairman of the board of directors of Surdam, Lloyd’s agent in Israel, as the chairman of Israel Insurance Association, the chairman of Academic College of Insurance and a director of Mehadrin Ltd., the largest citrus company in Israel. Dr. Borowitz serves as the Chairman of the Board of Inbal Pinto and Avshalom Polak Dance Company. Dr. Borowitz has been serving as a member of the board of governors of the Hebrew University of Jerusalem and of Tel Aviv University for over 20 years. Dr. Borowitz’s academic background includes a PhD in High Energy Physics, an MBA and B.A. in General History from Tel Aviv University, Israel, and a B.Sc. in Mathematics and Physics from the Hebrew University of Jerusalem, Israel.

The aggregate compensation paid by us and our subsidiaries to our current executive officers and directors, for the year ended December 31, 2013, was approximately $1,689,000. This amount includes approximately $76,000 set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include business travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly reimbursed or paid by companies in Israel.

After the completion of this offering, we will be a “foreign private issuer” under Nasdaq Marketplace Rules, as discussed below.

As a foreign private issuer, we are permitted to follow certain Israeli corporate governance practices instead of the Nasdaq Marketplace Rules, provided that we disclose which requirements we are not following and the equivalent Israeli requirement. Pursuant to the “foreign private issuer exemption”:

Otherwise, we intend to comply with the rules generally applicable to U.S. domestic companies listed on the Nasdaq Capital Market. We may in the future decide to use the foreign private issuer exemption with respect to some or all of the other Nasdaq Marketplace Rules. Following the completion of this offering, we also intend to comply with Israeli corporate governance requirements under the Companies Law applicable to public companies.

Under our amended and restated articles of association, the number of directors on our board of directors will be no less than five (5) and no more than seven (7) and must include at least two external directors. The minimum and maximum number of directors may be changed, at any time and from time to time, by a special majority (66 2/3%) vote of our shareholders at a shareholders’ meeting.

Each director holds office until the annual general meeting of our shareholders in the subsequent year unless the tenure of such director expires earlier pursuant to the Companies Law or unless removed from office as described below, except that our external directors have a term of office of three years under Israeli law (see “− External directors − Election and dismissal of external directors”).

The board of directors may elect new directors if the number of directors falls below the minimum number provided in our articles so the number of directors in office shall be at least the minimum number, provided that in such case a shareholders’ meeting shall be held within six months of such appointment in order to elect directors. An amendment of our amended and restated articles of association regarding any change to the minimum or maximum number of directors in our articles will require a special majority vote. External directors are elected for an initial term of three years and may be elected for up to two additional three-year terms (or more) under the circumstances described below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See “—External Directors.” See “− External directors” for a description of the procedure for the election of external directors.

Ehud Marom has served as our chief executive officer and chairman of our board of directors since January 2008. Our board of directors has determined that combining the role of chief executive officer and chairman of the board is the most effective leadership structure at the present time considering, among other things, Mr. Marom’s extensive experience in the pharmaceutical industry and his role as our co-founder and chief executive officer. As the chief executive officer, Mr. Marom has detailed knowledge of the risks, opportunities and challenges facing the company and is, therefore, the most appropriate person to identify strategic priorities and to develop an agenda that ensures that the board of directors’ time and attention are focused on critical matters. The combined role of chief executive officer and chairman of the board of directors also facilitates the flow of information between management and the board of directors and ensures clear accountability for the execution of the company’s strategy.

Under Israeli law, the chief executive officer of a public company may not serve as the chairman of the board of directors of the company unless approved by the holders of a majority of the shares of the company represented at the meeting in person or by proxy or written ballot, provided that:

With respect to the initial public offering of a company, the chief executive officer may serve as the chairman of the board for an interim period, not to exceed three months, until such shareholder approval is received. We intend to hold a meeting within three months following the completion of this offering, at which meeting shareholders will be asked to approve Mr. Marom’s service as both our chief executive officer and chairman.

In addition, under the Companies Law, our board of directors must determine the minimum number of directors who are required to have financial and accounting expertise. Under applicable regulations, a director with financial and accounting expertise is a director who, by reason of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements. See “−External directors – Qualifications of external directors.” He or she must be able to thoroughly comprehend the financial statements of the company and initiate debate regarding the manner in which financial information is presented. In determining the number of directors required to have such expertise, the board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that we require at least one director with the requisite financial and accounting expertise and that has such expertise.

There are no family relationships among any of our office holders (including directors).

Our articles of association provide, as allowed by the Companies Law, that any director may, by written notice to us, appoint another person who is qualified to serve as a director to serve as an alternate director. The alternate director will be regarded as a director. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external director and to have either “financial and accounting expertise” or “professional expertise,” depending on the qualifications of the external director he or she is replacing. The term of appointment of an alternate director may be for one meeting of the board of directors or until notice is given of the cancellation of the appointment. A person who does not have the requisite “financial and accounting experience” or the “professional expertise,” depending on the qualifications of the external director he or she is replacing, may not be appointed as an alternate director for an external director.

Under the Companies Law, companies incorporated under the laws of the State of Israel that are “public companies,” including companies with shares listed on the Nasdaq Capital Market, are required to appoint at least two external directors who meet the qualification requirements set forth in the Companies Law. Appointment of external directors must be made by a general meeting of our shareholders no later than three months following the completion of this offering, and therefore we intend to hold a shareholders meeting within three months of the completion of this offering for the appointment of two external directors.

A person may not serve as an external director if the person is a relative of a controlling shareholder or if on the date of the person’s appointment or within the preceding two years the person or his or her relatives, partners, employers or anyone to whom that person is subordinate, whether directly or indirectly, or entities under the person’s control have or had any affiliation with any of (each an “Affiliated Party”): (1) us; (2) any person or entity controlling us on the date of such appointment; (3) any relative of a controlling shareholder; or (4) any entity controlled, on the date of such appointment or within the preceding two years, by us or by a controlling shareholder. If there is no controlling shareholder or any shareholder holding 25% or more of voting rights in the company, a person may not serve as an external director if the person has any affiliation to the chairman of the board of directors, the general manager (chief executive officer), any shareholder holding 5% or more of the company’s shares or voting rights or the senior financial officer as of the date of the person’s appointment.

The term “controlling shareholder” means a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to have “control” of the company and thus to be a controlling shareholder of the company if the shareholder holds 50% or more of the “means of control” of the company. “Means of control” is defined as (1) the right to vote at a general meeting of a company or a corresponding body of another corporation; or (2) the right to appoint directors of the corporation or its general manager. For the purpose of approving transactions with controlling shareholders, the term also includes any shareholder that holds 25% or more of the voting rights of the company if the company has no shareholder that owns more than 50% of its voting rights. For the purpose of determining the holding percentage stated above, two or more shareholders who have a personal interest in a transaction that is brought for the company’s approval are deemed as joint holders.

The term affiliation includes:

The term “relative” is defined as a spouse, sibling, parent, grandparent, descendant, spouse’s descendant, sibling and parent and the spouse of each of the foregoing.

The term “office holder” is defined as a general manager, chief business manager, deputy general manager, vice general manager, director or manager directly subordinate to the general manager or any other person assuming the responsibilities of any of the foregoing positions, without regard to such person’s title.

A person may not serve as an external director if that person or that person’s relative, partner, employer, a person to whom such person is subordinate (directly or indirectly) or any entity under the person’s control has a business or professional relationship with any entity that has an affiliation with any Affiliated Party, even if such relationship is intermittent (excluding insignificant relationships). Additionally, any person who has received compensation intermittently (excluding insignificant relationships) other than compensation permitted under the Companies Law may not continue to serve as an external director.

No person can serve as an external director if the person’s position or other affairs create, or may create, a conflict of interest with the person’s responsibilities as a director or may otherwise interfere with the person’s ability to serve as a director or if such a person is an employee of the Israeli Securities Authority or of an Israeli stock exchange. If at the time an external director is appointed all current members of the board of directors, who are not controlling shareholders or relatives of controlling shareholders, are of the same gender, then the external director to be appointed must be of the other gender. In addition, a person who is a director of a company may not be elected as an external director of another company if, at that time, a director of the other company is acting as an external director of the first company.

The Companies Law provides that an external director must meet certain professional qualifications or have financial and accounting expertise and that at least one external director must have financial and accounting expertise. However, if at least one of our other directors (1) meets the independence requirements of the Exchange Act, (2) meets the standards of the Nasdaq Marketplace Rules for membership on the audit committee and (3) has financial and accounting expertise as defined in the Companies Law and applicable regulations, then neither of our external directors is required to possess financial and accounting expertise as long as both possess other requisite professional qualifications. The determination of whether a director possesses financial and accounting expertise is made by the board of directors. A director with financial and accounting expertise is a director who by virtue of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements so that he or she is able to fully understand our financial statements and initiate debate regarding the manner in which the financial information is presented.

The regulations promulgated under the Companies Law define an external director with requisite professional qualifications as a director who satisfies one of the following requirements: (1) the director holds an academic degree in either economics, business administration, accounting, law or public administration, (2) the director either holds an academic degree in any other field or has completed another form of higher education in the company’s primary field of business or in an area which is relevant to his or her office as an external director in the company, or (3) the director has at least five years of experience serving in any one of the following, or at least five years of cumulative experience serving in two or more of the following capacities: (a) a senior business management position in a company with a substantial scope of business, (b) a senior position in the company’s primary field of business or (c) a senior position in public administration.

Until the lapse of a two-year period from the date that an external director of a company ceases to act in such capacity, the company in which such external director served, and its controlling shareholder or any entity under control of such controlling shareholder may not, directly or indirectly, grant such former external director, or his or her spouse or child, any benefit, including via (i) the appointment of such former director or his or her spouse or his child as an officer in the company or in an entity controlled by the company’s controlling shareholder, (ii) the employment of such former director and (iii) the engagement, directly or indirectly, of such former director as a provider of professional services for compensation, including via an entity under his or her control. With respect to a relation who is not a spouse or a child, such limitations shall only apply for one year from the date such external director ceased to be engaged in such capacity.

Under Israeli law, external directors are elected by a majority vote at a shareholders’ meeting, provided that either:

Under Israeli law, the initial term of an external director of an Israeli public company is three years. The external director may be reelected, subject to certain circumstances and conditions, to two additional terms of three years, and thereafter, subject to conditions set out in the regulations promulgated under the Companies Law, to further three year terms. An external director may be removed by the same special majority of the shareholders required for his or her election, if he or she ceases to meet the statutory qualifications for appointment or if he or she violates his or her fiduciary duty to the company. An external director may also be removed by order of an Israeli court if the court finds that the external director is permanently unable to exercise his or her office, has ceased to meet the statutory qualifications for his or her appointment, has violated his or her fiduciary duty to the company, or has been convicted by a court outside Israel of certain offenses detailed in the Companies Law.

If the vacancy of an external directorship causes a company to have fewer than two external directors, the company’s board of directors is required under the Companies Law to call a special general meeting of the company’s shareholders as soon as possible to appoint such number of new external directors so that the company thereafter has two external directors.

Under the Companies Law, each committee authorized to exercise any of the powers of the board of directors is required to include at least one external director and its audit and compensation committees are required to include all of the external directors.

An external director is entitled to compensation and reimbursement of expenses in accordance with regulations promulgated under the Companies Law and is prohibited from receiving any other compensation, directly or indirectly, in connection with serving as a director except for certain exculpation, indemnification and insurance provided by the company, as specifically allowed by the Companies Law.

Under the Companies Law, the board of directors of any public company must also appoint an audit committee comprised of at least three directors, including all of the external directors. The audit committee may not include:

According to the Companies Law, the majority of the members of the audit committee, as well as the majority of members present at audit committee meetings, will be required to be “independent” (as defined below) and the chairman of the audit committee will be required to be an external director. Any persons disqualified from serving as a member of the audit committee may not be present at the audit committee meetings, unless the chairman of the audit committee has determined that such person is required to be present at the meeting or if such person qualifies under one of the exemptions of the Companies Law.

The term “independent director” is defined under the Companies Law as an external director or a director who meets the following conditions and who is appointed or classified as such according to the Companies Law: (1) the conditions for his or her appointment as an external director (as described above) are satisfied and the audit committee approves the director having met such conditions and (2) he or she has not served as a director of the company for over nine consecutive years with any interruption of up to two years of his or her service not being deemed a disruption to the continuity of his or her service.

The approval of the audit committee is required to effect specified actions and transactions with office holders and controlling shareholders and their relatives, or in which they have a personal interest. See “Fiduciary duties and approval of specified related party transactions and compensation under Israeli law.” The audit committee may not approve an action or a transaction with a controlling shareholder or with an office holder unless at the time of approval the audit committee meets the composition requirements under the Companies Law.

Our board of directors has adopted an audit committee charter setting forth the responsibilities of the audit committee consistent with the rules of the SEC and the Nasdaq Marketplace Rules, which include:

Additionally, under the Companies Law, the role of the audit committee includes the identification of irregularities in our business management, among other things, by consulting with the internal auditor or our independent auditors and suggesting an appropriate course of action to the board of directors. In addition, the audit committee or the board of directors, as set forth in the articles of association of the company, is required to approve the yearly or periodic work plan proposed by the internal auditor. The audit committee is required to assess the company’s internal audit system and the performance of its internal auditor. The Companies Law also requires that the audit committee assess the scope of the work and compensation of the company’s external auditor. In addition, the audit committee is required to determine whether certain related party actions and transactions are “material” or “extraordinary” for the purpose of the requisite approval procedures under the Companies Law and whether certain transactions with a controlling shareholder will be subject to a competitive procedure. The audit committee charter states that in fulfilling its role the committee is entitled to demand from us any document, file, report or any other information that is required for the fulfillment of its roles and duties and to interview any of our employees or any employees of our subsidiaries in order to receive more details about his or her line of work or other issues that are connected to the roles and duties of the audit committee.

Amendment No. 20 to the Companies Law, which became effective as of December 2012 (“Amendment No. 20”), established new regulations relating to the terms of office and employment of directors and officers in public companies and companies that have publicly issued debentures. Such companies are required to appoint a compensation committee in accordance with the guidelines set forth in Amendment No. 20.

The compensation committee must consist of at least three members. All of the external directors must serve on the committee and constitute a majority of its members. The chairman of the compensation committee must be an external director. The remaining members are not required to be external directors, but must be directors who qualify to serve as members of the audit committee (as described above). In accordance with Amendment No. 20, our compensation committee will be composed of three members.

committee must be an external director. The remaining members are not required to be external directors, but must be directors who qualify to serve as members of the audit committee (as described above). In accordance with Amendment No. 20, our compensation committee will be composed of three members. The chairman of the compensation committee will be.

In accordance with the Companies Law, the roles of the compensation committee are, among others, as follows:

In addition to the roles mentioned above our compensation committee also makes recommendations to our board of directors regarding the awarding of employee equity grants.

In accordance with the provisions of Amendment No. 20, we intend to adopt a compensation policy within nine months following the effective date of the registration statement of which this prospectus forms a part. A compensation policy must be approved by the board of directors after receiving and considering the recommendations of the compensation committee. In addition, the compensation policy requires the approval of the general meeting of the shareholders. In public companies such as our company, shareholder approval requires one of the following: (i) the majority of shareholder votes counted at general meeting including the majority of all of the votes of those shareholders who are non-controlling shareholders and do not have a personal interest in the approval of the compensation policy, who participate at the meeting (excluding abstentions) or (ii) the total number of votes against the proposal among the shareholders mentioned in paragraph (i) does exceed two percent (2%) of the voting rights in the company. Under special circumstances, the board of directors may approve the compensation policy despite the objection of the shareholders on the condition that the compensation committee and then the board of directors decide, on the basis of detailed arguments and after discussing again the compensation policy, that approval of the compensation policy, despite the objection of the meeting of shareholders, is for the benefit of the company. As of the date of this prospectus, we have not adopted yet a compensation policy.

Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee. The role of the internal auditor is, among other things, to examine whether a company’s actions comply with applicable law and orderly business procedure. Under the Companies Law, the internal auditor may not be an interested party or an office holder or a relative of an interested party or of an office holder, nor may the internal auditor be the company’s independent auditor or the representative of the same.

An “interested party” is defined in the Companies Law as (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as a chief executive officer of the company. As of the date of this prospectus, we have not yet appointed our internal auditor.

The Companies Law imposes a duty of care and a fiduciary duty on all office holders of a company. The duty of care of an office holder is based on the duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance (New Version) 5728-1968. This duty of care requires an office holder to act with the degree of proficiency with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care includes, among other things, a duty to use reasonable means, in light of the circumstances, to obtain:

The fiduciary duty incumbent on an office holder requires him or her to act in good faith and for the benefit of the company, and includes, among other things, the duty to:

We may approve an act specified above which would otherwise constitute a breach of the office holder’s fiduciary duty, provided that the office holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses his or her personal interest a sufficient time before the approval of such act. Any such approval is subject to the terms of the Companies Law, setting forth, among other things, the appropriate parties of the company entitled to provide such approval, and the methods of obtaining such approval.

The Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obliged to disclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.

Under the Companies Law, once an office holder has complied with the above disclosure requirement, a company may approve a transaction between the company and the office holder or a third party in which the office holder has a personal interest. However, a company may not approve a transaction or action that is not to the company’s benefit.

Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder or with a third party in which the office holder has a personal interest, which is not an extraordinary transaction, requires approval by the board of directors. Our articles of association provide that such a transaction, which is not an extraordinary transaction, shall be approved by the board of directors or a committee of the board of directors or any other entity (which has no personal interest in the transaction) authorized by the board of directors. If the transaction considered is an extraordinary transaction with an office holder or third party in which the office holder has a personal interest, then audit committee approval is required prior to approval by the board of directors. For the approval of compensation arrangements with directors and executive officers, see “− Compensation of directors and executive officers.”

Any persons who have a personal interest in the approval of a transaction that is brought before a meeting of the board of directors or the audit committee may not be present at the meeting or vote on the matter. However, if the chairman of the board of directors or the chairman of the audit committee has determined that the presence of an office holder with a personal interest is required, such office holder may be present at the meeting for the purpose of presenting the matter. Notwithstanding the foregoing, a director who has a personal interest may be present at the meeting and vote on the matter if a majority of the directors or members of the audit committee have a personal interest in the approval of such transaction. If a majority of the directors at a board of directors meeting have a personal interest in the transaction, such transaction also requires approval of the shareholders of the company.

A “personal interest” is defined under the Companies Law as the personal interest of a person in an action or in a transaction of the company, including the personal interest of such person’s relative or the interest of any other corporate body in which the person and/or such person’s relative is a director or general manager, a 5% shareholder or holds 5% or more of the voting rights, or has the right to appoint at least one director or the general manager, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest also includes (1) a personal interest of a person who votes according to a proxy of another person, including in the event that the other person has no personal interest, and (2) a personal interest of a person who gave a proxy to another person to vote on his or her behalf regardless of whether the discretion of how to vote lies with the person voting or not.

An “extraordinary transaction” is defined under the Companies Law as any of the following:

The Companies Law also requires that a controlling shareholder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. A controlling shareholder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, and the terms of engagement of the company, directly or indirectly, with a controlling shareholder or a controlling shareholder’s relative (including through a corporation controlled by a controlling shareholder), regarding the company’s receipt of services from the controlling shareholder, and if such controlling shareholder is also an office holder of the company, regarding his or her terms of employment, require the approval of each of (i) the audit committee or the compensation committee with respect to the terms of the engagement of the company, (ii) the board of directors and (iii) the shareholders, in that order. In addition, the shareholder approval must fulfill one of the following requirements:

In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the abovementioned approval every three years, however, such transactions not involving the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable under the circumstances.

The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s vote.

Directors. Under Amendment No. 20, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the shareholders at a general meeting. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, shareholder approval will also be required, as follows:

Executive officers other than the chief executive officer. Amendment No. 20 requires the compensation of a public company’s executive officers (other than the chief executive officer) to be approved by, first, the compensation committee, second, by the company’s board of directors and third, if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders (by a special majority vote as discussed above with respect to the approval of director compensation). However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.

Chief executive officer. The compensation paid to a public company’s chief executive officer is required to be approved by, first, the company’s compensation committee; second, the company’s board of directors, and third, the company’s shareholders (by a special majority vote as discussed above with respect to the approval of director compensation). However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide a detailed report for their decision.

The compensation committee and board of directors approval should be in accordance with the company’s stated compensation policy; however, in special circumstances, they may approve compensation terms of a chief executive officer that are inconsistent with such policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained (by a special majority vote as discussed above with respect to the approval of director compensation). The compensation committee may waive the shareholder approval requirement with regards to the approval of the engagement terms of a candidate for the chief executive officer position, if they determine that the compensation arrangement is consistent with the company’s stated compensation policy, and that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company and that subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to employ the chief executive officer candidate.

Under the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, when voting at meetings of shareholders on the following matters:

A shareholder also has a general duty to refrain from discriminating against other shareholders.

The remedies generally available upon a breach of contract will also apply to a breach of the shareholder duties mentioned above, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder.

In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or any other power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.

Under the Companies Law and the regulations promulgated thereunder, a private placement of securities does not require approval at a general meeting of the shareholders of a company; provided however, that in special circumstances, such as a private placement completed in lieu of a special tender offer (See “Description of Share Capital – Acquisitions under Israeli law”) or a private placement which qualifies as a related party transaction (See “Management – Fiduciary duties and approval of specified related party transactions and compensation under Israeli law”), approval at a general meeting of the shareholders of a company is required.

Under the Companies Law, a company may not exculpate an office holder from liability for a breach of a fiduciary duty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association include such a provision. The company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law and the Securities Law, 5738 – 1968 (the “Securities Law”) a company may indemnify an office holder in respect of the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder, either in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.

Under the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder if and to the extent provided in the company’s articles of association:

Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the board of directors and, with respect to directors or controlling shareholders, their relatives and third parties in which such controlling shareholders have a personal interest, also by the shareholders.

Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by law. Our office holders are currently covered by a directors’ and officers’ liability insurance policy. As of the date of the completion of this offering, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are not aware of any pending or threatened litigation or proceeding involving any of our office holders, including our directors, in which indemnification is sought.

We have entered into new agreements with each of our current office holders exculpating them from a breach of their duty of care to us to the fullest extent permitted by law, subject to limited exceptions, and undertaking to indemnify them to the fullest extent permitted by law, subject to limited exceptions, including, with respect to liabilities resulting from this offering, to the extent that these liabilities are not covered by insurance. This indemnification is limited, with respect to any monetary liability imposed in favor of a third party, to events determined as foreseeable by the board of directors based on our activities. The maximum aggregate amount of indemnification that we may pay to our office holders based on such new indemnification agreement is the greater of (1) 50% of our shareholders’ equity pursuant to our audited financial statements for the year preceding the year in which the event in connection with which indemnification is sought occurred, and (2) $20 million (as may be increased from time to time by shareholders approval). Such indemnification amounts are in addition to any insurance amounts. Each office holder who agrees to receive this letter of indemnification also gives his approval to the termination of all previous letters of indemnification that we have provided to him or her in the past, if any. However, in the opinion of the SEC, indemnification of office holders for liabilities arising under the Securities Act is against public policy and therefore unenforceable.

There is no pending litigation or proceeding against any of our office holders as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any office holder.

We have entered into written employment or service agreements with each of our executive officers. See “Certain Relationships and Related Party Transactions – Employment agreements” for additional information.

There are no arrangements or understandings between us and any of our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment or service as directors of our company or any of our subsidiaries.

On March 30, 2014, we adopted the 2014 Equity Incentive Plan, which became immediately effective. The 2014 Equity Incentive Plan is intended to afford an incentive to our and any of our affiliate’s employees, directors, consultants, advisors and any other person or entity whose services are considered valuable, to continue as service providers, to continue assisting us, to increase their efforts on our and our affiliates behalf and to promote our success, by providing such persons with opportunities to acquire a proprietary interest in us.

A share option is the right to purchase a specified number of ordinary shares in the future at a specified exercise price and subject to the other terms and conditions specified in the option agreement and the 2014 Equity Incentive Plan. The exercise price of each option granted under the 2014 Equity Incentive Plan will be determined in accordance with the limitation set forth under the 2014 Equity Incentive Plan. The exercise price of any share options granted under the 2014 Equity Incentive Plan may be paid in cash, through the surrender of ordinary shares already owned by the option holder or any other method that may be approved by our compensation committee, which may include procedures for cashless exercise.

Our compensation committee may also grant, or recommend that our board of directors grant, other forms of equity incentive awards under the 2014 Equity Incentive Plan, such as restricted shares, restricted share units, and other forms of share-based compensation.

Israeli participants in the 2014 Equity Incentive Plan may be granted options subject to Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 as amended (the “Israeli Tax Ordinance”). Section 102 of the Israeli Tax Ordinance allows employees, directors and officers who are not controlling shareholders and are considered Israeli residents to receive favorable tax treatment for compensation in the form of shares or options. Our non-employee service providers and controlling shareholders may only be granted options under another section of the Israeli Tax Ordinance, which does not provide for similar tax benefits. Section 102 includes two alternatives for tax treatment involving the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee. The most favorable tax treatment for the grantees is under Section 102(b)(2) of the Israeli Tax Ordinance, the issuance to a trustee under the “capital gain track.” However, under this track we are not allowed to deduct an expense with respect to the issuance of the options or shares. Any stock options granted under the 2014 Equity Incentive Plan to participants in the United States will be either “incentive stock options,” which may be eligible for special tax treatment under the Internal Revenue Code of 1986, or options other than incentive stock options (referred to as “nonqualified stock options”), as determined by our compensation committee or our board of directors and stated in the option agreement.

Our compensation committee will administer the 2014 Equity Incentive Plan, or in the event that our board of directors does not create a committee to administer the 2014 Equity Incentive Plan, the 2014 Equity Incentive Plan will be administered by our board of directors. Our board of directors may, subject to any legal limitations, exercise any powers or duties of the compensation committee concerning the 2014 Equity Incentive Plan. The compensation committee will, among others, select which eligible persons will receive options or other awards under the 2014 Equity Incentive Plan and will determine, or recommend to our board of directors, the number of ordinary shares covered by those options or other awards, the terms under which such options or other awards may be exercised (however, options generally may not be exercised later than seven years from the grant date of an option) or may be settled or paid, and the other terms and conditions of such options and other awards under the 2014 Equity Incentive Plan. Holders of options and other equity incentive awards may not transfer those awards, unless they die or the compensation committee determines otherwise.

To the extent permitted under applicable law, our compensation committee will have the authority to accelerate the vesting of any outstanding options and restricted shares at such time and under such circumstances as it, in its sole discretion, deems appropriate. In the event of a merger or sale, as defined in the 2014 Equity Incentive Plan, any award then outstanding shall be assumed or an equivalent award shall be substituted by the successor corporation of the merger or sale or any parent or affiliate thereof as determined by our board of directors. In the event that the awards are not assumed or substituted, our compensation committee may, in its discretion, accelerate the vesting, exercisability of the outstanding award, or provide for the cancellation of such award and payment of cash, as determined to be fair in the circumstances.

Subject to particular limitations specified in the 2014 Equity Incentive Plan and under applicable law, our board of directors may amend or terminate the 2014 Equity Incentive Plan, and the compensation committee may amend awards outstanding under the 2014 Equity Incentive Plan. In addition, an amendment to the 2014 Equity Incentive Plan that requires shareholder approval under applicable law will not be effective unless approved by the requisite vote of shareholders. In addition, in general, no suspension, termination, modification or amendment of the 2014 Equity Incentive Plan may adversely affect any award previously granted without the written consent of grantees holding a majority in interest of the awards so affected. The 2014 Equity Incentive Plan will continue in effect until all ordinary shares available under the 2014 Equity Incentive Plan are delivered and all restrictions on those shares have lapsed, unless the 2014 Equity Incentive Plan is terminated earlier by our board of directors. No awards may be granted under the 2014 Equity Incentive Plan on or after the tenth anniversary of the date of adoption of the plan.

Any equity award to an office holder, director or controlling shareholder, whether under the 2014 Equity Incentive Plan or otherwise, may be subject to further approvals in addition to the approval of the compensation committee as described above. We intend to grant to our chief executive officer, Ehud Marom, prior to consummation of this offering, a one-time grant of options under the 2014 Equity Incentive Plan to purchase shares representing 1.5% of our outstanding ordinary shares. This grant is in lieu of our previous commitment to annually grant to Mr. Marom options representing between 0.4% and 1% of our outstanding ordinary shares.

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this prospectus and after this offering by:

The percentages of ordinary shares beneficially owned after the offering assume that the underwriters will not exercise their over-allotment option to purchase additional ordinary shares in the offering. Except where otherwise indicated, we believe, based on information furnished to us by such owners, that the beneficial owners of the ordinary shares listed below have sole investment and voting power with respect to such shares.

None of our shareholders has different voting rights from other shareholders. To the best of our knowledge, we are not owned or controlled, directly or indirectly, by another corporation or by any foreign government. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

Unless otherwise noted below, each shareholder’s address is c/o Mapi – Pharma Ltd., 16 Einstein St., P.O. Box 4113, Ness Ziona, 74140 Israel.

Share purchase agreement

We entered into the Share Purchase Agreement on August 8, 2008, pursuant to which we issued a total of 10,000 ordinary shares for an aggregate purchase price of €20,000,000 ($29,654,000 at the closing date). Pursuant to the agreement, our board of directors is required to be comprised of an even number of directors, with 50% to be elected by the Marom Group and 50% to be elected by Allegro. The agreement also includes a put option right pursuant to which Allegro has the option to require us to purchase all of its shares at a certain purchase price and certain anti-dilution protection rights.

We intend to enter into a termination agreement effective immediately prior to the entry into the underwriting agreement in connection with the offering to which this prospectus relates, pursuant to which the Share Purchase Agreement will be terminated. No consideration was or will be conveyed for the termination of the Share Purchase Agreement.

Registration rights agreement

We intend to enter into a registration rights agreement, pursuant to which each of the holders of our ordinary shares is a party. The registration rights agreement contains the following provisions:

Demand registration rights

At any time after nine months following the closing of this offering, at the request of the holders of at least 5% of the ordinary shares outstanding on the date of this prospectus, we must register any or all of these shareholders’ ordinary shares as follows:

•

in the event that we are not eligible under applicable securities laws to file a registration statement on Form F-3, we are required to effect up to two such registrations, but only if the minimum anticipated gross aggregate offering price of the shares to be registered exceeds $5,000,000, and

•

in the event that we are eligible under applicable securities laws to file a registration statement on Form F-3, we are required to effect an unlimited number of registrations, but only (a) if the minimum gross anticipated aggregate offering price of the shares to be registered exceeds $1,000,000, and (b) up to two within a period of twelve months.

Such registration must also include any additional registrable securities requested to be included in such registration by any other holders who are party to the registration rights agreement or entitled thereunder.

Our obligation to effect a registration is subject to certain qualifications and limitations, including our right to postpone a registration during the period that is 60 days (30 days in the case of a Form F-3 registration) before our good faith estimate of the date of filing of, and ending up to 180 days (90 days in the case of a Form F-3 registration) after the effective date of, a registration statement initiated by us and for which the piggyback rights described below will apply, our right to postpone a registration for a period of up to 60 days in the event of our furnishing a certificate signed by our chief executive officer that states that in the good faith judgment of our board of directors, it would be materially detrimental to us or our shareholders for such registration statement to either become effective or remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving us or (ii) require premature disclosure of material information that we have a bona fide business purpose for preserving as confidential. However, we may not invoke this postponement right for more than an aggregate of 90 days in any 12 month period.

Piggyback registration rights

Following our initial public offering, all of our shareholders that are a party to the registration rights agreement have the right to request that we include their registrable securities in any registration statement that we file (other than a registration statement on Form S-8, S-4 or other equivalent form). The right of any shareholder to include shares in the registration related thereto is conditioned upon the shareholder accepting the terms of the underwriting, if any, as agreed between us and the underwriters and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of our offering. However, we have agreed not to grant any other shareholders priority to have their securities registered prior the securities of any shareholder who is a party to this registration rights agreement.

We have entered into written employment agreements with each of our executive officers. These agreements provide for notice periods of varying duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue to receive base salary and benefits. These agreements also contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. See “Risk factors − Risks relating to our business − Under applicable employment laws, we may not be able to enforce covenants not to compete” for a further description of the enforceability of non-competition clauses.

Our amended and restated articles of association permit us to exculpate, indemnify and insure each of our directors and officers to the fullest extent permitted by the Companies Law. We have obtained Directors and Officers insurance for each of our executive officers and directors. For further information, see “Management – Exculpation, insurance and indemnification of directors and officers.”

In March 2012, we signed a laboratory services agreement with Stem Cell Medicine Ltd. (“Stem Cell”). Mr. Marom, our board chairman, chief executive officer and a significant shareholder, also serves as the chairman of the board of directors and chief executive officer, and is a significant shareholder of Stem Cell. The services agreement was effective as of January 2012 for one year and was renewed for an additional one year term until January 2014. This agreement has expired and has not been renewed. Pursuant to the services agreement, we provided Stem Cell with certain laboratory, engineering and design services as well as secretarial and office management services. The monthly services fees we received from Stem Cell were NIS 60,000 per month (not including VAT) (approximately $16,000).

In December 2013, we signed an agreement with Stem Cell pursuant to which Stem Cell is providing us with the use and certain services of Stem Cell’s laboratory located in Jerusalem, Israel, effective as of November 2013. The services are related to the development and study of Risperidone LAI and Glatiramer Acetate Depot. In consideration for the services, we pay Stem Cell an amount of NIS 5,000 (not including VAT) (approximately $1,400) per project for each day Stem Cell provides the services. As of the date of this prospectus, no fees are due by us to Stem Cell.

In January 2013, our fully owned subsidiary, Mapi Pharma Nanjing Ltd. (“Mapi China”), entered into a laboratory services agreement with Stem Cell. The laboratory services agreement is effective as of November 1, 2012 for a term of three years. Pursuant to the Laboratory Services Agreement, Mapi China provides Stem Cell with laboratory space of approximately 309 square meters (which represents approximately 25% of the space of Mapi China’s laboratory in Nanjing, China), as well as laboratory materials, research and development support and accounting services. The total services fee during 2013 was approximately US$64,000.

In January 2011, we signed an agreement with Pharma Two B Ltd. (“Pharma Two B”). Mr. Marom also serves as the chairman of the board of directors of Pharma Two B and is a shareholder of Pharma Two B. Pursuant to the agreement Pharma Two B Ltd. will provide us certain financial services. The agreement was effective as of January 2011 and was terminated in November 2013. In consideration for the services, we paid a monthly fee of NIS 14,600-16,500 (not including VAT) (approximately $3,900-4,500).

The following description of our share capital and provisions of our articles of association are summaries and do not purport to be complete.

Effective upon the completion of this offering, our authorized share capital will consist solely of 70,000,000 ordinary shares, par value NIS 1.00 per share, of which 15,357,143 shares will be issued and outstanding (assuming that the underwriters do not exercise their over-allotment option to purchase additional ordinary shares).

All of our outstanding ordinary shares will be validly issued, fully paid and non-assessable. Our ordinary shares are not redeemable and do not have any preemptive rights.

Our registration number with the Israeli Registrar of Companies is 51-409278-2. Our purpose as set forth in our articles of association is to engage in any lawful activity.

All ordinary shares will have identical voting and other rights in all respects.

Our fully paid ordinary shares are issued in registered form and may be freely transferred under our articles of association, unless the transfer is restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership or voting of our ordinary shares by non-residents of Israel is not restricted in any way by our articles of association or the laws of the State of Israel, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.

Our board of directors may make, from time to time, such calls as it may deem fit upon shareholders with respect to any sum unpaid with respect to shares held by such shareholders which is not payable at a fixed time. Such shareholder shall pay the amount of every call so made upon him. Unless otherwise stipulated by the board of directors, each payment in response to a call shall be deemed to constitute a pro rata payment on account of all shares with respect to which such call was made. A shareholder shall not be entitled to his rights as shareholder, including the right to dividends, unless such shareholder has fully paid all the notices of call delivered to him, or which according to our articles of association are deemed to have been delivered to him, together with interest, linkage and expenses, if any, unless otherwise determined by the board of directors.

Our ordinary shares do not have cumulative voting rights for the election of directors. As a result, the holders of a majority of the voting power represented at a shareholders meeting have the power to elect all of our directors, subject to the special approval requirements for external directors under the Companies Law described under “Management – External directors.”

Under our amended and restated articles of association, our board of directors must consist of not less than five (5) but no more than seven (7) directors, including two external directors as required by the Companies Law. Pursuant to our articles of association, other than the external directors, for whom special election requirements apply under the Companies Law, the vote required to appoint a director is a simple majority vote of holders of our voting shares participating and voting at the relevant meeting. In addition, our articles of association allow our board of directors to appoint new directors to fill vacancies on the board of directors if the number of directors falls below the minimum number provided in our articles so the number of directors in office shall be at least the minimum number. In such case, a shareholders meeting shall be held within six months of such appointment in order to elect directors. External directors are elected for an initial term of three years, may be elected for additional terms of three years each under certain circumstances, and may be removed from office pursuant to the terms of the Companies Law.

We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the Companies Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s articles of association provide otherwise. Our articles of association do not require shareholder approval of a dividend distribution and provide that dividend distributions may be determined by our board of directors.

In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

There are currently no Israeli currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.

Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months after the date of the previous annual general meeting. All general meetings other than the annual meeting of shareholders are referred to in our articles of association as special meetings. Our board of directors may call special meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. In addition, the Companies Law provides that our board of directors is required to convene a special meeting upon the written request of (i) any two of our directors or one-quarter of the members of our board of directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% or more of our outstanding voting power or (b) 5% or more of our outstanding voting power. This is different from the Delaware General Corporation Law, or the DGCL, which allows such right of shareholders to be denied by a provision in a company’s certificate of incorporation as opposed to the Israeli law.

Under Israeli law, one or more shareholders holding at least 1% of the voting rights at the general meeting may request that the board of directors include a matter in the agenda of a general meeting to be convened in the future, provided that it is appropriate to discuss such a matter at the general meeting.

Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which may be between four and 40 days prior to the date of the meeting. Furthermore, the Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:

Under our articles of association, we are not required to give notice to our registered shareholders pursuant to the Companies Law, unless otherwise required by law. The Companies Law requires that a notice of any annual general meeting or special general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, or an approval of a merger, or as otherwise required under applicable law, notice must be provided at least 35 days prior to the meeting. Under the Companies Law, shareholders are not permitted to take action by written consent in lieu of a meeting. Our articles of association provide that a notice of general meeting shall be published by us on Form 6-K at least 21 days prior to the date of the general meeting (or earlier if so required by law).

Under the Companies Law, shareholders are provided access to minutes of our general meetings, our shareholders register and principal shareholders register, our articles of association, our financial statements and any document that we are required by law to file publicly with the Israeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent.

Under the Companies Law and our articles of association, the rights attached to any class of share, such as voting, liquidation and dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise in accordance with the rights attached to such class of shares, as set forth in our articles of association.

For a discussion of registration rights we have granted to our existing shareholders prior to this offering, please see “Certain Relationships and Related Party Transactions – Registration rights agreement.”

A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company’s issued and outstanding share capital is required by the Companies Law to make a tender offer to all of the company’s shareholders for the purchase of all of the issued and outstanding shares of the company. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the issued and outstanding share capital of a certain class of shares is required to make a tender offer to all of the shareholders who hold shares of the relevant class for the purchase of all of the issued and outstanding shares of that class. If the shareholders who do not accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares.

Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above.

If (a) the shareholders who did not respond or accept the tender offer hold at least 5% of the issued and outstanding share capital of the company or of the applicable class or the shareholders who accept the offer constitute less than a majority of the offerees that do not have a personal interest in the acceptance of the tender offer, or (b) the shareholders who did not accept the tender offer hold 2% or more of the issued and outstanding share capital of the company (or of the applicable class), the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the applicable class from shareholders who accepted the tender offer.

The Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not apply if there is already another holder of at least 25% of the voting rights in the company. Similarly, the Companies Law provides that an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company, subject to certain exceptions.

Under the DGCL there are no provisions relating to mandatory tender offers.

The Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under the Companies Law are met, by a majority vote of each party’s shares, and, in the case of the target company, a majority vote of each class of its shares voted on the proposed merger at a shareholders meeting.

For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of the shares represented at the shareholders meeting that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold, as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, vote against the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same special majority approval that governs all extraordinary transactions with controlling shareholders (as described under “Management – Fiduciary duties and approval of specified related party transactions and compensation under Israeli law – Disclosure of personal interests of a controlling shareholder and approval of transactions”).

If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the request of holders of at least 25% of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the value to the parties to the merger and the consideration offered to the shareholders of the company.

Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the merging entities, and may further give instructions to secure the rights of creditors.

In addition, a merger may not be consummated unless at least 50 days have passed from the date on which a proposal for approval of the merger was filed by each party with the Israeli Registrar of Companies and at least 30 days have passed from the date on which the merger was approved by the shareholders of each party.

The Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including shares providing certain preferred rights with respect to voting, distributions or other matters and shares having preemptive rights. As of the date of this prospectus, no preferred shares will be authorized under our articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares, such class of shares, depending on the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover or otherwise prevent our shareholders from realizing a potential premium over the market value of their ordinary shares. The authorization and designation of a class of preferred shares will require an amendment to our articles of association, which requires the prior approval of the holders of a majority of the voting power attaching to our issued and outstanding shares at a general meeting. The convening of the meeting, the shareholders entitled to participate and the majority vote required to be obtained at such a meeting will be subject to the requirements set forth in the Companies Law as described above in “– Voting rights.”

As an Israeli company we are not subject to the provisions of Section 203 of the DGCL, which in general prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior did own, 15% or more of the voting stock of a corporation.

Pursuant to the Companies Law and our articles of association, our board of directors may exercise all powers and take all actions that are not required under law or under our articles of association to be exercised or taken by our shareholders, including the power to borrow money for company purposes.

Our articles of association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must be approved by a resolution duly passed by our shareholders at a general meeting. In addition, transactions that have the effect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our board of directors and an Israeli court.

We were incorporated under the laws of the State of Israel on January 29, 2008. We are registered with the Israeli Registrar of Companies in Jerusalem.

The transfer agent and registrar for our ordinary shares is VStock Transfer, LLC.

We have applied to have our ordinary shares approved for quotation on the Nasdaq Capital Market under the symbol “MAPI.”

Prior to this offering, no public market existed for our ordinary shares. Sales of substantial amounts of our ordinary shares following this offering, or the perception that these sales could occur, could adversely affect prevailing market prices of our ordinary shares and could impair our future ability to obtain capital, especially through an offering of equity securities. Assuming that the underwriters do not exercise their over-allotment option to purchase additional ordinary shares in this offering and assuming no exercise of options outstanding following this offering, we will have an aggregate of 15,357,143 ordinary shares outstanding upon the completion of this offering. Of these shares, the 2,857,143 ordinary shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless purchased by “affiliates” (as that term is defined under Rule 144 of the Securities Act), who may sell only the volume of shares described below and whose sales would be subject to additional restrictions described below.

The remaining 12,500,000 ordinary shares will be held by our existing shareholders and will be deemed to be “restricted securities” under Rule 144. Restricted securities may only be sold in the public market pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration such as under Rule 144 under the Securities Act. These rules are summarized below.

Eligibility of restricted shares for sale in the public market

The following indicates approximately when the ordinary shares that are not being sold in this offering, but which will be outstanding at the time at which this offering is complete, will be eligible for sale into the public market under the provisions of Rule 144 and Rule 701 (but subject to the further contractual restrictions arising under the lock-up agreements described below):

•

upon the completion of this offering, 1,250,000 ordinary shares held by non-affiliates of our company that have been held for at least one year will be available for resale under Rule 144(b)(1)(ii); and

•

upon the completion of this offering, 11,250,000 ordinary shares held by affiliates of our company that have been held for at least six months will be available for resale under Rule 144, so long as at least 90 days have elapsed after the completion of this offering, and subject to the current public information requirement and the volume, manner of sale and other limitations under Rule 144.

Representative’s warrants

Aegis Capital Corp is acting as the representative of the underwriters of this offering (the “Representative”). We have also agreed to issue to the Representative or its designees, at the completion of this offering, warrants (the “Representative’s Warrants”) to purchase that number of our ordinary shares equal to 4% of the aggregate number of ordinary shares sold in the offering (excluding the shares sold in connection with the exercise of the over-allotment). 25% of the Representative’s Warrants shall have an exercise period of 48 months beginning on the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 150% of the per share public offering price in this offering, 50% of the Representative’s Warrants shall have an exercise period of 42 months beginning 6 months after the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 200% of the per share public offering price in this offering; and 25% of the Representative’s Warrants shall have an exercise period of 36 months beginning one year following the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 250% of the per share public offering price in this offering. The Representative’s Warrants provide for one demand registration right, unlimited piggyback rights and customary anti-dilution provisions (for share dividends and splits and recapitalizations) consistent with Rule 5110 of the Financial Industry Regulatory Authority, or FINRA, and further, the number of shares underlying the Representative’s Warrants shall be reduced if necessary to comply with FINRA rules or regulations. Such rights of the Representative will be in effect only once the registration statement of which this prospectus forms a part is no longer effective.

All of our directors, executive officers and shareholders of the Company (or holders of securities convertible or exercisable into ordinary shares) have signed lock-up agreements pursuant to which, subject to certain exceptions, such persons have agreed not to sell or otherwise dispose of ordinary shares or any securities convertible into or exchangeable for ordinary shares for a period of 180 days after the date of this prospectus without the prior written consent of Aegis Capital Corp. The Representative may, in its sole discretion, at any time without prior notice, release all or any portion of the ordinary shares from the restrictions in any such agreement.

The 180-day restricted period is subject to extension if (1) during the last 17 days of the restricted period we issue an earnings release or material news or a material event relating to us occurs or (2) prior to the expiration of the restricted period, we announce that we will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the restricted period, in which case the restrictions imposed in the lock-up agreements will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In addition, if the Representative agrees to release any party from the restrictions set forth in the lock-up agreement with such party prior to the expiration of the restricted period, all other parties subject to the lock-up agreement shall be entitled to a proportionate release of their ordinary shares from the lock-up agreement restrictions.

In general, under Rule 144 as currently in effect, and subject to the terms of any lock-up agreement, commencing 90 days after the completion of this offering, a person, including an affiliate, who has beneficially owned our ordinary shares for six months or more, including the holding period of any prior owner other than one of our affiliates (i.e., commencing when the shares were acquired from us or from an affiliate of us as restricted securities), is entitled to sell our shares, subject to the availability of current public information about us (which information will be deemed to be available as long as we continue to file required reports with the SEC). In the case of an affiliate shareholder, the right to sell is also subject to the fulfillment of certain additional conditions, including manner of sale provisions, notice requirements, and a volume limitation that limits the number of shares that may be sold thereby, within any three-month period, to the greater of:

Rule 144 also provides that affiliates that sell our ordinary shares that are not restricted securities must nonetheless comply with the same restrictions applicable to restricted securities, other than the holding period requirement.

Under Rule 144 as currently in effect, a person who is not considered to have been one of our affiliates at any time during the three months preceding a sale and who has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than one of our affiliates, is entitled to sell his, her or its shares under Rule 144 without complying with the provisions relating to the availability of current public information or with any other conditions under Rule 144. Therefore, unless subject to a lock-up agreement or otherwise restricted, such shares may be sold immediately upon the completion of this offering.

In general, under Rule 701 as currently in effect, each of our employees, consultants or advisors who purchases our ordinary shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell such ordinary shares in reliance on Rule 144, but without compliance with some of the restrictions, as described below.

Rule 701 will apply to the options granted under our 2014 Equity Incentive Plan prior to the completion of this offering, along with the shares acquired upon exercise of these options, including exercises after the completion of this offering. Securities issued in reliance on Rule 701 are restricted securities and may be sold beginning 90 days after the completion of this offering in reliance on Rule 144 by:

As of April 15, 2014, no options to purchase our ordinary shares were issued and outstanding under our 2014 Equity Incentive Plan.

After the offering, the holders of 12,500,000 ordinary shares will be entitled to registration rights. For more information on these registration rights, see “Certain Relationships and Related Party Transactions – Registration rights agreement.”

The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of our ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

The following is a summary of the material Israeli tax laws applicable to us, and some Israeli Government programs benefiting us. This section also contains a discussion of some Israeli tax consequences to persons owning our ordinary shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of this kind of investor include traders in securities or persons that own, directly or indirectly, 10% or more of our outstanding voting capital, all of whom are subject to special tax regimes not covered in this discussion. Some parts of this discussion are based on a new tax legislation which has not been subject to judicial or administrative interpretation. The discussion should not be construed as legal or professional tax advice and does not cover all possible tax considerations.

SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAXES.

Israeli resident companies are generally subject to corporate tax, currently at the rate of 26.5% of a company’s taxable income. However, the effective tax rate payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate.

Under Israeli tax legislation, a corporation will be considered as an “Israeli resident company” if it meets one of the following: (i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.

The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.”

The Industry Encouragement Law defines an “Industrial Company” as a company resident in Israel, of which 90% or more of its income in any tax year, other than income from defense loans, is derived from an “Industrial Enterprise” owned by it. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production.

The following corporate tax benefits, among others, are available to Industrial Companies:

Although at the date of this prospectus, we still have no industrial production activities, we may qualify as an Industrial Company in the future and may be eligible for the benefits described above.

The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets) by “Industrial Enterprises” (as defined under the Investment Law).

The Investment Law was significantly amended as of January 1, 2011 (the “2011 Amendment”). The 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment.

The 2011 Amendment introduced new tax benefits for income generated by a “Preferred Company” through its “Preferred Enterprise,” in accordance with the definition of such term in the Investments Law, which generally means that a “Preferred Company” is an industrial company meeting certain conditions (including a minimum threshold of 25% export). However, under the 2011 Amendment there is no requirement for a minimum investment in productive assets in order to be eligible for the benefits granted under the Investments Law.

A Preferred Company is entitled to a reduced flat tax rate with respect to the income attributed to the Preferred Enterprise, at the following rates:

Dividends distributed from income which is attributed to a “Preferred Enterprise” will be subject to withholding tax at source at the following rates: (i) Israeli resident corporations – 0%, (ii) Israeli resident individuals – 20% in 2014 (iii) non-Israeli residents - 20% in 2014, subject to a reduced tax rate under the provisions of an applicable double tax treaty.

Under the 2011 Amendment, a company located in Development Region “A” may be entitled to cash grants and the provision of loans under certain conditions, if approved. The rates for grants and loans shall not be fixed, but up to 20% of the amount of the approved investment (may be increased with additional 4%). In addition, a company owning a Preferred Enterprise under the Grant Track may be entitled also to the tax benefits which are prescribed for a Preferred Company.

The termination or substantial reduction of any of the benefits available under the Investment Law could materially increase our tax liabilities.

We currently have a Preferred Enterprise program under the Grant Track of the Investments Law, which, we believe, entitles us to cash grants of 20% of the amount of the approved investment in the plant (which may be increased by an additional 4%). In addition, we believe that income generated from products manufactured at our plant in Neot Hovav will be entitled to a reduced tax rate of 9% (compared to a 26.5% corporate income tax rate in 2014), depending on the fulfillment of certain conditions.

Capital gain tax is imposed on the disposal of capital assets by an Israeli resident, and on the disposal of such assets by a non- Israel resident if those assets are either (i) located in Israel; (ii) are shares or a right to a share in an Israeli resident corporation, or (iii) represent, directly or indirectly, rights to assets located in Israel. The Israeli Income Tax Ordinance of 1961 (New Version) (the “Ordinance”) distinguishes between “Real Gain” and the “Inflationary Surplus.” Real Gain is the excess of the total capital gain over Inflationary Surplus computed generally on the basis of the increase in the Israeli CPI between the date of purchase and the date of disposal.

In 2014, the capital gain accrued by individuals on the sale of our ordinary shares will be taxed at the rate of 25%. However, if the individual shareholder is a “Controlling Shareholder” (i.e., a person who holds, directly or indirectly, alone or together with another, 10% or more of one of the Israeli resident company’s means of control) at the time of sale or at any time during the preceding 12 months period, such gain will be taxed at the rate of 30%.

The real capital gain derived by corporations will be generally subject to a corporate tax rate of 26.5% in 2014.

Individual and corporate shareholder dealing in securities in Israel are taxed at the tax rates applicable to business income– 26.5% for corporations in 2014 and a marginal tax rate of up to 50% in 2014 for individuals, including a 2% excess tax which is levied on individuals whose taxable income in Israel exceeds NIS 811,560 in 2014. Notwithstanding the foregoing, capital gain derived from the sale of our ordinary shares by a non-Israeli shareholder may be exempt under the Ordinance from Israeli taxation provided that the following cumulative conditions are met: (i) the shares were purchased upon or after the registration of the securities on the stock exchange (this condition shall not apply to shares purchased on or after January 1, 2009), (ii) the seller does not have a permanent establishment in Israel to which the derived capital gain is attributed, (iii) if the seller is a corporation, no more than 25% of its means of control are held, directly and indirectly, by an Israeli resident shareholders, and (iv) if the seller is a corporation, there is no Israeli Resident that is entitled to 25% or more of the revenues or profits of the corporation directly or indirectly. In addition, the sale of shares may be exempt from Israeli capital gain tax under the provisions of an applicable tax treaty. For example, the U.S.-Israel Double Tax Treaty exempts U.S. resident from Israeli capital gain tax in connection with such sale, provided (i) the U.S. resident owned, directly or indirectly, less than 10% of an Israeli resident company’s voting power at any time within the 12 month period preceding such sale; (ii) the seller, being an individual, is present in Israel for a period or periods of less than 183 days at the taxable year; and (iii) the capital gain from the sale was not derived through a permanent establishment of the U.S. resident in Israel.

Either the purchaser, the Israeli stockbrokers or financial institution through which the shares are held is obliged, subject to the above mentioned exemptions, to withhold tax upon the sale of securities from the real capital gain at the rate of 25% in respect of a corporation and/or an individual.

At the sale of securities traded on a stock exchange a detailed return, including a computation of the tax due, must be filed and an advanced payment must be paid on January 31 and June 30 of every tax year in respect of sales of securities made within the previous six months. However, if all tax due was withheld at source according to applicable provisions of the Ordinance and regulations promulgated thereunder the aforementioned return need not be filed and no advance payment must be paid. Capital gain is also reportable on the annual income tax return.

We have never paid cash dividends. A distribution of dividend by our company from income attributed to a Preferred Enterprise will generally be subject to withholding tax in Israel at the following tax rates: Israeli resident individuals - 20% with respect to dividends to be distributed as of 2014; Israeli resident companies – 0% for a Preferred Enterprise; Non-Israeli residents – 20% with respect to dividends to be distributed as of 2014, subject to a reduced rate under the provisions of any applicable double tax treaty. A distribution of dividends from income, which is not attributed to a Preferred Enterprise to an Israeli resident individual, will generally be subject to income tax at a rate of 25%. However, a 30% tax rate will apply if the dividend recipient is a “Controlling Shareholder” (as defined above) at the time of distribution or at any time during the preceding 12 months period. If the recipient of the dividend is an Israeli resident corporation, such dividend will be exempt from income tax provided the income from which such dividend is distributed was derived or accrued within Israel.

The Ordinance provides that a non-Israeli resident (either individual or corporation) is generally subject to an Israeli income tax on the receipt of dividends at the rate of 25% (30% if the dividends recipient is a “Controlling Shareholder” (as defined above), at the time of distribution or at any time during the preceding 12 months period); those rates are subject to a reduced tax rate under the provisions of an applicable double tax treaty. Thus, under the U.S.-Israel Double Tax Treaty the following rates will apply in respect of dividends distributed by an Israeli resident company to a U.S. resident: (i) if the U.S. resident is a corporation which holds during that portion of the taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any), at least 10% of the outstanding shares of the voting stock of the Israeli resident paying corporation and not more than 25% of the gross income of the Israeli resident paying corporation for such prior taxable year (if any) consists of certain type of interest or dividends – the tax rate is 12.5%, (ii) if both the conditions mentioned in section (i) above are met and the dividend is paid from an Israeli resident company’s income which was entitled to a reduced tax rate applicable to a Preferred Enterprise – the tax rate is 15% and (iii) in all other cases, the tax rate is 25%. The aforementioned rates under the Israel U.S. Double Tax Treaty will not apply if the dividend income was derived through a permanent establishment of the U.S. resident in Israel.

A non-Israeli resident who receives dividends from which tax was withheld is generally exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from business conducted in Israel by the taxpayer, and (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed.

Payers of dividends on our ordinary shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through which the securities are held, are generally required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder regarding his, her or its foreign residency, to withhold tax upon the distribution of dividend at the rate of 25%, so long as the shares are registered with a Nominee Company (for corporations and individuals).

Non-residents of Israel who hold our ordinary shares are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and winding up of our affairs, repayable in non-Israeli currency at the rate of exchange prevailing at the time of conversion. However, Israeli income tax is generally required to have been paid or withheld on these amounts. In addition, the statutory framework for the potential imposition of currency exchange control has not been eliminated, and may be restored at any time by administrative action.

Israeli law presently does not impose estate or gift taxes.

The following is a description of the material U.S. federal income tax consequences relating to the acquisition, ownership and disposition of our ordinary shares. This description addresses only the U.S. federal income tax consequences to holders that are initial purchasers of our ordinary shares pursuant to the offering and that will hold such ordinary shares as capital assets. This description does not address tax considerations applicable to holders that may be subject to special tax rules, including, without limitation:

Moreover, this description does not address the U.S. federal estate, gift, or alternative minimum tax consequences, or any U.S. state, local or non-U.S. tax consequences of the acquisition, ownership and disposition of our ordinary shares.

This description is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, existing, proposed and temporary U.S. Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, in each case as in effect and available on the date hereof. All the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below. There can be no assurances that the U.S. Internal Revenue Service, or IRS, will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of our ordinary shares or that such a position would not be sustained. Holders should consult their own tax advisers concerning the U.S. federal, state, local and foreign tax consequences of acquiring, owning and disposing of our ordinary shares in their particular circumstances.

For purposes of this description, the term “U.S. Holder” means a beneficial owner of our ordinary shares that, for U.S. federal income tax purposes, is (i) a citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has elected to be treated as a domestic trust for U.S. federal income tax purposes.

A “Non-U.S. Holder” is a beneficial owner of our ordinary shares that is neither a U.S. Holder nor a partnership (or other entity treated as a partnership for U.S. federal income tax purposes).

If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds our ordinary shares, the U.S. federal income tax consequences relating to an investment in our ordinary shares will depend in part upon the status of the partner and the activities of the partnership. Such a partner or partnership should consult its tax advisor regarding the U.S. federal income tax consequences of acquiring, owning and disposing of our ordinary shares in its particular circumstances.

Unless otherwise indicated, this discussion assumes that the Company is not, and will not become, a PFIC for U.S. federal income tax purposes. See “– Passive foreign investment company consequences” below.

Persons considering an investment in our ordinary shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the acquisition, ownership and disposition of our ordinary shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Subject to the discussion below under “Passive foreign investment company consequences,” if you are a U.S. Holder, the gross amount of any distribution made to you with respect to our ordinary shares before reduction for any Israeli taxes withheld therefrom, other than certain distributions, if any, of our ordinary shares distributed pro rata to all our shareholders, generally will be includible in your income as dividend income to the extent such distribution is paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. Non-corporate U.S. Holders may qualify for the lower rates of taxation with respect to dividends on ordinary shares applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year), provided that certain conditions are met, including certain holding period requirements and the absence of certain risk reduction transactions. Moreover, such lower rate of taxation shall not apply if the Company is a PFIC for the taxable year in which it pays a dividend, or was a PFIC for the preceding taxable year. However, such dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders. To the extent that the amount of any distribution by us exceeds our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a tax-free return of your adjusted tax basis in our ordinary shares and thereafter as either long-term or short-term capital gain depending upon whether the U.S. Holder has held our ordinary shares for more than one year as of the time such distribution is received.

If you are a U.S. Holder, dividends paid to you with respect to our ordinary shares will be foreign source income for foreign tax credit purposes. Subject to certain conditions and limitations, Israeli tax withheld on dividends may be deducted from your taxable income or credited against your U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends generally constitute “passive category income,” or, in the case of certain U.S. Holders, “general category income.” A foreign tax credit for foreign taxes imposed on distributions may be denied if you do not satisfy certain minimum holding period requirements. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor to determine whether and to what extent you will be entitled to this credit.

The amount of a distribution paid to a U.S. Holder in a foreign currency will be the dollar value of the foreign currency calculated by reference to the spot exchange rate on the day the U.S. Holder receives the distribution, regardless of whether the foreign currency is converted into U.S. dollars at that time. Any foreign currency gain or loss a U.S. Holder realizes on a subsequent conversion of foreign currency into U.S. dollars will be U.S. source ordinary income or loss. If dividends received in foreign currency are converted into U.S. dollars on the day they are received, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend.

Subject to the discussion below under “Backup withholding tax and information reporting requirements,” if you are a Non-U.S. Holder, you generally will not be subject to U.S. federal income (or withholding) tax on dividends received by you on your ordinary shares, unless:

Subject to the discussion below under “Passive foreign investment company consequences,” if you are a U.S. Holder, you generally will recognize gain or loss on the sale, exchange or other disposition of our ordinary shares equal to the difference between the amount realized on such sale, exchange or other disposition and your adjusted tax basis in our ordinary shares, and such gain or loss will be capital gain or loss. The adjusted tax basis in an ordinary share generally will be equal to the cost of such ordinary share. If you are a non-corporate U.S. Holder, capital gain from the sale, exchange or other disposition of ordinary shares is generally eligible for a preferential rate of taxation applicable to capital gains, if your holding period determined at the time of such sale, exchange or other disposition for such ordinary shares exceeds one year (i.e., such gain is long-term capital gain). The deductibility of capital losses is subject to limitations. Any such gain or loss generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes.

Subject to the discussion below under “Backup withholding tax and information reporting requirements,” if you are a Non-U.S. Holder, you generally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale or exchange of such ordinary shares unless:

If we were to be classified as a PFIC in any taxable year, a U.S. Holder would be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S. company that does not distribute all of its earnings on a current basis.

Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their dividend income and net gains from the disposition of ordinary shares. Each U.S. Holder that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in our ordinary shares.

U.S. Holders paying more than $100,000 for our ordinary shares generally will be required to file IRS Form 926 reporting the payment of the Offer Price for our ordinary shares to us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply. Each U.S. Holder should consult its own tax advisor as to the possible obligation to file IRS Form 926.

U.S. backup withholding tax and information reporting requirements may apply to certain payments to certain holders of our ordinary shares. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, our ordinary shares made within the United States, or by a U.S. payer or U.S. middleman, to a holder of our ordinary shares, other than an exempt recipient (including a payee that is not a U.S. person that provides an appropriate certification and certain other persons). A payer may be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the sale or redemption of, ordinary shares within the United States, or by a U.S. payer or U.S. middleman, to a holder, other than an exempt recipient, if such holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, such backup withholding tax requirements. Any amounts withheld under the backup withholding rules will be allowed as a credit against the beneficial owner’s U.S. federal income tax liability, if any, and any excess amounts withheld under the backup withholding rules may be refunded, provided that the required information is timely furnished to the IRS.

Certain U.S. Holders who are individuals are required to report information relating to an interest in our ordinary shares, subject to certain exceptions (including an exception for shares held in accounts maintained by financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their federal income tax return. U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of our ordinary shares.

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the offer and sale of ordinary shares in this offering. The underwriting discounts and commissions to be paid to the underwriters represent of the total amount of the offering. All amounts listed below are estimates except the SEC registration fee, Nasdaq listing fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee.

The underwriters are committed to purchase all the shares offered by us if any shares are purchased, other than those covered by the option to purchase additional shares described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

The obligations of the underwriters may be terminated upon the occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriters’ obligations are subject to customary conditions, representations and warranties, such as receipt by the underwriters of officers’ certificates and legal opinions.

We have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect thereof.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

We have agreed to pay underwriting discounts and commissions of 6.5% of the gross proceeds of the offering (equivalent to 6.5% of the per share public offering price of $14.00), subject to certain exceptions. The following table shows the public offering price, underwriting discounts and commissions and expenses to be paid by us to the underwriters and the proceeds of the public offering, before expenses, to us.

Pursuant to a previous engagement with an investment banker, we may be required to pay a tail fee of $300,000 in connection with this offering.

We have agreed to grant to the Representative the right of first refusal to act as sole book runner for each and every public and private equity and public debt offering of ours, or any successor to or any subsidiary of ours that takes place during the nine months following the date of effectiveness of this registration statement.

We have also agreed to issue to the Representative or its designees, at the completion of this offering, the Representative’s Warrants to purchase that number of our ordinary shares equal to 4% of the aggregate number of ordinary shares sold in the offering (excluding the shares sold in connection with the exercise of the over-allotment). 25% of the Representative’s Warrants shall have an exercise period of 48 months beginning on the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 150% of the per share public offering price in this offering; 50% of the Representative’s Warrants shall have an exercise period of 42 months beginning 6 months after the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 200% of the per share public offering price in this offering; and 25% of the Representative’s Warrants shall have an exercise period of 36 months beginning one year following the first anniversary of the effectiveness of the registration statement of which this prospectus forms a part, at a price per share equal to 250% of the per share public offering price in this offering. The Representative's Warrants and the ordinary shares underlying the Representative's Warrants have been deemed compensation by FINRA, and are, therefore, subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. The Representative (or permitted assignees under the Rule) will not sell, transfer, assign, pledge or hypothecate the Representative's Warrants or the ordinary shares underlying the Representative's Warrants, nor will it engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the Representative's Warrants or the ordinary shares underlying the Representative's Warrants for a period of 180 days after the effective date of the registration statement this prospectus is a part. The Representative’s Warrants provide for one demand registration right, unlimited piggyback rights and customary anti-dilution provisions (for share dividends and splits and recapitalizations) consistent with FINRA Rule 5110, and further, the number of shares underlying the Representative’s Warrants shall be reduced if necessary to comply with FINRA rules or regulations. Such rights of the Representative will be in effect only once the registration statement of which this prospectus forms a part is no longer effective.

The underwriters do not intend to confirm sales of the shares offered hereby to any accounts over which they have discretionary authority.

Our directors, executive officers and shareholders (or holders of securities convertible or exercisable into ordinary shares) have entered into lock-up agreements with the underwriters (the “Lock-Up Parties”). Under these agreements, we and the Lock-Up Parties have agreed, subject to specified exceptions, not to sell or transfer any ordinary shares or securities convertible into, or exchangeable or exercisable for, our ordinary shares, during a period ending 180 days after the date of this prospectus, without first obtaining the written consent of the Representative. Specifically, we and the Lock-Up Parties have agreed not to:

The 180-day restricted period is subject to extension if (1) during the last 17 days of the restricted period we issue an earnings release or material news or a material event relating to us occurs or (2) prior to the expiration of the restricted period, we announce that we will release earnings results or becomes aware that material news or a material event will occur during the during the 16-day period beginning on the last day of the restricted period, in which case the restrictions imposed in the lock-up agreements will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In addition, if the Representative agrees to release any party from the restrictions set forth in the lock-up agreement with such party prior to the expiration of the restricted period, all other parties subject to the lock-up agreement shall be entitled to a proportionate release of their ordinary shares from the lock-up agreement restrictions.

A prospectus in electronic format may be made available on the websites maintained by the underwriters or selling group members, if any, participating in this offering and the underwriters participating in this offering may distribute prospectuses electronically. The Representative may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

The underwriters and their affiliates have provided, and may in the future provide, various investment banking, commercial banking and other financial services for us and our affiliates for which they have received, and may in the future receive, customary fee; however, except as disclosed in this prospectus, we have no present arrangements with the underwriters for any further services.

In connection with this offering, the underwriters may engage in stabilizing transactions, overallotment transactions, syndicate covering transactions, penalty bids and purchases to cover positions created by short sales.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ordinary shares or preventing or retarding a decline in the market price of our ordinary shares. As a result, the price of our ordinary shares in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor any of the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our ordinary shares. These transactions may be effected on Nasdaq, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price will be determined by negotiations between us and the Representative. In determining the initial public offering price, we and the Representative expect to consider a number of factors including:

Neither we nor the underwriters can assure investors that an active trading market will develop for our ordinary shares, or that the shares will trade in the public market at or above the initial public offering price.

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the ordinary shares offered by this prospectus in any jurisdiction where action for that purpose is required. The ordinary shares offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such ordinary shares be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any ordinary shares offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of securities described in this prospectus may not be made to the public in that relevant member state other than:

Provided that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For purposes of this provision, the expression an “offer of securities to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

We have not authorized and do not authorize the making of any offer of securities through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the securities as contemplated in this prospectus. Accordingly, no purchaser of the securities, other than the underwriters, is authorized to make any further offer of the securities on behalf of us or the underwriters.

This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Qualified Investors) that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

This prospectus has not been prepared in the context of a public offering of “financial securities” in France within the meaning of Article L.411-1 of the French Code Monétaire et Financier and Title I of Book II of the Reglement Général of the Autorité des marchés financiers (the “AMF”) and therefore has not been and will not be filed with the AMF for prior approval or submitted for clearance to the AMF. Consequently, our securities may not be, directly or indirectly, offered or sold to the public in France and offers and sales of our securities may only be made in France to qualified investors (investisseurs qualifiés) acting for their own, as defined in and in accordance with Articles L.411-2 and D.411-1 to D.411-4, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code Monétaire et Financier. Neither this prospectus nor any other offering material may be released, issued or distributed to the public in France or used in connection with any offer for subscription on sale of our securities to the public in France. The subsequent direct or indirect retransfer of our securities to the public in France may only be made in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code Monétaire et Financier.

Each person who is in possession of this prospectus is aware of the fact that no German securities prospectus (wertpapierprospekt) within the meaning of the “Securities Prospectus Act” (wertpapier-prospektgesetz, the “act”) of Germany has been or will be published with respect to our securities. In particular, each underwriter has represented that it has not engaged and has agreed that it will not engage in a public offering in Germany within the meaning of the act with respect to any of our securities otherwise than in accordance with the act and all other applicable legal and regulatory requirements.

The securities which are the subject of the offering contemplated by this prospectus may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. None of this prospectus or any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

None of this prospectus or any other offering or marketing material relating to the offering, us or the securities has been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA and the offer of securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the securities.

The offering of our securities is not a public offering in the Netherlands. Our securities may not be offered or sold to individuals or legal entities in the Netherlands unless (i) a prospectus relating to the offer is available to the public, which has been approved by the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten) or by the competent supervisory authority of another state that is a member of the European Union or party to the Agreement on the European Economic Area, as amended or (ii) an exception or exemption applies to the offer pursuant to Article 5:3 of The Netherlands Financial Supervision Act (Wet op het financieel toezicht) or Article 53 paragraph 2 or 3 of the Exemption Regulation of the Financial Supervision Act, for instance due to the offer targeting exclusively “qualified investors” (gekwalificeerde beleggers) within the meaning of Article 1:1 of The Netherlands Financial Supervision Act.

The underwriters will not offer or sell any of our securities directly or indirectly in Japan or to, or for the benefit of, any “Japanese person” or to others, for re-offering or re-sale directly or indirectly in Japan or to any Japanese person, except in each case pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law of Japan and any other applicable laws and regulations of Japan. For purposes of this paragraph, “Japanese person” means any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

The underwriters and each of their affiliates have not (1) offered or sold, and will not offer or sell, in Hong Kong, by means of any document, any of our securities other than (a) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (2) issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere any advertisement, invitation or document relating to our securities which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to our securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance and any rules made under that Ordinance. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

This document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our securities may not be circulated or distributed, nor may our securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

Where our securities are subscribed or purchased under Section 275 by a relevant person, which is:

Shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired our securities under Section 275 except:

In the State of Israel, the securities offered hereby may not be offered to any person or entity other than the following:

Offerees of the securities offered hereby in the State of Israel shall be required to submit written confirmation that they fall within the scope of one of the above criteria, that they are fully aware of the significance of being an investor in this offering pursuant to such criteria and that they have given their consent. An appeal to an investor for the consent shall not be considered a public offering. This prospectus supplement will not be distributed or directed to investors in the State of Israel who do not fall within one of the above criteria.

The address of Aegis Capital Corp is 810 Seventh Avenue, 18th Floor, New York, New York 10019.

The validity of the ordinary shares being offered by this prospectus and other legal matters concerning this offering relating to Israeli law will be passed upon for us by Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., Tel-Aviv, Israel. Certain legal matters in connection with this offering relating to U.S. law will be passed upon for us by Haynes and Boone, LLP, New York, New York. Certain legal matters in connection with this offering relating to Israeli law will be passed upon for the underwriters by Zysman, Aharoni, Gayer & Co., Tel Aviv, Israel. Certain legal matters concerning this offering relating to U.S. law will be passed upon for the underwriters by Zysman, Aharoni, Gayer and Sullivan & Worcester LLP, New York, New York.

The consolidated financial statements of Mapi – Pharma Ltd. as of December 31, 2013 and 2012 and for each of the years in the two-year period ended December 31, 2013, have been included herein in reliance upon the report of Somekh Chaikin, a Member Firm of KPMG International, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

We are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers and the Israeli experts named in this prospectus, substantially all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and substantially all of our directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States

We have irrevocably appointed Puglisi & Associates as our agent to receive service of process in any action against us in any U.S. federal or state court arising out of this offering or any purchase or sale of securities in connection with this offering. The address of our agent is 850 Library Avenue, Suite 204, Newark, Delaware 19715.

We have been informed by our legal counsel in Israel, Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., that it may be difficult to initiate an action with respect to U.S. securities law in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to hear such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact by expert witnesses which can be a time-consuming and costly process. Certain matters of procedure may also be governed by Israeli law.

Subject to certain time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter which, subject to certain exceptions, is non-appealable, including judgments based upon the civil liability provisions of the Securities Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that:

Even if these conditions are met, an Israeli court will not declare a foreign civil judgment enforceable if:

If a foreign judgment is enforced by an Israeli court, it generally will be payable in Israeli currency, which can then be converted into non-Israeli currency and transferred out of Israel. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to issue a judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment, but the judgment debtor may make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.

We have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to this offering of our ordinary shares. This prospectus does not contain all of the information contained in the registration statement. The rules and regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement. Statements made in this prospectus concerning the contents of any contract, agreement or other document are summaries of all material information about the documents summarized, but are not complete descriptions of all terms of these documents. If we filed any of these documents as an exhibit to the registration statement, you may read the document itself for a complete description of its terms.

You may read and copy the registration statement, including the related exhibits and schedules, and any document we file with the SEC without charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet site that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through this web site at http://www.sec.gov.

We are not currently subject to the informational requirements of the Exchange Act. As a result of this offering, we will become subject to the informational requirements of the Exchange Act applicable to foreign private issuers and will fulfill the obligations of these requirements by filing reports with the SEC. As a foreign private issuer, we will be exempt from the rules under the Exchange Act relating to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to file with the SEC, within 120 days after the end of our fiscal year ended December 31, 2014 and each subsequent fiscal year, an annual report on Form 20-F containing financial statements which will be examined and reported on, with an opinion expressed, by an independent registered public accounting firm. We also intend to file with the SEC reports on Form 6-K containing unaudited financial information for the first three quarters of each fiscal year.

We maintain a corporate website at www.mapi-pharma.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

Under the Companies Law, a company may not exculpate an office holder from liability for a breach of a fiduciary duty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association include such a provision. The company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law and the Securities Law, 5738 – 1968 (the “Securities Law”) a company may indemnify an office holder in respect of the following liabilities, payments and expenses incurred for acts performed by him as an office holder, either in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.

Under the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder if and to the extent provided in the company’s articles of association:

Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to directors or controlling shareholders, their relatives and third parties in which such controlling shareholders have a personal interest, also by the shareholders.

Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by law. Our office holders are currently covered by a directors’ and officers’ liability insurance policy. As of the date of the completion of this offering, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are not aware of any pending or threatened litigation or proceeding involving any of our office holders, including our directors, in which indemnification is sought.

We have entered into new agreements with each of our current office holders exculpating them from a breach of their duty of care to us to the fullest extent permitted by law, subject to limited exceptions, and undertaking to indemnify them to the fullest extent permitted by law, subject to limited exceptions, including, with respect to liabilities resulting from this offering, to the extent that these liabilities are not covered by insurance. This indemnification is limited, with respect to any monetary liability imposed in favor of a third party, to events determined as foreseeable by the board of directors based on our activities. The maximum aggregate amount of indemnification that we may pay to our office holders based on such new indemnification agreement is the greater of (1) 50% of our shareholders’ equity pursuant to our audited financial statements for the year preceding the year in which the event in connection of which indemnification is sought occurred, and (2) $20 million (as may be increased from time to time by shareholders approval). Such indemnification amounts are in addition to any insurance amounts. Each office holder who agrees to receive this letter of indemnification also gives his approval to the termination of all previous letters of indemnification that we have provided to him or her in the past, if any. However, in the opinion of the SEC, indemnification of office holders for liabilities arising under the Securities Act is against public policy and therefore unenforceable.

There have been no transactions during the preceding three fiscal years involving sales of our securities that were not registered under the Securities Act.

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tel Aviv, State of Israel on April 17, 2014.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant’s duly authorized representative has signed this registration statement on Form F-1 in on this 17th day of April, 2014.

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

Mapi - Pharma Ltd.
16 Einstein St. P.O. Box 4113
Ness Ziona 74140
+972 (73) 712-1213
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Puglisi & Associates
850 Library Avenue, Suite 204
Newark, DE 19715
(302) 738-6680
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Shachar Hadar, Adv.	Rick A. Werner, Esq.	Eran Ben Dor, Adv.	Oded Har-Even, Esq.
Gross, Kleinhendler,	Haynes and Boone, LLP	Zysman, Aharoni, Gayer & Co.	Shy S. Baranov, Esq.
Hodak, Halevy,	30 Rockefeller Plaza,	41-45 Rothschild Blvd.	Zysman, Aharoni, Gayer and
Greenberg & Co.	26th Floor	Beit Zion	Sullivan & Worcester
One Azrieli Center	New York, New York 10112	Tel-Aviv, Israel 65784	LLP
Tel Aviv 67021, Israel	(212) 659-7300	Tel: +972 (3) 795-5555	1633 Broadway
Tel: +972 (3) 607-4444			New York, NY 10019
			Tel: (212) 660-5000

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)			Amount of Registration Fee (2)
Ordinary shares, par value NIS 1.00 per share(3)		US$	49,285,710		US$	6,348
Representative’s warrants(4)			--			--
Ordinary shares underlying representative’s warrants at an exercise price that equals to 150% of the offering price(5)			642,857			83
Ordinary shares underlying representative’s warrants at an exercise price that equals to 200% of the offering price(6)			1,714,286			221
Ordinary shares underlying representative’s warrants at an exercise price that equals to 250% of the offering price(7)			1,071,428			138
Total		US$	52,714,281		US$	6,790

Mapi - Pharma Ltd – IPO: ‘F-1/A’ on 4/17/14

On: Thursday, 4/17/14, at 5:10pm ET · Accession #: 1178913-14-1343 · File #: 333-194832

Previous ‘F-1’: ‘F-1’ on 3/26/14 · Next: ‘F-1/A’ on 5/1/14 · Latest: ‘F-1/A’ on 2/4/16

Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer — Form F-1
Filing Table of Contents

F-1/A — Pre-Effective Amendment to Registration Statement of a Foreign Private Issuer
Document Table of Contents

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Dates Referenced Herein and Documents Incorporated by Reference

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

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

Mapi - Pharma Ltd.
(Exact Name of Registrant as Specified in its Charter)

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

PRELIMINARY PROSPECTUS	SUBJECT TO COMPLETION	DATED APRIL 17, 2014

	Per share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds to us (before expenses)	$	$


Ordinary shares we are offering...................................................................................		2,857,143 ordinary shares (or 3,285,714 ordinary shares if the underwriters exercise their option to purchase additional ordinary shares in full).

Ordinary shares to be outstanding after this offering..............................................		15,357,143 ordinary shares (or 15,785,714 ordinary shares if the underwriters exercise their option to purchase additional ordinary shares in full).

Use of proceeds..............................................................................................................		We estimate that we will receive net proceeds from this offering of approximately $35.5 million, or approximately $41 million if the underwriters exercise their option to purchase additional ordinary shares in full, based on an assumed initial public offering price of $14.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses.

		We expect to use the net proceeds from this offering as follows:

		(i) approximately $12 million to expand our clinical development program, specifically with respect to Glatiramer Acetate Depot and Risperidone LAI, as well as other products;

		(ii) approximately $7 million to finance the completion of our manufacturing plant in Neot Hovav, Israel;

		(iii) approximately $3 million to continue the development and commercialization of our complex API and formulation products; and

		(iv) the balance of the net proceeds for general corporate purposes, including working capital requirements. See “Use of Proceeds” on page 36 of this prospectus.

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

Proposed Nasdaq Capital Market symbol .....................................................		“MAPI”

	Year ended December 31,
	2013			2012
	(in thousands of U.S. dollars, except share and per share amounts
Consolidated Statements of Comprehensive Loss Data:

Income from co-development arrangement		13			194
Research and development expenses, net		(2,079	)		(2,481	)
General and administrative expenses		(2,113	)		(1,911	)
Financing income, net		2,708			3,374
Loss		(1,492	)		(845	)
Other comprehensive loss		-			(8	)
Total comprehensive loss		(1,492	)		(853	)

Loss attributable to holders of ordinary shares		(746	)		(423	)

Loss per ordinary share:(1)
Basic		(74.6	)		(42.3	)
Diluted		(74.6	)		(42.3	)
Weighted average number of ordinary shares used in computing basic and diluted loss per share:		10,000			10,000

Pro forma loss per ordinary share: (2)
Basic		(0.12	)		(0.07	)
Diluted		(0.12	)		(0.07	)

Weighted average number of ordinary shares used in computing basic and diluted pro forma loss per share:		12,500,000			12,500,000

	Actual as of December 31, 2013		Pro forma as of December 31, 2013(3)		Pro forma as adjusted as of December 31, 2013(4)
Consolidated Statement of Financial Position Data:
Cash and cash equivalents		2,305		2,305		37,805
Investment in trading securities		6,179		6,179		6,179
Total current assets		9,520		9,520		45,020
Total non-current assets		6,616		6,616		6,616
Total current liabilities		5,707		1,574		1,574
Total non-current liabilities		109		6		6
Shareholders’ equity		10,320		14,556		50,056

	As of December 31, 2013
	Actual			Pro Forma			Pro Forma as adjusted
	(In thousands US$)
Ordinary shares of NIS 1.00 par value per share: 1,000,000 ordinary shares authorized, 20,000 ordinary shares issued and outstanding, actual; 70,000,000 ordinary shares authorized, 15,357,143 ordinary shares issued and outstanding, pro forma as adjusted(1)		6			6			4,437
Accumulated losses		(11,258	)		(11,155	)		(11,155	)
Share premium and other reserves		21,572			25,705			56,774
Total Capitalization		10,320			14,556			50,056

Assumed initial public offering price per ordinary share			$	14.00
Pro forma consolidated net tangible book value per ordinary share as of December 31, 2013	$	1.16
Increase in consolidated net tangible book value per ordinary share attributable to the offering	$	2.10
Pro forma as adjusted net tangible book value per share after this offering			$	3.26
Dilution per ordinary share to new investors			$	10.74
Percentage of dilution per ordinary share to new investors				77	%

	Shares purchased				Total consideration				Average price per share
	Number		%		Amount		%
Existing shareholders		12,500,000		81.40	$	29,654,000		42.57	$	2.37
New investors		2,857,143		18.60		40,000,000		57.43		14.00
Total		15,357,143		100	$	69,654,000		100	$	4.54

	December 31, 2013		December 31, 2012
Consolidated Statements of Financial Position Data:
Cash and cash equivalents		2,305		4,014
Investment in trading securities		6,179		10,503
Total current assets		9,520		14,924
Total non-current assets		6,616		4,010
Total current liabilities		5,707		4,721
Total non-current liabilities		109		2,401
Shareholders’ equity		10,320		11,812

	Year Ended December 31,
	2013		2012
	(in thousands US$)
Salaries and related personnel expenses, including directors fee		1,682		1,516
Professional expenses		163		123
Rent, insurance and maintenance		137		115
Other expenses		131		157
Total		2,113		1,911

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands US$)
OCS		674		-		-		-		674
Operating leases		76		76		-		-		-
Investment in Neot Hovav Plant*		1,286		-		1,286		-		-

LCM Product	Sales in 2013 (approximate figures)*	Medical indication	R&D status
Glatiramer Acetate Depot	$4.3 billion	RRMS	Pre-clinical development
Risperidone LAI	$1.32 billion	Schizophrenia and bipolar disorder	Pre-clinical development
Pregabalin ER	$4.5 billion	Neuropathic pain	Pre-clinical development

API	Medical Indication Pursued	Our Patent	Earliest date of off-patent development in the relevant territory
Deferasirox	Chronic Iron Overload	A Patent Cooperation Treaty (“PCT”) application directed to processes and polymorphs was filed in January 2010. National phase applications are pending in the U.S., EP and Israel.	2017 (Canada); 2019 (U.S.)
Darunavir	HIV	A PCT polymorphs application was filed in December 2009 and a PCT processes application was filed in January 2011. In February 2014, a processes patent was allowed in the European Union, in April 2014, a process patent was allowed in the US. Grant procedures are in process.	2017 (U.S.)
Alogliptin Benzoate	Diabetes	A PCT polymorphs application was filed in November 2010 and a PCT processes application was filed in March 2010.	2024 (E.U.); 2028 (U.S.)
Febuxostat	Chronic hyperuricemia	A PCT application directed to processes and intermediates was filed in March 2011.	2019 (U.S.)
Tapentadol HCl	Acute pain	A PCT application directed to intermediates was filed in December 2010. This patent has been granted in the U.S. with an expiration date of December 2030.	2022 (U.S.)
Dronedarone HCl	Atrial fibrillation	None.	2019 (E.U.) 2016 (U.S.)
Lurasidone HCl	Schizophrenia	A PCT application directed to processes and intermediates was filed in June 2012.	2018 (U.S.)
Fingolimod HCl	RRMS	A PCT application directed to processes and intermediates was filed in October 2011.	2017 (Israel); 2019 (U.S., E.U., Australia)
Indacaterol Maleate	Chronic obstructive pulmonary disease	None.	2020 (Russia, China, Latin America, Turkey); 2021 (Canada); 2024 (E.U.); 2025 (U.S.)
Abiraterone Acetate	Prostate cancer	A PCT application directed to processes and intermediates was filed in July 2013.	2015 (Israel), 2016 (U.S.)
Perampanel	Epilepsy	A PCT processes application was filed in January 2013.	2021 (Canada); 2022 (U.S. and E.U.)
Dapagliflozin Propanediol	Type 2 diabetes	A PCT co-crystals application was filed in December 2013.	2020 (U.S.)
Glatiramer Acetate	RRMS	None.	2014 (U.S.)

Properties	Location	Owned/Leased	Purpose	Size
Israel research and development facility	Ness Ziona, Israel	Leased	Headquarters, multipurpose research and development.	600 square meters
Israeli development and manufacturing plant, currently under construction	Neot Hovav, Israel	Leased	Manufacture of complex APIs.	Approximately 12,000 square meters
China research and development facility	Nanjing, China	Owned	Asian development and production center, developing intermediates for our production sites and other global development centers.	1,400 square meters
Germany research and development facility	Luckenwalde, Germany	Leased	Development of finished oral dosage forms and complex generics.	150 square meters

	December 31,
Department	2013		2012		2011
Research and development		24		27		22
Management and administration		7		6		6
Total		31		33		28

Name	Age	Position
Ehud Marom	63	Chief Executive Officer and Chairman of the Board of Directors
Nir Bernstein	47	Chief Financial Officer
Uri Danon	47	Executive Vice President
Shai Rubnov, PhD	41	Vice President Research and Development
Alex Mogle	46	Vice President Corporate Development
Safi Landskroner	45	Vice President Business Development
David Leonov, PhD	68	Head of API Development
Yoram Sela, PhD	53	Head of Formulations and director nominee
Itamar Borowitz, PhD	70	Director