| GENERAL | NOTE
1 – GENERAL Vascular
Biogenics Ltd. (“VBL” or the “Company”) is a biopharmaceutical company that has historically focused on developing
targeted therapies for immune-inflammatory diseases and cancer. VBL’s goal has been to provide differentiated targeted therapeutics
to address the underlying cause of diseases where treatment options are limited. VBL’s
sole product candidate, VB-601, is a targeted antibody for immune-inflammatory applications that has shown disease-modifying activity
across multiple preclinical models including multiple sclerosis, rheumatoid arthritis, non-alcoholic steatohepatitis (“NASH”)
and inflammatory bowel disease. VB-601 was developed using VBL’s monocyte targeting technology (“MTT”) and is designed
to specifically inhibit monocyte migration. VBL plans to monetize this asset prior to or concurrent with the Merger rather than pursue
further clinical development internally. On June 30, 2023, VBL entered into a non-binding term sheet, as amended,
for the proposed sale of the VB-601 Asset . In
May 2023, VBL received an additional € 1.4 1.5 Proposed
Merger with Notable Labs, Inc. On
February 22, 2023, VBL entered into a Merger Agreement (the “Merger Agreement”) with Notable Labs, Inc., a Delaware corporation
(“Notable”), and Vibrant Merger Sub, Inc., a Delaware corporation and VBL’s direct, wholly-owned subsidiary, pursuant
to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Notable will be merged with
and into Merger Sub at the effective time (“Effective Time”), with Notable continuing after the merger as the surviving corporation
and VBL’s wholly-owned subsidiary (such transaction, the “Merger”). The Merger is intended to qualify as a tax-free
reorganization for U.S. federal income tax purposes. At
the Effective Time, each outstanding share of Notable capital stock will be converted into the right to receive VBL ordinary shares,
as set forth in the Merger Agreement. Under the exchange ratio formula in the Merger Agreement, immediately following the Effective Time,
the former Notable securityholders are expected to own approximately 76 24 The
Merger Agreement contains a customary “no-shop” provision under which neither VBL nor Notable is permitted to (i) solicit
any alternative acquisition proposals, (ii) furnish any non-public information to any person in connection with or in response to any
alternative acquisition proposal, (iii) engage in any negotiations or discussions with any person with respect to any alternative acquisition
proposal, (iv) approve, endorse or recommend any alternative acquisition proposal, or (v) execute or enter into any agreement relating
to any alternative acquisition proposal. The “no-shop” provision is subject to certain exceptions that permit the board of
directors of either party to comply with its fiduciary duties, which, under certain circumstances, would enable VBL or Notable to provide
information to, and enter into discussions or negotiations with, third parties in response to any alternative acquisition proposals. The
Merger Agreement contains customary representations, warranties and covenants made by Notable and VBL, including representations relating
to obtaining the requisite approvals of the securityholders of Notable and VBL, agreements relating to indemnification of directors and
officers, and covenants relating to Notable’s and VBL’s conduct of their respective businesses between the date of signing
the Merger Agreement and the Effective Time. The
Merger Agreement provides each of VBL and Notable with specified termination rights, and further provides that, upon termination of the
Merger Agreement under specified circumstances, the terminating party may be required to pay the other party a termination fee of $ 2,500,000 500,000 500,000 The
Merger Agreement provides that, immediately following the Effective Time, the board of directors of the combined organization
organization VBL’s
and Notable’s obligations to consummate the Merger are subject to the satisfaction or waiver of customary closing conditions, including,
among others, obtaining the requisite approval of VBL’s shareholders, obtaining the requisite approval of Notable’s stockholders,
proceeds of Notable’s pre-closing financing, net of certain specified expenses, not being less than $ 5,000,000 15,000,000 In
connection with the execution of the Merger Agreement, VBL and Notable entered into shareholder support agreements with VBL’s current
directors and executive officers who currently collectively beneficially own or control an aggregate of approximately 2.5 Although
VBL has entered into the Merger Agreement and intends to consummate the proposed Merger, there is no assurance that VBL will be able
to successfully consummate the proposed Merger on a timely basis, or at all. If, for any reason, the proposed Merger is not completed,
VBL will reconsider its strategic alternatives and could pursue other courses of action. Asset
Sale- Modi’in Facility On
February 15, 2023, VBL entered into a purchase agreement providing for the sale of VBL’s rights to the Modi’in manufacturing
facility, along with certain tangible assets and equipment located therein for $ 7.1 15.0 0.4 Proposed
Sale of VB-601 Asset On
June 30, 2023, VBL entered into a non-binding term sheet with Wellbeing Group Ltd. (“Wellbeing”) (as amended on July 25,
2023, the “VB-601 Offer”) for the proposed sale of the VB-601 Asset to Wellbeing, or one of its assignees, for total
consideration of up to $ 5 The
VB-601 Offer consists of a $ 250,000 upfront
cash payment to be paid upon closing, up to a total of $ 4.75 million
in clinical and commercial milestones, and a low to mid single digit percentage tiered royalty on annual net sales above $ 50 million.
The VB-601 Offer includes a 90-day exclusivity period and other reasonable and customary closing conditions for a transaction of
this type and nature. Wellbeing intends to form a new company and recruit Prof. Harats, Dr. Feige, and Mr. Backenroth
(“Interested Parties”) as investors and partners to manage the company and develop VB-601 due to their historical
knowledge of the program. Due to the involvement of the Interested Parties in the entity that will be moving forward with and
developing the VB-601 Asset, the transaction is considered a related party transaction, and requires audit committee and board of
directors approval and execution of definitive documentation. VBL’s board of directors also resolved that the closing of the
VB-601 Asset Sale would be subject to the separate approval of the VBL shareholders at the VBL special meeting. The Interested
Parties recused themselves from negotiations between VBL and Wellbeing regarding the VB-601 Offer. The VB-601 Asset Sale would be
expected to close immediately prior to or concurrent with the Merger, however, it is not a condition to the closing of the
Merger. Nasdaq
Listing In
August 2022, VBL received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC
(“Nasdaq”), notifying VBL that the Company’s listed securities did not maintain the minimum bid price requirement
of $ 1.00 1.00 0.10 1.00 0.10 As
of June 30, 2023, VBL wrote-off all remaining fixed assets and related accumulated depreciation and recorded an impairment loss of
$ 0.3 Since
inception, VBL has incurred significant losses, and it expects to continue to incur significant expenses and losses for at least the
next several years. As of June 30, 2023, VBL had an accumulated deficit of $ 297.9 24.3 If
VBL is unable to raise additional funds through equity or debt financings or through strategic alliances when needed or conclude any
strategic transaction for its assets to maximize shareholder value, it may be required to delay, limit, reduce or terminate its product
development efforts or cease operations altogether. Failure to obtain additional financing will have a material, adverse impact on the
Company’s business operations and there can be no assurance that VBL will be able to obtain the needed financing to achieve its
goals on acceptable terms or at all. |
