PPBT Press Release: Kitov Pharmaceuticals Holdings Ltd. (FormDRS)

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As confidentially submitted to the Securities and Exchange Commission on August 18, 2014.

This draft registration statement has not been publicly filed with the Securities and Exchange Commission, and all

information herein remains strictly confidential.

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

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year ended ______________

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

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ________

Commission file number ____________

Kitov Pharmaceuticals Holdings Ltd.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Israel

(Jurisdiction of incorporation or organization)

Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel

(Address of principal executive offices)

Simcha Rock, Chief Financial Officer

Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel

Tel: 972-2-625-4124; Fax: 972-72-257-8658

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of class		Name of each exchange on which registered

American Depositary Shares, each representing 40 Ordinary Shares ⁽¹⁾		Nasdaq Capital Market
Ordinary Shares, no par value ⁽²⁾		Nasdaq Capital Market

(1)

Evidenced by American Depositary Receipts.

(2)

Not for trading, but only in connection with the listing of the American Depositary Shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: N/A

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act 1934.

Yes ¨ No ¨

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

¨ Yes x No

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

Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨

International Financing Reporting Standards as issued by the International Accounting Standards Board x

Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No ¨

TABLE OF CONTENTS

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	3
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	3
ITEM 3.	KEY INFORMATION	4
ITEM 4.	INFORMATION ON THE COMPANY	23
ITEM 4A.	UNRESOLVED STAFF COMMENTS	37
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	37
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	46
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	64
ITEM 8.	FINANCIAL INFORMATION	65
ITEM 9.	THE OFFER AND LISTING	65
ITEM 10.	ADDITIONAL INFORMATION	66
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	81
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	82
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	89
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	89
ITEM 15.	CONTROLS AND PROCEDURES	89
ITEM 16.	[RESERVED]	90
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	90
ITEM 16B.	CODE OF ETHICS	90
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	90
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.	90
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	90
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.	90
ITEM 16G.	CORPORATE GOVERNANCE	90
ITEM 16H.	MINE SAFETY DISCLOSURE	90
ITEM 17.	FINANCIAL STATEMENTS	90
ITEM 18.	FINANCIAL STATEMENTS	90
ITEM 19.	EXHIBITS	91

Unless the context otherwise requires, all references to (i) “Kitov Holdings,” refers to Kitov Pharmaceutical Holdings Ltd., (ii) “Kitov Group,” “we,” “us,” “our,” and similar designations refer to Kitov Pharmaceutical Holdings Ltd., together with its wholly-owned subsidiary, Kitov Pharmaceuticals Ltd., and (iii) references to “Kitov Pharmaceuticals” refer to Kitov Pharmaceuticals Ltd., the wholly owned subsidiary of Kitov Pharmaceutical Holdings Ltd.. The term “NIS” refers to New Israeli Shekels, the lawful currency of the State of Israel, the terms “dollar”, “US$” or “$” refer to U.S. dollars, the lawful currency of the U.S. Our functional and presentation currency is the U.S. dollar. Foreign currency transactions in currencies other than the U.S. dollar are translated in this Registration Statement into U.S. dollars using exchange rates in effect at the date of the transactions.

________________________________

FORWARD-LOOKING STATEMENTS

Some of the statements under the sections entitled “Item 3. Key Information — Risk Factors,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects” and elsewhere in this Registration Statement may include forward looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “will”, “would”, and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. In addition, the sections of this Registration Statement on Form 20-F entitled “Item 4. Information on the Company” contain information obtained from independent industry and other sources that we have not independently verified. You should not put undue reliance on any forward-looking statements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

•

the initiation, timing, progress and results of our preclinical and clinical trials, and other development efforts;

•

our ability to successfully complete our preclinical studies or clinical trials;

•

our receipt of regulatory approvals for our therapeutic candidates, and the timing of other regulatory filings and approvals;

•

the clinical development, commercialization, and market acceptance of our therapeutic candidates;

•

our ability to establish and maintain corporate collaborations;

•

the interpretation of the properties and characteristics of our therapeutic candidates and of the results obtained with our therapeutic candidates in preclinical studies or clinical trials;

•

the implementation of our business model, strategic plans for our business and therapeutic candidates;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our therapeutic candidates and our ability to operate our business without infringing the intellectual property rights of others;

•

estimates of our expenses, future revenues capital requirements and our needs for additional financing;

•

competitive companies, technologies and our industry; and

•

statements as to the impact of the political and security situation in Israel on our business.

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Directors and Senior Management

The following table lists the members of our board of directors. The business address for all directors is Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel.

Name		Position(s)

J. Paul Waymack		Chairman of the Board of Directors and Chief Medical Officer
Isaac Israel		Chief Executive Officer and Director
Simcha Rock		Chief Financial Officer and Director
Morris Laster		Director
Philip Serlin		Director
Moran Sherf-Blau		External Director
Alain Zeitoun		External Director

The following table lists our executive officers. The business address for all of these executives is Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel.

Name		Position(s)

Isaac Israel		Chief Executive Officer and Director
J. Paul Waymack		Chief Medical Officer and Chairman of the Board of Directors
Simcha Rock		Chief Financial Officer and Director

Advisors

Not applicable

Auditors

Our independent external auditor has been Somekh Chaikin, a Member Firm of KPMG International, independent registered public accounting firm. The address of Somech Chaikin is 17 Ha'arba'a Street Tel Aviv 6473917, Israel. Somech Chaikin was the auditor of our subsidiary, Kitov Pharmaceuticals Ltd., at the time of its acquisition by Kitov Pharmaceuticals Holdings Ltd. (then known as Mainrom Line Logistics Ltd.) in July 2013, and Somech Chaikin was thereafter appointed as the auditor of both the parent company and the subsidiary. Because this acquisition was accounted for under International Financial Reporting Standards, or IFRS, as a reverse merger, the consolidated financial statements of Kitov Holdings presented in this report include the financial results of Kitov Pharmaceuticals for the three years ended December 31, 2011, 2012 and 2013 and of Kitov Holdings for the period from July 11, 2013 to December 31, 2013. See "Item 3. Key Information – A. Selected Financial Data" below. These financial statements have been audited by Somekh Chaikin.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

Selected Financial Data

On July 11, 2013, Kitov Pharmaceuticals Holdings Ltd. (then known as Mainrom Line Logistics Ltd.), or Kitov Holdings, acquired issued and outstanding shares of Kitov Pharmaceuticals Ltd., or Kitov Pharmaceuticals, a privately held Israel company, in exchange for the issuance by Kitov Holdings to Kitov Pharmaceuticals' shareholders of 17, 569,220 ordinary shares constituting, immediately following such issuance, approximately 63.75% of the fully diluted share capital of Kitov Holdings (subject to a potential issuance of an additional 17,927,776 shares to Kitov Pharmaceuticals’ shareholders upon the attainment of a milestone in connection with our pivotal Phase 3 trial for KIT-302). See "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals". The acquisition of Kitov Pharmaceutical's shares occurred pursuant to a Share Transfer Agreement by and among Kitov Pharmaceuticals, Kitov Holdings, the shareholders of Kitov Pharmaceuticals and the controlling shareholders of Kitov Holdings. The acquisition was accounted for under International Financial Reporting Standards, or IFRS, as a reverse merger, and therefore the consolidated financial statements of Kitov Holdings presented in this report include the financial results of Kitov Pharmaceuticals for the three years ended December 31, 2011, 2012 and 2013 and of Kitov Holdings for the period from July 11, 2013 to December 31, 2013. Our consolidated financial statements are prepared in accordance with IFRS, as issued by IASB, and we have derived the selected financial data as of December 31, 2013 and2012, and for the three year period ended December 31, 2013, and for the three-month periods ended March 31, 2014 and 2013 from our audited financial statements and unaudited financial statements, respectively, included elsewhere in this Registration Statement on Form 20-F. You should read this selected financial data in conjunction with, and it is qualified in its entirety by, our historical financial information and other information provided in this Registration Statement including “Item 5. Operating and Financial Review and Prospects” and our financial statements and related notes appearing elsewhere in this Registration Statement on Form 20-F. The unaudited selected financial data were prepared on a basis consistent with our audited financial statements and include, in the opinion of our management, all adjustments necessary for the fair presentation of the financial information contained in those statements.

	Year ended December 31									Three months ended March 31
	2013			2012			2011			2014			2013
	(U.S. dollars in thousands, except share and per share data)									(U.S. dollars in thousands, except share and per share data)
Statement of Operations

Research and development expenses		109			94			37			412			5
General and administrative expenses		1,061			608			90			210			110
Trade listing expenses and other expenses		1,383			-			-			720			-
Operating loss		2,553			702			127			1,342			115
Finance expense (income)		75			1			(2	)		98			4

Loss for the period		(2,628	)		(703	)		(125	)		(1,440	)		(119	)
Loss per ordinary share – basic and diluted		(0.12	)		(0.04	)		(0.01	)		(0.04	)		(0.01	)

Number of ordinary shares used in computing loss per ordinary share		21,335,300			17,569,220			17,569,220			35,306,453			17,569,220

	As of December 31						As of March 31
	2013			2012			2014
	(U.S. dollars in thousands)						(U.S. dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents		193			-			2,813
Working capital		(946	)		(407	)		2,090
Total assets		311			8			3,088
Total liabilities		(1,257	)		(415	)		(998	)
Accumulated deficit		(4,600	)		(1,972	)		(6,040	)
Total equity(deficit)		(946	)		(407	)		2,090

Capitalization and Indebtedness

The following table sets forth our capitalization as of March 31, 2014. This table should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and our financial statements and related notes included elsewhere in this Registration Statement on Form 20-F.

	As of March 31, 2014
	(U.S. dollars in thousands)
Current Liabilities:
Liabilities to Related Parties (*)		418
Accounts and other payables:		580
Non-Current Liabilities:		-

Equity:
Share capital, no par value		-
Share Premium and other reserves		8,130
Accumulated deficit		(6,040	)
Total equity		2,090
Liabilities and equity		3,088

(*) Amounts advanced by shareholders to Kitov Pharmaceuticals and to Kitov Holdings prior to the 2013 acquisition of Kitov Pharmaceuticals by Kitov Holdings.

Reasons for the Offer and Use of Proceeds

Not applicable.

Risk Factors

You should carefully consider the risks we describe below, in addition to the other information set forth elsewhere in this Registration Statement on Form 20-F, including our consolidated financial statements and the related notes beginning on page F-1, before deciding to invest in our ordinary shares or our American Depositary Shares. These material risks could adversely impact our results of operations, possibly causing the trading price of our ordinary shares and American Depositary Shares to decline, and you could lose all or part of your investment.

Risks Related to Our Financial Condition and Capital Requirements

We are a clinical development stage biopharmaceutical company with a history of operating losses. We expect to incur additional losses in the future and may never be profitable.

We are a clinical development stage biopharmaceutical company, and we are focused on the development of innovative pharmaceutical products. Both of our current therapeutic candidates are in the clinical development stage, and neither has been approved for marketing or is being marketed or commercialized. Our therapeutic candidates require additional clinical trials before we can obtain the regulatory approvals in order to initiate commercial sales. We have incurred losses from commencement of our pharmaceutical research and development activities through March 31, 2014 of approximately $6 million as a result of research and development, listing for trading, general administrative, and other expenses. We may incur significant additional losses as we continue to focus our resources on prioritizing, selecting and advancing our therapeutic candidates. Our ability to generate revenue and achieve profitability depends mainly upon our ability, alone or with others, to successfully develop our therapeutic candidates, obtain the required regulatory approvals in various territories and then commercialize our therapeutic candidates. We may be unable to achieve any or all of these goals with regard to our therapeutic candidates. As a result, we may never be profitable or achieve significant or sustained revenues.

Our limited operating history as a pharmaceutical research and development company makes it difficult to evaluate our business and prospects.

We have a limited operating history as a pharmaceutical research and development company, and our operations to date have been limited primarily to acquiring therapeutic candidates, research and development, raising capital and recruiting scientific and management personnel and third party partners. We have not yet demonstrated an ability to commercialize or obtain regulatory approval for any of our therapeutic candidates. Consequently, any predictions about our future performance may not be accurate, and you may not be able to fully assess our ability to complete development or commercialize our therapeutic candidates, obtain regulatory approvals, or achieve market acceptance or favorable pricing for our therapeutic candidates.

Our current working capital is not sufficient to complete our research and development with respect to our therapeutic candidates. We will need to raise additional capital to achieve our strategic objectives of developing and commercializing therapeutic candidates, and our failure to raise sufficient capital would significantly impair our ability to fund our operations, develop our therapeutic candidates, attract development or commercial partners and retain key personnel.

We have funded our operations primarily through offerings of our securities and private loans. We plan to fund our future operations through commercialization and out-licensing of our therapeutic candidates and raising additional capital. As of June 30, 2014, we had cash and cash equivalents of approximately $1.3 million. This amount is not sufficient to complete the research and development of our therapeutic candidates.

Our business presently generates no revenues, and given that we plan to continue expending substantial funds in research and development, including clinical trials, we will need to raise additional capital in the future through either debt or equity financing or pursuant to development or commercialization agreements with third parties with respect to particular therapeutic candidates. However, we cannot be certain that we will be able to raise capital on commercially reasonable terms or at all, or that our actual cash requirements will not be greater than anticipated. We may have difficulty raising needed capital or securing a development or commercialization partner in the future as a result of, among other factors, our lack of revenues from commercialization of the therapeutic candidates, as well as the inherent business risks associated with our company and present and future market conditions. In addition, global and local economic conditions may make it more difficult for us to raise needed capital or secure a development or commercialization partner in the future and may impact our liquidity. If we are unable to obtain future financing, we may be forced to delay, reduce the scope of, or eliminate one or more of our research, development or commercialization programs related to our therapeutic candidates, any of which may have a material adverse effect on our business, financial condition and results of operations. Moreover, to the extent we are able to raise capital through the issuance of debt or equity securities, it could result in substantial dilution to existing shareholders.

Our long term capital requirements are uncertain and subject to numerous risks.

Our long term capital requirements are expected to depend on many potential factors, including, among others:

the regulatory path of our therapeutic candidates;

our ability successfully to commercialize our therapeutic candidates, including securing commercialization agreements with third parties and favorable pricing and market share;

the progress, success and cost of our clinical trials and research and development programs;

the costs, timing and outcome of regulatory review and obtaining regulatory approval of our therapeutic candidates and addressing regulatory and other issues that may arise post-approval;

the costs of obtaining and enforcing patents and defending intellectual property-related claims;

the costs of developing sales, marketing and distribution channels; and

our consumption of available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner than anticipated.

Risks Related to Our Business and Regulatory Matters

If we and/or our potential commercialization partners are unable to obtain U.S. Food and Drug Administration or other foreign regulatory authority approval for our therapeutic candidates, we and/or our potential commercialization partners will be unable to commercialize our therapeutic candidates.

To date, we have not marketed, distributed or sold any therapeutic candidate or other product. Currently, we have two therapeutic candidates in clinical development, “KIT-302” and “KIT-301” for the concurrent treatment of osteoarthritis and hypertension. Our therapeutic candidates are subject to extensive governmental laws, regulations and guidelines relating to development, clinical trials, manufacturing and commercialization of drugs. We may not be able to obtain marketing approval for any of our therapeutic candidates in a timely manner or at all.

Any material delay in obtaining, or the failure to obtain, required regulatory approvals will increase our costs and materially and adversely affect our ability to generate future revenues. Any regulatory approval to market a therapeutic candidate may be subject to limitations on the indicated uses for marketing the therapeutic candidate or may impose restrictive conditions of use, including cautionary information, thereby limiting the size of the market for the therapeutic candidate. We also are, and will be, subject to numerous regulatory requirements from both the U.S. Food and Drug Administration and foreign state agencies that govern the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. Moreover, approval by one regulatory authority does not ensure approval by other regulatory authorities in separate jurisdictions. Each jurisdiction may have different approval processes and may impose additional testing requirements for our therapeutic candidates than other jurisdictions. Additionally, the U.S. Food and Drug Administration or other foreign regulatory bodies may change their approval policies or adopt new laws, regulations or guidelines in a manner that delays or impairs our ability to obtain the necessary regulatory approvals to commercialize our therapeutic candidates.

Clinical trials may involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. We and/or potential commercialization partners will not be able to commercialize our therapeutic candidates without completing such trials.

We have limited experience in conducting and managing the clinical trials that are required to commence commercial sales of our therapeutic candidates. Clinical trials are expensive, complex, can take many years to complete and have uncertain outcomes. We cannot predict whether we, independently or through third parties, will encounter problems with any of the completed, ongoing or planned clinical trials that will cause delays, including suspension of clinical trials, or delay of data analysis or release of the final report. The clinical trials of our therapeutic candidates may take significantly longer to complete than is estimated. Failure can occur at any stage of the testing, and we may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent commercialization of our current or future therapeutic candidates.

In connection with the clinical trials for our therapeutic candidates and other therapeutic candidates that we may seek to develop in the future, either on our own or through licensing or partnering agreements, we face various risks, including but not limited to:

delays in securing clinical investigators or trial sites for the clinical trials;

delays in receiving import or other government approvals to ensure appropriate drug supply;

delays in obtaining institutional review board and other regulatory approvals to commence a clinical trial;

negative or inconclusive results from clinical trials;

the U.S. Food and Drug Administration or other foreign regulatory authorities may disagree with the number, design, size, conduct or implementation of our clinical studies;

an inability to monitor patients adequately during or after treatment;

problems with investigator or patient compliance with the trial protocols;

a therapeutic candidate may not prove safe or efficacious; there may be unexpected or even serious adverse events and side effects from the use of a therapeutic product;

the results with respect to any therapeutic candidate may not confirm the positive results from earlier preclinical studies or clinical trials;

the results may not meet the level of statistical significance required by the U.S. Food and Drug Administration or other foreign regulatory authorities;

the results will justify only limited and/or restrictive uses, including the inclusion of warnings and contraindications, which could significantly limit the marketability and profitability of the therapeutic candidate;

the clinical trials may be delayed or not completed due to the failure to recruit suitable candidates or if there is a lower rate of suitable candidates than anticipated or if there is a delay in recruiting suitable candidates; and

changes to the current regulatory requirements related to clinical trials which can delay, hinder or lead to unexpected costs in connection with our receiving the applicable regulatory approvals.

A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience than us, have suffered significant setbacks in advanced clinical trials, even after seeing promising results in earlier clinical trials. As such, we do not know whether any clinical trials we may conduct will demonstrate adequate efficacy and safety sufficient to obtain regulatory approval to market our therapeutic candidates. If any of the clinical trials of any therapeutic candidate do not produce favorable results, our ability to obtain regulatory approval for the therapeutic candidate may be adversely impacted, which will have a material adverse effect on our business, financial condition and results of operations.

If we do not establish collaborations for our therapeutic candidates or otherwise raise substantial additional capital, we will likely need to alter our development and any commercialization plans.

Our drug development programs and the potential commercialization of our therapeutic candidates will require additional cash to fund expenses. As such, our strategy includes selectively partnering or collaborating with multiple pharmaceutical and biotechnology companies to assist us in furthering development and potential commercialization of our therapeutic candidates, in some or all jurisdictions. We may not be successful in collaborations with third parties on acceptable terms, or at all. In addition, if we fail to negotiate and maintain suitable development 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 therapeutic candidate or failure to develop, market and commercialize such therapeutic candidate independently will have an adverse effect on our business, financial condition and results of operation.

Any collaborative arrangements that we establish may not be successful or we may otherwise not realize the anticipated benefits from these collaborations. We do not control third parties with whom we have or may have collaborative arrangements, and we rely on them to achieve results which may be significant to us. In addition, any future collaboration arrangements may place the development and commercialization of our therapeutic candidates outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.

Our collaborative arrangements require us to rely on external consultants, advisors, and experts for assistance in several key functions, including clinical development, manufacturing, regulatory, market research, 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 therapeutic candidates subjects us to a number of risks, including:

we may not be able to control the amount and timing of resources that our collaborators may devote to our therapeutic candidates;

should a collaborator fail to comply with applicable laws, rules, or regulations when performing services for us, we could be held liable for such violations;

our collaborators may experience financial difficulties or changes in business focus;

our collaborators partners may fail to secure adequate commercial supplies of our therapeutic candidates upon marketing approval, if at all;

our collaborators partners may have a shortage of qualified personnel;

we may be required to relinquish important rights, such as marketing and distribution rights;

business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;

under certain circumstances, a collaborator could move forward with a competing therapeutic candidate developed either independently or in collaboration with others, including our competitors; and

collaborative arrangements are often terminated or allowed to expire, which could delay the development and may increase the cost of developing our therapeutic candidates.

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

Our business plan is based upon the combination of drugs that have not been previously combined. Unexpected difficulties or delays in perfecting the combination of such drugs or in successfully marketing such combination drugs could have an adverse effect on our business, financial condition and results of operations.

We are focused on the development of combinations of existing drugs for the simultaneous treatment of pain caused by osteoarthritis, and hypertension.

Since these existing drugs have not previously been combined into one therapeutic agent, we cannot be certain whether the combination will work as intended. In particular, we do not know whether the combination will be bio-equivalent to the separate component drugs, and we cannot be certain that the formulation and manufacturing process for the combination drugs will develop as planned. In addition, we cannot be certain that the market will consider our combination drug to be superior to treatment with the separate drug components. Any delays in perfecting the combination, the production of the combination, or in market acceptance of the combination could have an adverse effect on our business, financial condition and results of operations.

We rely on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including, but not limited to, failing to meet established deadlines for the completion of such clinical trials.

We do not have the ability independently to conduct clinical trials for our product candidates, and we rely on third parties, such as contract research organizations, medical institutions, contract laboratories, current and potential development or commercialization partners, clinical investigators and independent study monitors to perform this function. Our reliance on these third parties for clinical development activities reduces our control over these activities. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. Although we have, in the ordinary course of business, entered into agreements with these third parties, we continue to be responsible for confirming that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. Moreover, the U.S. Food and Drug Administration requires us to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities and requirements. To date, we believe our contract research organizations and other similar entities with which we are working have performed well. However, if these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be required to replace them. Although we believe that there are a number of other third-party contractors we could engage to continue these activities, it may result in a delay of the affected trial and additional costs. Accordingly, we may be delayed in obtaining regulatory approvals for our therapeutic candidates and may be delayed in our efforts to successfully commercialize our therapeutic candidates for targeted diseases.

In addition, our ability to bring our therapeutic candidates to market depends on the quality and integrity of data that we present to regulatory authorities in order to obtain marketing authorizations. Although we attempt to audit and control the quality of third party data, we cannot guarantee the authenticity or accuracy of such data, nor can we be certain that such data has not been fraudulently generated.

If third parties do not manufacture our therapeutic candidates in sufficient quantities, in the required timeframe, and at an acceptable cost, clinical development and commercialization of our therapeutic candidates would be delayed.

We do not currently own or operate manufacturing facilities, and we rely, and expect to continue to rely, on third parties to manufacture clinical and commercial quantities of our therapeutic candidates. Our reliance on third parties includes our reliance on them for quality assurance related to regulatory compliance. Our current and anticipated future reliance upon others for the manufacture of our therapeutic candidates may adversely affect our future profit margins, if any, and our ability to develop therapeutic candidates and commercialize any therapeutic candidates on a timely and competitive basis.

We may not be able to maintain our existing or future third party manufacturing arrangements on acceptable terms, if at all. If for some reason our manufacturers do not perform as agreed or expected, or our manufacturers otherwise terminate their arrangements with us, we may be required to replace them. Although we are not substantially dependent upon our existing manufacturing agreements since we could replace them with other third party manufacturers, we may incur added costs and delays in identifying, engaging, qualifying and training any such replacements.

We rely on third party contract vendors to manufacture and supply us with high quality API, or Active Pharmaceutical Ingredients, in the quantities we require on a timely basis.

We currently do not manufacture any API ourselves. Instead, we rely on third-party vendors for the manufacture and supply of our APIs that are used to formulate our therapeutic candidates. While there are many potential API suppliers in the market, if these suppliers are incapable or unwilling to meet our current or future needs on acceptable terms or at all, we could experience a delay in conducting additional clinical trials of our therapeutic candidates and incur additional costs.

While there may be several alternative suppliers of API in the market, we have not conducted extensive investigation into the quality or availability of their APIs. As a result, we can provide no assurances that supply sources will not be interrupted from time to time. Changing API suppliers or finding and qualifying new API suppliers can be costly and take a significant amount of time. Many APIs require significant lead time to manufacture. There can also be challenges in maintaining similar quality or technical standards from one manufacturing batch to the next.

If we are not able to find stable, reliable supplies of our API, we may not be able to produce enough supplies of our therapeutic candidates, which could affect our business, financial condition or results of operation.

We anticipate continued reliance on third-party manufacturers if we are successful in obtaining marketing approval from the U.S. Food and Drug Administration and other regulatory agencies for any of our therapeutic candidates.

To date, our therapeutic candidates have been manufactured in relatively small quantities for formulation development and clinical trials by third-party manufacturers, and our therapeutic candidates may be developed in the future for preclinical and clinical trials, as may be required. If the U.S. Food and Drug Administration or other regulatory agencies approve any of our therapeutic candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party manufacturers to produce commercial quantities of our approved therapeutic candidates. These manufacturers may not be able to successfully increase the manufacturing capacity for any of our approved therapeutic candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the U.S. Food and Drug Administration must review and approve. If they are unable to successfully increase the manufacturing capacity for a therapeutic candidate, or we are unable to establish alternative manufacturing capabilities, the commercial launch of any approved products may be delayed or there may be a shortage in supply.

We and our third-party manufacturers are, and will be, subject to regulations of the U.S. Food and Drug Administration and other foreign regulatory authorities.

We and our contract manufacturers are, and will be, required to adhere to laws, regulations and guidelines of the U.S. Food and Drug Administration and other foreign regulatory authorities setting forth current good manufacturing practices. These laws, regulations and guidelines cover all aspects of the manufacturing, testing, quality control and recordkeeping relating to our therapeutic candidates. We and our manufacturers may not be able to comply with applicable laws, regulations and guidelines. We and our manufacturers are and will be subject to unannounced inspections by the U.S. Food and Drug Administration, state regulators and similar foreign regulatory authorities outside the U.S. Our failure, or the failure of our third party manufacturers, to comply with applicable laws, regulations and guidelines could result in the imposition of sanctions on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our therapeutic candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of our therapeutic candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect regulatory approval and supplies of our therapeutic candidates and materially and adversely affect our business, financial condition and results of operations.

Even if we obtain regulatory approvals, our therapeutic candidates will be subject to ongoing regulatory review. If we fail to comply with continuing U.S. and applicable foreign laws, regulations and guidelines, we could lose those approvals, and our business would be seriously harmed.

Even if our therapeutic candidates receive regulatory approval, we or our potential commercialization partners, as applicable, will be subject to ongoing reporting obligations, including pharmacovigilance, and the therapeutic candidates and the manufacturing operations will be subject to continuing regulatory review, including inspections by the U.S. Food and Drug Administration and other foreign regulatory authorities. The results of this ongoing review may result in the withdrawal of a therapeutic candidate from the market, the interruption of the manufacturing operations or the imposition of labeling or marketing limitations. Since many more patients are exposed to drugs following their marketing approval, serious but infrequent adverse reactions that were not observed in clinical trials may be observed during the commercial marketing of the therapeutic candidate. In addition, the manufacturer and the manufacturing facilities that we or our potential commercialization partners use or will use to produce any therapeutic candidate will be subject to periodic review and inspection by the U.S. Food and Drug Administration and other foreign regulatory authorities. Later discovery of previously unknown problems with any therapeutic candidate, manufacturer or manufacturing process, or failure to comply with rules and regulatory requirements, may result in actions such as:

restrictions on such therapeutic candidate, manufacturer or manufacturing process;

warning letters from the U.S. Food and Drug Administration or other foreign regulatory authorities;

withdrawal of the therapeutic candidate from the market;

suspension or withdrawal of regulatory approvals;

refusal to approve pending applications or supplements to approved applications that we or our potential commercialization partners submit;

voluntary or mandatory recall;

fines;

refusal to permit the import or export of our therapeutic candidates;

product seizure or detentions;

injunctions or the imposition of civil or criminal penalties;

adverse publicity; or

if we, or our current or potential commercialization partners, suppliers, third party contractors or clinical investigators are slow to adapt, or are unable to adapt, to changes in existing regulatory requirements or the adoption of new regulatory requirements or policies, we or our potential commercialization partners may lose marketing approval for any of our therapeutic candidates if any of our therapeutic candidates are approved, resulting in decreased or lost revenue from milestones, product sales or royalties.

Modifications to our therapeutic candidates, or to any other therapeutic candidates that we may develop in the future, may require new regulatory clearances or approvals or may require us or our current or potential development and commercialization partners, as applicable, to recall or cease marketing these therapeutic candidates until clearances are obtained.

Modifications to our therapeutic candidates, after they have been approved for marketing, if at all, or to any other pharmaceutical product or medical device that we may develop in the future, may require new regulatory clearance or approvals, and, if necessitated by a problem with a marketed product, may result in the recall or suspension of marketing of the previously approved and marketed product until clearances or approvals of the modified product are obtained. The U.S. Food and Drug Administration and other foreign regulatory authorities require pharmaceutical product and device manufacturers initially to make and document a determination of whether or not a modification requires a new approval, supplement or clearance. A manufacturer may determine in conformity with applicable laws, regulations and guidelines that a modification may be implemented without pre-clearance by the U.S. Food and Drug Administration or other foreign regulatory authorities; however, the U.S. Food and Drug Administration or other foreign regulatory authorities can review a manufacturer’s decision and may disagree. The U.S. Food and Drug Administration or other foreign regulatory authorities may also on their own initiative determine that a new clearance or approval is required. If the U.S. Food and Drug Administration or other foreign regulatory authorities require new clearances or approvals of any pharmaceutical product for which we or our current or potential development and commercialization partners previously received marketing approval, we or our current or potential development and commercialization partners may be required to recall such therapeutic candidate and to stop marketing the therapeutic candidate as modified, which could require us or our current or potential development and commercialization partners to redesign the therapeutic candidate and cause a material adverse effect on our business, financial condition and results of operations.

We depend on our ability to identify and acquire or in-license therapeutic candidates to achieve commercial success.

Our therapeutic candidates were all acquired by us from third parties. We evaluate internally and with external consultants each potential therapeutic candidate. However, there can be no assurance as to our ability to accurately or consistently select therapeutic candidates that have the highest likelihood to achieve commercial success.

Our business could suffer if we are unable to attract and retain key employees or directors.

The loss of the services of members of senior management or other key personnel could delay or otherwise adversely impact the successful completion of our planned clinical trials or the commercialization of our therapeutic candidates or otherwise affect our ability to manage our company effectively and to carry out our business plan. These key personnel include Dr. Paul Waymack, our Founder and Chairman of the Board of Directors. We do not maintain key-man life insurance. Although we have entered into employment or consultancy agreements with all of the members of our senior management team, members of our senior management team may resign at any time. High demand exists for senior management and other key personnel in the pharmaceutical industry. There can be no assurance that we will be able to continue to retain and attract such personnel.

Our growth and success also depend on our ability to attract and retain additional highly qualified scientific, technical, business development, marketing, managerial and finance personnel. We experience intense competition for qualified personnel, and the existence of non-competition agreements between prospective employees and their former employers may prevent us from hiring those individuals or subject us to liability from their former employers. In addition, if we elect to independently commercialize any therapeutic candidate, we will need to expand our marketing and sales capabilities. While we attempt to provide competitive compensation packages to attract and retain key personnel, many of our competitors are likely to have greater resources and more experience than we have, making it difficult for us to compete successfully for key personnel. If we cannot attract and retain sufficiently qualified technical employees on acceptable terms, we may not be able to develop and commercialize competitive therapeutic candidates. Further, any failure to effectively integrate new personnel could prevent our business from successfully growing.

We face several risks associated with international business.

We operate our business in multiple international jurisdictions. Such operations could be affected by changes in foreign exchange rates, capital and exchange controls, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, trade regulations and procedures and actions affecting approval, production, pricing, and marketing of, reimbursement for and access to, our products, as well as by political unrest, unstable governments and legal systems and inter-governmental disputes. Any of these changes could adversely affect our business.

Risks Related to Our Industry

Even if our therapeutic candidates receive regulatory approval or do not require regulatory approval, they may not become commercially viable products.

Even if our therapeutic candidates are approved for commercialization, they may not become commercially viable products. For example, if we or our potential commercialization partners receive regulatory approval to market a therapeutic candidate, approval may be subject to limitations on the indicated uses or subject to labeling or marketing restrictions which could materially and adversely affect the marketability and profitability of the therapeutic candidate. In addition, a new therapeutic candidate may appear promising at an early stage of development or after clinical trials but never reach the market, or it may reach the market but not result in sufficient product sales, if any. A therapeutic candidate may not result in commercial success for various reasons, including:

difficulty in large-scale manufacturing, including yield and quality;

low market acceptance by physicians, healthcare payers, patients and the medical community as a result of lower demonstrated clinical safety or efficacy compared to other products, prevalence and severity of adverse side effects, or other potential disadvantages relative to alternative treatment methods;

insufficient or unfavorable levels of reimbursement from government or third-party payers, such as insurance companies, health maintenance organizations and other health plan administrators;

infringement on proprietary rights of others for which we or our potential commercialization partners have not received licenses;

incompatibility with other therapeutic products;

other potential advantages of alternative treatment methods and competitive forces that may make it more difficult for us to penetrate a particular market segment;

ineffective marketing and distribution support;

lack of significant competitive advantages over existing products on the market;

lack of cost-effectiveness; or

timing of market introduction of competitive products.

Physicians, various other health care providers, patients, payers or the medical community in general may be unwilling to accept, utilize or recommend any of our approved therapeutic candidates. If we are unable, either on our own or through third parties, to manufacture, commercialize and market our proposed formulations or therapeutic candidates when planned, or develop commercially viable therapeutic candidates, we may not achieve any market acceptance or generate revenue.

The market for our therapeutic candidates is rapidly changing and competitive, and new drug delivery mechanisms, drug delivery technologies, new drugs and new treatments which may be developed by others could impair our ability to maintain and grow our business and remain competitive.

The pharmaceutical and biotechnology industry is highly competitive, and we face significant competition from many pharmaceutical, biopharmaceutical and biotechnology companies that are researching and marketing products designed to address the indications for which we are currently developing therapeutic candidates or for which we may develop therapeutic candidates in the future. There are various other companies that currently market or are in the process of developing products that address all of the indications or diseases treated by our therapeutic candidates. For information regarding our competition, see Item 4. “Information on the Company – B. Business Overview – Our Therapeutic Candidates.”

New drug delivery mechanisms, drug delivery technologies, new drugs and new treatments that have been developed or that are in the process of being developed by others may render our therapeutic candidates noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Some of these technologies may have an entirely different approach or means of accomplishing similar therapeutic effects compared to our therapeutic candidates. Technological competition from pharmaceutical and biotechnology companies, universities, governmental entities and others is intense and is expected to increase. Many of these entities have significantly greater research and development capabilities, human resources and budgets than we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities represent significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies by large corporations could increase such competitors’ financial, marketing, manufacturing and other resources.

The potential widespread acceptance of therapies that are alternatives to ours may limit market acceptance of our formulations or therapeutic candidates, even if commercialized. Many of our targeted diseases and conditions can also be treated by other medications or drug delivery technologies. These treatments may be widely accepted in medical communities and have a longer history of use. The established use of these competitive drugs may limit the potential for our therapeutic candidates to receive widespread acceptance if commercialized.

If third-party payers do not adequately reimburse customers for any of our therapeutic candidates that are approved for marketing, they might not be purchased or used, and our revenues and profits will not develop or increase.

Our revenues and profits will depend heavily upon the availability of adequate reimbursement for the use of our approved therapeutic candidates, if any, from governmental or other third-party payers, both in the U.S. and in foreign markets. Reimbursement by a third-party payer may depend upon a number of factors, including the third-party payer’s determination that the use of an approved therapeutic candidate is:

a covered benefit under its health plan;

safe, effective and medically necessary;

appropriate for the specific patient;

cost-effective; and

neither experimental nor investigational.

Obtaining reimbursement approval for a therapeutic candidate from each government or other third-party payer is a time-consuming and costly process that could require us or our current or potential development and commercialization partners to provide supporting scientific, clinical and cost-effectiveness data for the use of our therapeutic candidates to each payer. Even when a payer determines that a therapeutic candidate is eligible for reimbursement, the payer may impose coverage limitations that preclude payment for some uses that are approved by the U.S. Food and Drug Administration or other foreign regulatory authorities. Reimbursement rates may vary according to the use of the therapeutic candidate and the clinical setting in which it used, may be based on payments allowed for lower-cost products that are already reimbursed, may be incorporated into existing payments for other products or services, and may reflect budgetary constraints or imperfections in Medicare, Medicaid or other data used to calculate these rates.

In the U.S., there have been, and we expect that there will continue to be, federal and state proposals to constrain expenditures for medical products and services which may affect payments for our therapeutic candidates in the U.S. We believe that legislation that reduces reimbursement for our therapeutic candidates could adversely impact how much or under what circumstances healthcare providers will prescribe or administer our therapeutic candidates, if approved. This could materially and adversely impact our business by reducing our ability to generate revenue, raise capital, obtain additional collaborators and market our therapeutic candidates, if approved. At this stage, we are unable to estimate the extent of the direct or indirect impact of any such federal and state proposals.

Further, the Centers for Medicare and Medicaid Services frequently change product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values. Third-party payers often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and both the Centers for Medicare and Medicaid Services and other third-party payers may have sufficient market power to demand significant price reductions.

Legislative or regulatory reform of the healthcare system in the United States may harm our future 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 and other changes staged in thereafter. The Healthcare Reform Law imposes additional requirements and obligations upon us, which, to a certain extent, will depend upon the mix of products we sell. These changes include, among other things:

revisions to the Medicaid rebate program under which manufacturers must pay rebates by: (a) increasing the rebate percentage for branded drugs dispensed after December 31, 2009 to 23.1% of the average manufacturer price (“AMP”), with limited exceptions, (b) increasing the rebate for outpatient generic, multiple source drugs dispensed after December 31, 2009 to 13% of AMP; (c) changing the definition of AMP; and (d) extending the Medicaid rebate program effective January 1, 2011 to Medicaid managed care plans, with limited exception;

the imposition of annual fees upon manufacturers or importers of branded prescription drugs, which fees will be in amounts determined by the Secretary of Treasury based upon market share and other data;

providing a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap beginning in 2011; and

expands the definition of “covered entities” that purchase certain outpatient drugs in the 340B Drug Pricing Program of Section 340B of the Public Health Service Act.

While the 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 us if we market 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.

We could be exposed to significant drug product liability claims, which could be time consuming and costly to defend, divert management attention and adversely impact our ability to obtain and maintain insurance coverage.

The clinical trials that we conduct, and the testing, manufacture, marketing and commercial sale of our therapeutic candidates, involve and will involve an inherent risk that significant liability claims may be asserted against us. We currently have a clinical trial liability policy that includes coverage for our clinical trials. Should we decide to seek additional insurance against such risks before our product sales commence, there is a risk that such insurance will be unavailable to us, or if it can be obtained at such time, that it will be available only at an unaffordable cost. Even if we obtain insurance, it may prove inadequate to cover claims or litigation costs, especially in the case of wrongful death claims. Product liability claims or other claims related to our therapeutic candidates, regardless of their outcome, could require us to spend significant time and money in litigation or to pay significant settlement amounts or judgments. Any successful product liability or other claim may prevent us from obtaining adequate liability insurance in the future on commercially desirable or reasonable terms. An inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of our products and therapeutic candidates. A product liability claim could also significantly harm our reputation and delay market acceptance of our therapeutic candidates.

Global economic conditions may make it more difficult for us to commercialize our therapeutic candidates

The biopharmaceutical industry, like other industries and businesses, continues to face the effects of the challenging economic environment. Patients experiencing the effects of the challenging economic environment, including high unemployment levels and increases in co-pays, may switch to generic products, delay treatments, skip doses or use less effective treatments to reduce their costs. Challenging economic conditions in the U.S. have increased the number of patients in the Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many states, to formulary restrictions limiting access to brand-name drugs. In addition, in Europe and in a number of emerging markets there are government-mandated reductions in prices for certain biopharmaceutical products, as well as government-imposed access restrictions in certain countries. All of the aforesaid may make it more difficult for us to commercialize our therapeutic candidates.

Our business involves risks related to handling regulated substances which could severely affect our ability to conduct research and development of our therapeutic candidates.

In connection with our current or potential development and commercialization partners’ research and clinical development activities, as well as the manufacture of materials and therapeutic candidates, we and our current or potential development and commercialization partners are subject to foreign, federal, state and local laws, rules, regulations and policies governing the use, generation, manufacture, storage, air emission, effluent discharge, handling and disposal of certain materials, biological specimens and wastes. We and our current or potential development and commercialization partners may be required to incur significant costs to comply with environmental and health and safety regulations in the future. Our research and clinical development, as well as the activities of our manufacturing and current or potential development and commercialization partners, both now and in the future, may involve the controlled use of hazardous materials, including but not limited to certain hazardous chemicals. We cannot completely eliminate the risk of accidental contamination or injury from these materials. In the event of such an occurrence, we could be held liable for any damages that result and any such liability could exceed our resources.

Risks Related to Intellectual Property

We may be unable adequately to protect or enforce our rights to intellectual property, causing us to lose valuable rights. Loss of patent rights may lead us to lose market share and anticipated profits.

Our success depends, in part, on our ability, and the ability of our current or potential development and commercialization partners to obtain patent protection for our therapeutic candidates, 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 therapeutic candidates, inventions and improvements that may be important to the continuing development of our therapeutic candidates.

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 competitors may independently develop drug delivery technologies or products similar to ours or design around or otherwise circumvent any patents that may be issued to or licensed by us. Our pending patent applications, and those that 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 only 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 have sought will only extend, if issued, to those countries, if any, in which we will be 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 U.S. and the European Union. Competitors may successfully challenge any of our patents, produce similar drugs or products that do not infringe such patents, or produce drugs in countries where we have not applied for patent protection or that do not respect such 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 any future patents, third parties may still act to manufacture or market our therapeutic candidates in infringement of our patent protected rights. Such manufacture or marketing of our therapeutic candidates in infringement of any patent-protected rights is likely to cause us damage and lead to a reduction in the prices of our therapeutic candidates, thereby reducing our anticipated profits.

In addition, due to the extensive time needed to develop, test and obtain regulatory approval for our therapeutic candidates, any patents that may be issued that protect our therapeutic candidates 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 generic products into the market and a subsequent decline in market share and profits.

If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us.

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 current or potential development and 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.

Legal proceedings or third-party claims of intellectual property infringement and other challenges may require us to spend substantial time and money and could prevent us from developing or commercializing our therapeutic candidates.

The development, manufacture, use, offer for sale, sale or importation of our therapeutic candidates 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 therapeutic candidates 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 therapeutic candidate 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.

We may be subject to other patent-related litigation or proceedings that could be costly to defend and uncertain in their outcome.

In addition to infringement claims against us, we may in the future become a party to other patent litigation or proceedings before regulatory agencies, including interference or re-examination proceedings filed with the U.S. Patent and Trademark Office or opposition proceedings in other foreign patent offices regarding intellectual property rights with respect to our therapeutic candidates, as well as other disputes regarding intellectual property rights with our current and potential development and commercialization partners, or others with whom we have contractual or other business relationships. Post-issuance oppositions are not uncommon and we, our current and potential development and commercialization partners will be required to defend these opposition procedures as a matter of course. Opposition procedures may be costly, and there is a risk that we may not prevail.

Risks Related to our Ordinary Shares and American Depositary Shares

We may be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in 2014 or in any subsequent year which may have negative tax consequences for U.S. investors.

We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% of our gross income is “passive income” or (ii) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Based on our estimated gross income, the average value of our gross assets, and the nature of our business, we believe that we may be classified as a PFIC in the current taxable year and in future years. In addition, because we have valued our goodwill based on the market value of our equity, a decrease in the price of our ordinary shares may result in our becoming a PFIC. If we are treated as a PFIC for any taxable year during which a U.S. investor held our ordinary shares or American Depositary Shares, certain adverse U.S. federal income tax consequences could apply to the U.S. investor. See “Item 10. Additional Information – E. Taxation – U.S. Federal Income Tax Considerations – Passive Foreign Investment Company Consequences.”

The market price of our ordinary shares is, and the market price of our American Depositary Shares will be, subject to fluctuation, which could result in substantial losses by our investors.

The stock market in general, and the market price of our ordinary shares on the Tel Aviv Stock Exchange in particular, is subject to fluctuation, and changes in our share price may be unrelated to our operating performance. The market price of our ordinary shares on the Tel Aviv Stock Exchange has fluctuated in the past, and we expect it will continue to do so. It is likely that the market price of our American Depositary Shares will likewise be subject to wide fluctuations. The market price of our ordinary shares and American Depositary Shares are and will be subject to a number of factors, including:

announcements of technological innovations or new therapeutic candidates by us or others;

announcements by us of significant acquisitions, strategic partnerships, in-licensing, out-licensing, joint ventures or capital commitments;

expiration or terminations of licenses, research contracts or other development or commercialization agreements;

public concern as to the safety of drugs that we, our current or potential development and commercialization partners or others develop;

the volatility of market prices for shares of biotechnology companies generally;

success or failure of research and development projects;

departure of key personnel;

developments concerning intellectual property rights or regulatory approvals;

variations in our and our competitors’ results of operations;

changes in earnings estimates or recommendations by securities analysts, if our ordinary shares or American Depositary Shares are covered by analysts;

changes in government regulations or patent decision;

developments by our current or potential development and commercialization partners; and

general market conditions and other factors, including factors unrelated to our operating performance.

These factors and any corresponding price fluctuations may materially and adversely affect the market price of our ordinary shares and result in substantial losses by our investors.

Additionally, market prices for securities of biotechnology and pharmaceutical companies historically have been very volatile. The market for these securities has from time to time experienced significant price and volume fluctuations for reasons unrelated to the operating performance of any one company. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and attention of management from our business, even if we are successful.

Future sales of our ordinary shares or American Depositary Shares could reduce the market price of our ordinary shares and American Depositary Shares.

All of our outstanding ordinary shares are registered and available for sale in Israel. In addition, as of August 13, 2014, we had an aggregate of 57,504,068 issued and outstanding ordinary shares (not including 270 shares held in treasury), 7,154,574 series 1 traded options to purchase 7,154,574 ordinary shares, and 2,445,380 options to purchase 2,445,380 ordinary shares under our 2013 Share Option Plan. See “Item 6. Directors, Senior Management and Employees – E. Share Ownership – Share Option Plans.” Substantial sales of our ordinary shares or American Depositary Shares, or the perception that such sales may occur in the future, including sales of shares issuable upon the exercise of options, may cause the market price of our ordinary shares or American Depositary Shares to decline. Moreover, the issuance of shares underlying our options will also have a dilutive effect on our shareholders, which could further reduce the price of our ordinary shares and American Depositary Shares on their respective exchanges.

Our ordinary shares and our American Depositary Shares will be traded on different markets and this may result in price variations.

Our ordinary shares trade on the Tel Aviv Stock Exchange, and we intend to apply to have our American Depositary Shares listed on The Nasdaq Capital Market. Trading in our securities on these markets will take place in different currencies (U.S. dollars on The Nasdaq Capital Market and New Israeli Shekels, or NIS, on the Tel Aviv Stock Exchange), and at different times (resulting from different time zones, different trading days and different public holidays in the U.S. and Israel). The trading prices of our securities on these two markets may differ due to these and other factors. Any decrease in the price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.

Our American Depositary Shares have no prior trading history in the U.S., and an active market may not develop, which may limit the ability of our investors to sell our American Depositary Shares in the U.S.

There is no public market for our American Depositary Shares or ordinary shares in the U.S. Although we intend to apply to have our American Depositary Shares listed on The Nasdaq Capital Market, an active trading market for our American Depositary Shares may never develop or may not be sustained if one develops. If an active market for our American Depositary Shares does not develop, it may be difficult to sell your American Depositary Shares.

We will incur significant additional increased costs as a result of the listing of our American Depositary Shares on The Nasdaq Capital Market, and our management will be required to devote substantial time to new compliance initiatives as well as to compliance with ongoing U.S. and Israeli reporting requirements.

As a public company in the U.S., we will incur additional significant accounting, legal and other expenses that we did not incur before the offering. We also anticipate that we will incur costs associated with reporting requirements of the Securities and Exchange Commission and the Nasdaq Listing Rules. We expect these rules and regulations to increase our legal and financial compliance costs, introduce new costs such as investor relations, stock exchange listing fees and shareholder reporting, and to make some activities more time consuming and costly. These laws, rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. Furthermore, until such time as our shareholders may vote to approve our transition from Israeli securities law reporting requirements to U.S. requirements, we will also be required to comply fully with both Israeli and U.S. requirements. The need to comply with both U.S. and Israeli reporting and other securities law requirements will also add to our legal and financial compliance costs and require devotion of additional management resources to reporting and compliance efforts.

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

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under the NASDAQ Listing Rules for domestic issuers. For instance, we will follow home country practice in Israel with regard to, among other things, composition of the board of directors, which does not require that a majority of a company's board of directors be independent, director nomination procedures and quorum requirement at shareholder meetings. In addition, we will follow our home country law, instead of the NASDAQ Listing Rules, which require that we obtain shareholder approval for certain dilutive events, such as for the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the NASDAQ Capital Market may provide less protection than is accorded to investors under the Listing Rules of The NASDAQ Stock Market applicable to domestic issuers.

In addition, as a foreign private issuer, we will be exempt from the rules and regulations under the U.S. Securities Exchange Act of 1934, as amended, 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 U.S. Securities Exchange Act of 1934, as amended. In addition, we will not be required under the U.S. Securities Exchange Act of 1934, as amended, to file annual, quarterly and current reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as domestic companies whose securities are registered under the U.S. Securities Exchange Act of 1934, as amended.

We will be obligated to develop and maintain proper and effective internal controls over financial reporting. We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our ordinary shares.

We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to document and test our internal control procedures and furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in connection with filing of our second annual report on Form 20-F submitted after this Registration Statement on Form 20-F is declared effective. This report will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will be required to issue an opinion on management's assessment of those matters at a later date.

We have not completed the challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. The continuous process of strengthening our internal controls and complying with Section 404 is complicated and time consuming. Furthermore, as our business continues to grow both domestically and internationally, our internal controls will become more complex and will require significantly more resources and attention to ensure our internal controls remain effective overall. During the course of testing, our management may identify weaknesses or deficiencies, which may not be remedied in a timely manner. If our management cannot favorably assess the effectiveness of our internal controls over financial reporting, or if our independent registered public accounting firm identifies material weaknesses in our internal control, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common shares to decline.

Because we are becoming a reporting company under the Securities Exchange Act of 1934, as amended, by means of filing this Form 20-F, we may not be able to attract the attention of research analysts at major brokerage firms.

Because we do not intend to become a reporting company by conducting an underwritten initial public offering, we do not expect security analysts of major brokerage firms to provide coverage of our company in the near future. In addition, major investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if we were to become a public reporting company by means of an initial public offering. The failure to receive research coverage or support in the market for our shares will have an adverse effect on our ability to develop a liquid market for our American Depositary Shares.

We currently do not anticipate paying cash dividends, and accordingly, shareholders must rely on the appreciation in our American Depositary Shares for any return on their investment.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Therefore, the success of an investment in our American Depositary Shares will depend upon any future appreciation in their value. There is no guarantee that our American Depositary Shares will appreciate in value or even maintain the price at which our shareholders have purchased their shares.

The ability of any Israeli company to pay dividends or repurchase its shares is subject to Israeli law, and the amount of cash dividends payable may be subject to devaluation in the Israeli currency.

The ability of an Israeli company to pay dividends or repurchase its shares is governed by Israeli law, which provides that distributions, including cash dividends and share repurchases, may be made only out of retained earnings as determined for statutory purposes in Israeli currency. Since we do not have earnings, we do not have any ability to pay dividends or repurchase our shares. 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.

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

The depositary for the American Depositary Shares has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying the American Depositary Shares, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your American Depositary Shares represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of American Depositary Shares. For example, it would be unlawful to make a distribution to a holder of American Depositary Shares if it consists of securities that require registration under the Securities Act of 1933, as amended, but that are not properly registered or distributed under an applicable exemption from registration. In addition, conversion into U.S. dollars from foreign currency that was part of a dividend made in respect of deposited ordinary shares may require the approval or license of, or a filing with, any government or agency thereof, which may be unobtainable. In these cases, the depositary may determine not to distribute such property and hold it as “deposited securities” or may seek to affect a substitute dividend or distribution, including net cash proceeds from the sale of the dividends that the depositary deems an equitable and practicable substitute. We have no obligation to register under U.S. securities laws any American Depositary Shares, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of American Depositary Shares, ordinary shares, rights or anything else to holders of American Depositary Shares. In addition, the depositary may withhold from such dividends or distributions its fees and an amount on account of taxes or other governmental charges to the extent the depositary believes it is required to make such withholding. This means that you may not receive the same distributions or dividends as those we make to the holders of our ordinary shares, and, in some limited circumstances, you may not receive any value for such distributions or dividends if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of the American Depositary Shares.

Holders of American Depositary Shares must act through the depositary to exercise their rights as shareholders of our company.

Holders of our American Depositary Shares do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement for the American Depositary Shares. Under Israeli law, the minimum notice period required to convene a shareholder meeting is no less than 35 or 21 calendar days, depending on the proposals on the agenda for the shareholders meeting. When a shareholder meeting is convened, holders of our American Depositary Shares may not receive sufficient notice of a shareholders’ meeting to permit them to withdraw their ordinary shares to allow them to cast their vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to holders of our American Depositary Shares or carry out their voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to holders of our American Depositary Shares in a timely manner, but we cannot assure holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their American Depositary Shares. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of our American Depositary Shares may not be able to exercise their right to vote and they may lack recourse if their American Depositary Shares are not voted as they requested. In addition, in the capacity as an American Depositary Share holder, they will not be able to call a shareholders’ meeting.

The depositary for our American Depositary Shares will give us a discretionary proxy to vote our ordinary shares underlying American Depositary Shares if a holder of our American Depositary Shares does not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect their interests.

Under the deposit agreement for the American Depositary Shares, the depositary will give us a discretionary proxy to vote our ordinary shares underlying American Depositary Shares at shareholders’ meetings if a holder of our American Depositary Shares does not vote, unless:

we have instructed the depositary that we do not wish a discretionary proxy to be given;

we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or

a matter to be voted on at the meeting would have a material adverse impact on shareholders.

The effect of this discretionary proxy is that a holder of our American Depositary Shares cannot prevent our ordinary shares underlying such American Depositary Shares from being voted, absent the situations described above, and it may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

Risks Related to our Operations in Israel

We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and its region.

We are incorporated under the laws of the State of Israel, our principal offices are located in central Israel and some of our officers, employees and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect our operations and results of operations and could make it more difficult for us to raise capital. In 2008, 2012, and again in the summer of 2014, Israel was engaged in an armed conflict with Hamas, a militia group and political party operating in the Gaza Strip, and during the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. These conflicts involved missile strikes against civilian targets in various parts of Israel, and negatively affected business conditions in Israel. Recent political uprisings and civil resistance demonstrations in various countries in the Middle East, including Egypt and Syria, are affecting the political stability of those countries. It is not clear how this instability, will develop and how it will affect the political and security situation in the Middle East. This instability may lead to deterioration of the political relationships that exist between Israel and these countries, and have raised concerns regarding security in the region and the potential for armed conflict. In addition, it is widely believed that Iran, which has previously threatened to attack Israel, has been stepping up its efforts to achieve nuclear capability. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza and Hezbollah in Lebanon. The tension between Israel and Iran or these groups may escalate in the future and turn violent, which could affect the Israeli economy generally and us in particular. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm our results of operations. For example, any major escalation in hostilities in the region could result in a portion of our employees being called up to perform military duty for an extended period of time. Parties with whom we do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary.

Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

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

Provisions of Israeli law and our Articles of Association may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, or an acquisition of a significant portion of our shares, which could prevent a change of control, and negatively affect the price of our ordinary shares.

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.

These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, or an acquisition of a significant portion of our shares, even if such an acquisition or merger would be beneficial to us or to our shareholders. See “Item 10. Additional Information - B. Memorandum and Articles of Association.”

Because a certain portion of our expenses is incurred in currencies other than the U.S. dollar, our results of operations may be harmed by currency fluctuations and inflation.

Our reporting and functional currency is the U.S. dollar. Most of the royalty payments from our agreements with our current or potential development and commercialization partners are expected to be payable in U.S. dollars, and we expect our revenues from future licensing agreements to be denominated mainly in U.S. dollars or in Euros. We pay a portion of our expenses in U.S. dollars ; however, a portion of our expenses, related to salaries of the employees in Israel and payment to part of the service providers in Israel, are paid in NIS and in other currencies. In addition, a portion of our financial assets is held in NIS. As a result, we are exposed to the currency fluctuation risks. For example, if the NIS strengthens against the U.S. dollar, our reported expenses in U.S. dollars may be higher than anticipated. In addition, if the NIS weakens against the U.S. dollar, the U.S. dollar value of our financial assets held in NIS will decline.

It may be difficult to enforce a U.S. judgment against us and our officers and directors named in this Registration Statement on Form 20-F in Israel or the U.S., or to serve process on our officers and directors.

We are incorporated in Israel. Most of our executive officers and directors listed in this Registration Statement on Form 20-F reside outside of the U.S., and all of our assets and most of the assets of our executive officers and directors are located outside of the U.S. Therefore, a judgment obtained against us or most of our executive officers and our directors in the U.S., including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the U.S. and may not be enforced by an Israeli court. It may also be difficult for you to affect service of process on these persons in the U.S. or to assert U.S. securities law claims in original actions instituted in Israel.

Your obligations and responsibilities as a shareholder will be governed by Israeli law which may differ in some respects from the obligations and responsibilities of shareholders of U.S. companies. Israeli law may impose obligations and responsibilities on a shareholder of an Israeli company that are not imposed upon shareholders of corporations in the U.S.

We are incorporated under Israeli law. The obligations and responsibilities of the holders of our ordinary shares are governed by our articles of association and Israeli law. These obligations and responsibilities differ in some respects from the obligations and responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on 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 knows 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 implications of these provisions that govern shareholders’ actions. These provisions may be interpreted to impose additional obligations and responsibilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful stockholder claims against us and may reduce the amount of money available to us.

The Israeli Companies Law and our Articles of Association permit us to indemnify our directors and officers for acts performed by them in their capacity as directors and officers. The Israeli Companies Law and our Articles of Association provide that a company may not exempt or indemnify a director or an office holder nor enter into an insurance contract, which would provide coverage for any monetary liability incurred as a result of (a) a breach by the director or officer of his duty of loyalty, except for insurance and indemnification where the director or officer acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; (b) a breach by the director or officer of his duty of care if the breach was done intentionally or recklessly, except if the breach was solely as a result of negligence; (c) any act or omission done with the intent to derive an illegal personal benefit; or (d) any fine, civil fine, monetary sanctions, or forfeit imposed on the officer or director. See “Item 6. Directors, Senior Management and Employees – C. Board Practices – Board of Directors and Officers – Exemption, Insurance and Indemnification of Directors and Officers."

We have issued letters of indemnification to our directors and officers, pursuant to which we have agreed to indemnify them in advance for any liability or expense imposed on or incurred by them in connection with acts they perform in their capacity as a director or officer, subject to applicable law. The amount of the advance indemnity will not exceed 25% of our then consolidated shareholders’ equity, per our most recent consolidated annual financial statements.

Our indemnification obligations limit the personal liability of our directors and officers for monetary damages for breach of their duties as directors by shifting the burden of such losses and expenses to us. Although we have obtained directors and officers liability insurance, certain liabilities or expenses covered by our indemnification obligations may not be covered by such insurance or the coverage limitation amounts may be exceeded. As a result, we may need to use a significant amount of our funds to satisfy our indemnification obligations, which could severely harm our business and financial condition and limit the funds available to stockholders who may choose to bring a claim against our company. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors and officers for breaches of their duties, and may similarly discourage the filing of derivative litigation by our shareholders against the directors and officers even though such actions, if successful, might otherwise benefit our shareholders.

ITEM 4.

INFORMATION ON THE COMPANY

History and Development of the Company

We are an Israeli company, and our legal and commercial name is Kitov Pharmaceuticals Holdings Ltd. Our principal executive offices are located at Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel, and our telephone number is 972-2-625-4124.

We operate primarily through our wholly owned Israeli subsidiary, Kitov Pharmaceuticals Ltd., which was founded in 2010. On July 11, 2013, Kitov Pharmaceuticals Ltd. was acquired by a publicly traded shell company, then known as Mainrom Line Logistics Ltd. As part of the transaction, Mainrom changed its name to Kitov Pharmaceuticals Holdings Ltd. (which we refer to here as Kitov Holdings) and issued 17,569,220 ordinary shares (constituting, immediately following such issuance, approximately 63.75% of the fully diluted share capital of Kitov Holdings) to Kitov Pharmaceuticals' shareholders. In addition, Kitov Holdings agreed to issue an additional 17,927,776 shares to Kitov Pharmaceuticals’ shareholders upon the attainment of a milestone in connection with our pivotal Phase 3 trial for KIT-302. For more information regarding this transaction, see "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals".

In October 2012, Kitov Holdings (then known as Mainrom Line Logistics Ltd.) sold all of its activities, assets, rights, obligations and liabilities to a private company held by its then controlling shareholders, and all rights of Kitov Holdings' creditors against it were extinguished. The sale was made pursuant to an arrangement between Kitov Holdings and its creditors confirmed by the District Court in Lod, Israel. In connection with this sale, on October 31, 2012, the former controlling shareholders sold control of Kitov Holdings to Mr. Sheer Roichman. From the completion of these transactions until the completion of the acquisition of Kitov Pharmaceuticals described above, Kitov Holdings did not have any business activities and was a public shell company. See "Item 10. Additional Information – C. Material Contracts – Arrangement with Creditors and Sale of Kitov Holdings to Mr. Sheer Roichman".

Kitov Holdings was incorporated (under a previous name) on August 12, 1968 and its ordinary shares were originally listed for trading on the Tel Aviv Stock Exchange in 1978. Our securities are currently traded on the Tel Aviv Stock Exchange under the symbol “KTOV.”

Kitov Pharmaceuticals had no material capital expenditures for the years ended December 31, 2013, 2012 and 2011.

Business Overview

We are a biopharmaceutical company focused on the development of therapeutic candidates for the simultaneous treatment of two clinical conditions:

pain caused by osteoarthritis, and

hypertension (high blood pressure), which can be pre-existing or caused by the treatment for osteoarthritis.

In particular, we focus on developing combinations of existing drugs in advanced stages of development. We are currently developing two combinations, one based on naproxen and one based on celecoxib, both of which are active ingredients of known and approved for use drugs designed to relieve pain caused by osteoarthritis. These combinations are designed to simultaneously treat hypertension and reduce increased blood pressure, which is the main side effect of using the currently available drugs for treating osteoarthritis.

Our therapeutic candidates are designed to provide several benefits, including a solution to the concerns of physicians who avoid prescribing a Non-Sterioidal Anti-Inflammatory Drug (“NSAID”) treatment for osteoarthritis due to its side effects of elevating blood pressure, increased compliance by patients, and financial savings for patients in the U.S. by enabling them to purchase one drug rather than two.

Where applicable, we intend to seek U.S. Food and Drug Administration approval for the commercialization of our therapeutic candidates through the Section 505(b)(2) regulatory path under the Federal Food, Drug, and Cosmetic Act of 1938, as amended, and in corresponding regulatory paths in other foreign jurisdictions. Our current pipeline consists of two clinical development therapeutic candidates, which have been cleared for pivotal Phase 3 clinical trials, which will then be subject to review and approval by the U.S. Food and Drug Administration. Upon and subject to receipt of the requisite approvals, we intend to commercialize our therapeutic candidates through licensing and other commercialization arrangements with pharmaceutical companies on a global and/or territorial basis. We may also evaluate, on a case by case basis, co-development and similar arrangements, as well as independent commercialization of our therapeutic candidates.

Our Strategy

Our goal is to become a significant player in the development of innovative chemical drugs with a clinical and commercial added value, based on known and approved-for-use drugs.

Key elements of our strategy are to:

develop combination products with clinical and commercial advantages in the treatment of hypertension and pain caused by osteoarthritis, based on a combination of several existing drugs and obtain approval thereof from the U.S. Food and Drug Administration, or FDA, and the European regulatory authorities;

enter into sub-license agreements with international companies for potential or future therapeutic candidates based on potential upfront and milestone payments, royalties and/or other marketing arrangements, depending on product and market conditions;

expand our line of therapeutic candidates through the acquisition or in-licensing of technologies, products and drugs intended to meet clinical needs, thereby utilizing the skills, knowledge and experience of our personnel to develop and enhance the value of additional products, and bring them to market efficiently;

capitalize on the U.S. Food and Drug Administration’s 505(b)(2) regulatory pathway to obtain more timely and efficient approval of our formulations of previously approved products, when applicable. Under the 505(b)(2) process, we are able to seek U.S. Food and Drug Administration approval of a new dosage form, strength, route of administration, formulation, dosage regimen, or indication of a pharmaceutical product that has previously been approved by the U.S. Food and Drug Administration. This enables us to partially rely on the U.S. Food and Drug Administration’s findings of safety or efficacy for previously approved drugs, thus avoiding the duplication of costly and time consuming preclinical and various human studies. See “Government Regulations and Funding - Section 505(b)(2) New Drug Applications;” and

cooperate with third parties to both develop and commercialize therapeutic candidates in order to share costs and leverage the expertise of others.

Our two current clinical stage therapeutic candidates, “KIT-301” and “KIT-302,” are described below.

Background on Osteoarthritis and Hypertension

Numerous factors influence the drug market, including the aging of the general population. As life expectancy increases, we expect that demand will increase for innovative drugs that treat diseases related to the elderly, such as osteoarthritis and hypertension.

Osteoarthritis

Arthritis means joint inflammation, and the term is used to describe the pain, stiffness and/or swelling in the joints of the body where one or more bones are joined by ligaments. An arthritic joint is one that may have varying degrees of inflammation and possibly destruction of the joint cartilage, which normally provides a smooth surface enabling adjacent bones to move and glide on each other during normal motion.

The most common type of arthritis is called osteoarthritis and is more common with advancing age. People with osteoarthritis usually have joint pain and limited movement. Unlike some other forms of arthritis, osteoarthritis affects only the joints. This condition is also sometimes called degenerative joint disease. Osteoarthritis primarily affects the joint cartilage. Healthy cartilage allows bones to glide over one another and absorbs energy from the shock of physical movement. However, with osteoarthritis, the surface layer of cartilage breaks down and wears away. This allows the bony surface of the different bones under the cartilage to rub together, causing, pain, swelling, and loss of motion of the joint. Over time, affected joints may lose their normal shape. Also, bone spurs, small growths called osteophytes, may grow on the edges of the joint. Thus, bits of bone or cartilage can break off and float inside the joint space, causing more pain and possible damage.

Incidence of osteoarthritis in the younger population is usually caused by traumatic injuries to the joints, whereas in the older population it is a more chronic degenerative disease process. The main symptom of osteoarthritis is pain that appears gradually, worsens in exertion, and is relieved in rest.

The pain caused by osteoarthritis is described by patients as a deep pain or a burning sensation related to the joint tissues of the affected area. Osteoarthritis mainly affects the cartilage and disrupts the structural balance in the cartilage of the joint, causing the cartilage cells to increase production of new raw materials required to create cartilage, but concurrently produce enzymes that digest the cartilage. The net cartilage production and digestion cycle is expressed by a decrease in the quantity of cartilage that causes the adjacent bone tissue to turn into osteoporotic (porous) and deficient.

Osteoarthritis is one of the most common diseases worldwide causing physical disability in adults. According to data published in the Center for Disease Control (CDC) website, an estimated 26.9 million U.S. adults in 2005 were diagnosed with osteoarthritis, of which approximately 50% were diagnosed as suffering from both osteoarthritis and hypertension together. Among individuals over age 60, approximately 37% of those X-rayed were found to suffer from osteoarthritis in at least one joint, according to an August 2010 article in Clinics in Geriatric Medicine by Yuqing Zhang, D.Sc, et. al. and a January 2008 article in Arthritis Rheum by Yuqing Zhang, et. al. In addition, due to increased life expectancy in the Western world, there should be an increasing number of osteoarthritis patients in this age range.

The pharmaceuticals used for treating osteoarthritis include a range of drugs. The particular choice of treatment is made according to the disease severity. These can range from acetaminophen for cases of milder severity, to Voltaren^®, naproxen, Celebrex^® and Arcoxia^®for moderate severity, up to treatment with narcotics for the most severe cases.

Various alternative treatments are available, intended mainly to relieve the pain caused by the disease and to preserve and improve joint function. Changes in the patient's life style, namely diet, physiotherapy and exercise, classified as conservative treatments, may strengthen the muscles adjacent to the joints and increase their ranges, thereby reduce body weight, decrease the loads on the weight carrying joints to subsequently reduce the intensity of the pain.

The conservative treatments are frequently not sufficiently helpful. Therefore, most patients request medical treatment. According to data published on the website of the Mayo Clinic on April 2013, the most common medical treatments are the use of analgesics, such as NSAIDs or COX-2 enzyme inhibitors, acetaminophen, and corticosteroids. NSAIDs are non-steroidal anti-inflammatory drugs that treat inflammations by inhibiting enzymes responsible for the development of infections and subsequent pain. COX-2 enzyme inhibitors are non-steroidal drugs that treat inflammations by directly inhibiting COX-2, an enzyme responsible for the development of infections and subsequent pain. Targeting selectivity for COX-2 reduces the risk of peptic ulceration, and is the main feature of celecoxib, rofecoxib and other members of this drug class. After several COX-2 inhibiting drugs were approved for marketing, data from clinical trials revealed that COX-2 inhibitors caused a significant increase in heart attacks and strokes, with some drugs in the class having worse risks than others. See "- Our Therapeutic Candidates – Competition and Market - Competitive Treatments for Pain Caused by Osteoarthritis" below.

A typical treatment plan with these analgesics is as follows: (i) initial treatment of minor osteoarthritis will begin with use of drugs such as acetaminophen; (ii) in the event that acetaminophen treatment is not effective, the physician will prefer treatment through NSAIDs, which will begin by using drugs such as Ibuprofen followed by Naproxen and/or other NSAIDs (more than 20 types of drugs, including COX-2 enzyme inhibitors); (iii) in cases where treatment with these drugs is ineffective, the treatment will be direct injection of steroids into the affected joint; (iv) in cases where steroid injection is ineffective, treatment by injecting Hyaluronic Acid (HA) into the affected joint will be considered; and (v) in the event that all the aforementioned treatments fail, the patient should consider surgical replacement of the affected joint.

As noted above, non-steroidal anti-inflammatory drugs, or NSAIDs, both over-the-counter and prescription, are commonly taken to manage the pain of backache, osteoarthritis, rheumatoid arthritis, headache and other painful conditions. In 2012, approximately 100 million prescriptions were dispensed for oral anti-arthritis NSAIDs for the management of pain. Prescription sales of oral anti-arthritis NSAIDs in the U.S. in 2011 were approximately $3.0 billion.

NICOX, a pharmaceutical company, has attempted to develop NAPROXCINOD ®, a new chemical entity, or NCE, naproxen-based drug intended to treat pain and to act as an anti-hypertensive, completed three Phase 3 clinical trials with a total investment of tens of millions of dollars. However, the results of the trials did not meet the FDA's expectations. Therefore, in May 2010, an outside advisory committee to the FDA recommended to refrain from approving the drug. As a result of this recommendation, and its own internal review, the FDA rejected the request for approval. According to an announcement by NICOX in April 2012, pursuant to an appeal filed by NICOX in July 2011, a meeting was held in April 2012 between representatives of NICOX and the FDA, in which NICOX was informed that in order to gain approval of its drug, it must file a new New Drug Application, or NDA, and perform additional clinical trials, for the purpose of approving a specific dosage of the drug.

Hypertension (High Blood Pressure)

Hypertension is the most common chronic disease in the western world, affecting approximately thirty percent (30%) of the U.S. adult population, according to a 2012 article in Morbidity and Morality Weekly Report by Amy L. Valderrama. According to its physiological definition, "hypertension" is the pressure applied by the blood on the walls of the blood vessels. The term hypertension refers to the arterial blood pressure, which is the pressure in the arteries that lead blood to body organs. The pressure is created as a result of the contraction of the cardiac muscle.

Blood pressure is measured in units of mercury (Hg) millimeters ("mm Hg"). Diagnosing hypertension in adults requires at least two measures on two different occasions. There are two blood pressure values:

Systolic pressure is the peak pressure in the arteries measured in the cardiac cycle, during the contraction of the heart (systole);

Diastolic pressure is the lowest pressure point in the arteries measured when the atria are relaxing and there is no contraction of the heart (diastole).

The cause of hypertension in 95% of patients is unknown, and in these cases hypertension is defined as "essential hypertension". However, some studies postulate that genetic factors and environmental factors are involved in the initial development of hypertension. These factors include high salt consumption, obesity, excessive alcohol consumption, and probably mental and behavioral factors, which may be caused by various circumstances, including working in certain professions. Extreme hypertension may lead to functional disorders, and worsening health, while the affected person does not necessarily feel it and/or is aware of it. Therefore, hypertension is often referred to as the "Silent Killer".

The danger of hypertension is continuing damage to sensitive tissues of the blood vessels, such as blood vessels in the heart and eyes and to the nerve tissue in the brain where any damage may cause a stroke. Moreover, damage to the blood vessels may cause blockage due to arteriosclerosis and lead to the tearing of the vessels. These complications may cause various diseases and even death. Hypertension treatment methods focus on reducing the patient’s blood pressure to normal values, thereby preventing the occurrence of complications in the long term. Even a small increase in blood pressure may cause significant cardiovascular problems. For example, many studies show that an increase of 1 mm Hg in diastolic blood pressure increases the risk of heart attack, stroke and cardio-vascular diseases by 2% to 3%, according to a 2004 article in The Lancet by Julius S, et al. a 2003 article in the Journal of Rheumatology by Singh G et. al. and a 2005 article in Hypertension by Grover SA et. al., and an increase of 5 to 6 mm Hg in diastolic blood pressure maintained over a few years may be associated with a 67% increase in total stroke risk and a 15% increase in cardiac disease according to a 1997 article in Drug Safety Journal by Johnson AG.

As a result of the publication of various studies related to blood pressure, the medical community recognized a new diagnosis for Pre-hypertension, according to a 1990 article in The Lancet by Collins R., et al., stating that the population with a systolic blood pressure ranging from 115 Hg mm to 130 Hg mm is also exposed to increased risks of heart attacks, stroke and cardiovascular diseases. This is contrary to the previously accepted diagnosis, according to which only the population with hypertension values exceeding 130/90 Hg mm was regarded as having a high risk of developing cardiovascular diseases. In addition, a study published in a 2011 article in The Lancet by Thompson A, et al. states that the majority of the adult population is expected to benefit considerably from using anti-hypertension drugs.

Blood pressure can undergo significant alterations when subjects are placed on various medications. Uses of non-steroidal anti-inflammatory drugs (NSAIDs) may increase blood pressure from 3 Hg mm to 5 Hg mm. For example, according to a May 2010 FDA Joint Meeting of the Arthritis Advisory Committee and the Drug Safety and Risk Management Advisory Committee report published by the FDA, an increase of about 3.5 mm Hg was diagnosed following the use of Naproxen, while the use of Celebrex causes an increase of about 2.5 mm Hg.

Background on Combination Products

Numerous companies worldwide, including the largest pharmaceutics companies, have developed in recent years successful combination products comprised of a combination of two or more drugs to treat various medical conditions, where the safety and effectiveness of each of the drugs was proven separately.

Combination products manufactured and sold which are similar to our therapeutic product candidates, include:

Vimovo®, which was developed by Pozen Inc. and was approved by FDA in May 2010. Vimovo® is a combination of naproxen and esomeprazole magnesium, marketed by AstraZeneca PLC worldwide (except U.S.) and by Horizon Pharma in the U.S., and is designed for treating both pain and preventing gastric ulcer. Its net sales reached $91 million in 2013, a 42% increase compared to net sales in 2012 as reported in the 2013 Annual Report of Pozen Inc.

Caduet®, a combination of Lipitor® and amlodipine, was originally developed and manufactured by Pfizer and is designated for treating both cholesterol and hypertension, with an approximate sales of $223 million in 2013 according to Pfizer's 2013 financial report.

Janumet®, a combination of metformin and sitagliptin, manufactured by Merck & Co. Inc. and designated to treat diabetes, with approximate sales total of $958 million in 2013 according to IMS Health data.

The advantages of a majority of the combination drugs are expressed by an improved medical treatment of patients diagnosed as suffering from two or more different diseases and also by the convenience of using a single drug instead of multiple drugs. In addition, combination drugs have significant commercial advantages deriving from maintaining and even increasing the market share of the active components after their patents expire by extending the life span of the patents for the active components through the use of combination drugs. A party that develops combination drugs based on active materials developed by another manufacturer may become an attractive target for acquisition by the original developer whose patent has a shorter remaining life span.

Another example of a combination drug which created a new market for generic components, where the market of each individual component yields low profitability is Aggrenox® for the treatment of strokes, which is a combination drug integrating two generic components, extended-release dipyridamole and aspirin. These two components, which have been generic for many years, are sold individually or as components in other drugs, and their sales are divided among many products and manufacturers, and their profitability of these components is therefore very low. However, sales volume of Aggrenox^® amounted in 2010 to approximately $277 million in the U.S. according to website of drugs.com, with hardly any generic competition, due to the significant clinical advantages deriving from the synergetic effect between the two components of the combination and the slow release formulation of one of the components, which does not exist at all in the individual drugs taken separately.

Our Therapeutic Candidates

Kitov Group is developing two combinations, one based on naproxen and one based on celecoxib, both active ingredients of which are known and approved-for-use drugs designed to relieve pain caused by osteoarthritis. The Kitov Group combinations are designed to simultaneously treat hypertension and reduce increased blood pressure, which is the main side effect of using the currently available drugs for treating osteoarthritis.

KIT-301 and KIT-302, both developed by Kitov Group to treat osteoarthritis, are each based on two different drugs.

Our market penetration strategy with KIT-301 and KIT-302, both designed to simultaneously treat osteoarthritis and hypertension, is based on the estimate that the use of these drugs will reassure both patients and physicians through the combined treatment of both the pain of osteoarthritis and hypertension. We believe that the added anti-hypertensive drug is expected to minimize the negative effect of the increased hypertension caused by using pain-relief drugs. In addition, pursuant to draft guidelines of the FDA regarding anti-hypertensive drugs, we expect to publish in the package insert to the prescribers and consumers of our therapeutic products that they decrease blood pressure, which reduces the risk of heart attacks, stroke, cardiovascular diseases and death. See "Item 4. Information on the Company – B. Business Overview – FDA Guidelines on Anti-Hypertensive Drugs". We estimate that this will have a positive influence on physicians preferring our drugs in certain dosages, compared to the existing alternative treatments.

We acquired our two therapeutic products, KIT-301 and KIT-302, pursuant to an Asset Purchase Agreement with JPW PCH LLC. For more information, see “- Acquisition Agreement for Intellectual Property” below.

Studies show that approximately 13.5 million patients in the U.S. alone suffer concurrently from hypertension and chronic osteoarthritis pain in the joints, according to data published in the Center for Disease Control (CDC) website. To date, existing drugs used to treat the pain caused by osteoarthritis increase blood pressure in treated patients, which significantly increases the probability of the onset of a heart attack, stroke, other cardiovascular diseases and death. Therefore, we are developing products that intend to treat both diseases concurrently.

Although a combination drug for treating hypertension and cholesterol, CADUET®, and a combination drug for treating joint pain and gastric ulcer, Vimovo®, already exist in the market, to date, no similar combination exists that provides the combined treatment provided by KIT-301 and KIT-302. We therefore believe that KIT-301 and KIT-302 potentially hold significant advantages over the currently available drugs in the market, due to the fact that the drug treatment of osteoarthritis together with hypertension eases the burden of the treatment process for patients by providing the ability to use only one drug instead of multiple drugs concurrently, thereby increasing the patients' compliance with the required treatment. KIT-301 does not presume to provide a solution to gastrointestinal problems caused by the use of naproxen, the generic drug that is one of the components of KIT-301, while KIT-302 uses celecoxib, an NSAID that does not produce the extent of gastrointestinal side effects seen with other NSAIDs.

Both KIT-301 and KIT-302 are combination drugs designed to provide a solution to two diseases, osteoarthritis and hypertension, but are based on different drugs. For professional considerations and in order to manage the Company's financial and human resources, we intend to advance the development of KIT-302 first, and only then focus on the development of KIT-301.

KIT-301

KIT-301 is based on two known and approved-for-use active ingredients (naproxen and anti-HTN), the combination of which enables effective concurrent treatment of both diseases: hypertension and pain caused by osteoarthritis.

KIT-302

Similar to KIT-301, KIT-302 is a fixed dosage combination product based on two known active ingredients (celecoxib and amlodipine besylate), the effectiveness and safety of which has been separately proven for each, and which is intended to enable the concurrent treatment of both diseases (osteoarthritis and hypertension, respectively). The KIT-302 drug combination treats pain caused by osteoarthritis and at the same time treats existing hypertension, thus creating an enhanced therapeutic effect in a manner that reduces and even negates the patient's risk of hypertension caused by celecoxib.

While KIT-301 is based on two generic drugs, KIT-302 is based on one generic drug (amlodipine besylate) and one drug currently protected by patents held by Pfizer Inc. (Celebrex®). The U.S. Patent and Trademark Office granted Pfizer a "reissue patent" covering methods of treating osteoarthritis and other approved conditions with celecoxib, the active ingredient in Celebrex®. The reissued patent extends U.S. patent protection for Celebrex from May 30, 2014 to Dec. 2, 2015.

We currently expect to receive approval from the FDA to market KIT-302 in 2016. As a result of this timing and because KIT-302 combines the treatment of osteoarthritis by celecoxib with amlodipine besylate, which treats the side effect of hypertension, we believe that KIT-302 may be an attractive alternative to the generic versions of Celebrex® that we expect to be sold before KIT-302 enters the market.

On November 7, 2013, we filed with the FDA the final statistical plan for the pivotal Phase 3 clinical trial protocol for KIT-302 as part of the FDA's Special Protocol Assessment, or SPA, procedures. On February 21, 2014, the FDA replied and indicated that the proposed data analysis of the trial's results that we submitted to the FDA provides a suitable solution to achieve the primary endpoint of the pivotal Phase 3 trial and to support the final request for approval which will be submitted. As a result of the SPA process, FDA approved the Phase 3 trial design for our pivotal trial, and on June 18 2014, we commenced the trial, as described below. The trial is being performed using the Adaptive Trial Design, or ATD, in accordance with the SPA. Based on the ATD format, in the first stage of the trial 150 patients are to be recruited. The results of the trial will be disclosed to an independent external data monitoring committee, or DMC, which will analyze the results and determine the number of additional patients that we must recruit in order to demonstrate statistical validity and to meet the primary end point of the trial. To the extent the DMC recommends testing 200 or fewer additional patients, we will continue to recruit additional patients until reaching statistical validity and the primary end point of the trial. In the event that the DMC recommends testing more than 200 additional patients, the Board will discuss the additional testing. If the trial generates the anticipated results, it would support our submission of a new drug application to FDA for Kitov-302.

We believe KIT-302 will have competitive advantages vis a vis treatment with the two separate drug components. See “– Kitov Advantages” below.

Indication	Current Status	2014	2015	2016
KIT-302	FDA Approved SPA	On June 18 2014, we commenced the Phase 3 clinical trial, which is expected to be completed by the end of 2015	Conclusion of the Phase 3 clinical trial, performance of the final formulation PK study, and commencement of marketing of our business development activity with international companies for marketing rights in KIT-302	Filing NDA, receive approval and commence sales
KIT-301	FDA Approved SPA	-	-	Commencement of the Phase 3 clinical trial and chemical development

Research and Development

Our strategy is to develop two drug combinations that are intended to treat hypertension and pain caused by osteoarthritis. These combinations are comprised of known and approved-for-use components, the combination of which is intended to enhance the therapeutic effect, reduce blood pressure and thereby decrease the increased blood pressure side effect caused by the use of the existing drugs for osteoarthritis. Following discussions with the FDA, the FDA approved a development design in accordance with the 505(b)(2) NDA track. The FDA further agreed that there is no need to perform pre-clinical trials (i.e., animal studies). We will only be required to conduct a single pivotal Phase 3 clinical trial and a single standard pharmacokinetic trial, or PK Trial, for each of our drug combinations.

We intend to first develop KIT-302. To do so, we will perform a double blind, placebo controlled, pivotal Phase 3 trial for testing the decrease of hypertension in patients receiving our drug product. This trial will be performed in Europe in four groups of thirty (30) to sixty (60) patients (and a total of 150 – 200 patients), with the patients being treated over a total period of two weeks. Group One will receive a placebo. Group Two will be treated with a standard drug available in the market for treating hypertension (amlodipine besylate, one of the components of KIT-302). Group Three will be treated with celecoxib only, and Group Four will be treated with the two components of KIT-302. According to an agreement with the FDA, the trial will rely on a simple average blood pressure test in each group. The trial began in June 2014, and we expect to obtain preliminary results in approximately eight months. We expect the cost of the trial to be between $2.0 million and $2.5 million.

As per the SPA agreement with FDA, the purpose of the trial is to prove that a combination of the two components of KIT-302, as demonstrated in Group Four, lowers blood pressure at least half as well as when patients are treated by the blood pressure drug alone, as demonstrated in Group Two. If the average reduction in blood pressure in Group Four (treatment with the two components of KIT-302) is at least 50% of the decrease in blood pressure in Group Two (treatment with the anti-hypertension drug only), this would be adequate proof of efficacy to justify approval by FDA of KIT-302 for marketing. Group One and Group Three are for control purposes and will not be considered in evaluating the primary end-point. The trial will be conducted with off-the-shelf drugs, and the combination drug will be developed in parallel.

In addition, in connection with our Development Services Agreement with Dexcel Ltd., pursuant to which Dexcel will develop the formulation for KIT-302 and the subsequent stability testing and manufacturing scale-up in quantities adequate for submission of a New Drug Application to FDA, we or Dexcel will perform a relatively small clinical bioequivalence trial. This trial will be performed after completion of the formulation of KIT-302 to check the pharmo-kinetics of the combination drug in order to show that the blood levels achieved with our combination are the same as that obtained with the individual components. See "- Development Services Agreement with Dexcel" below for more information about this agreement.

It is not currently known whether the European regulatory authorities will require additional studies in order to grant their approval to market KIT-302 in Europe.

If the results of the trial present clear proof of the effectiveness of KIT-302 as an anti-hypertensive, we will employ a similar development strategy for our second drug, KIT-301.

Competition and Market

The pharmaceutical market is characterized by large international pharmaceutical companies that develop a wide range of products, both generic and New Chemical Entities (NCEs), which operate alongside smaller companies, such as ours, that develop a specific drug or a combination of drugs. Therefore, many small companies enter into agreements with such global companies during the drug development stage in order to continue the development or marketing of the drug, taking advantage of the financial, marketing and/or other resources available to such global companies. At the same time, the global companies tend to enter into agreements with smaller companies in order to save development time and resources. The global drug sector is a highly developed market with a turnover of hundreds of billions of U.S. dollars and intense competition. Most of the drugs we intend to develop have competing drugs, developed at the same time by other companies and organizations. We are therefore exposed to competition in our field of operation. Although the drugs we develop have advantages which our competitors lack, there is a constant risk in the drug development field that a competing party will complete the development stages before other organizations currently developing a drug intended for the same disease. Moreover, a constant threat in our market is presented by new drugs that have already completed all the development stages and have already entered the market and are competing with the treatments and drugs available on the market. All the drugs that we are currently developing are intended for oral use.

Competitive Treatments for Pain Caused by Osteoarthritis

The competition for KIT-301 and KIT-302 is expected to come from the oral anti-arthritic market, or more specifically the traditional non-selective NSAIDs (such as naproxen and diclofenac), traditional NSAID/gastroprotective agent combination products or combination product packages (such as Vimovo®, Arthrotec®, Prevacid® and NapraPAC™) and the only COX-2 inhibitor in the U.S. market, Celebrex® (including generic versions of Celebrex® that we expect to be sold following expiration of the patent). The U.S. prescription market for oral solid NSAIDs was approximately $2.9 billion in 2011, of which 62% was accounted for by Celebrex®, according to IMS.

Due to the voluntary withdrawal of Vioxx® by Merck & Co. in September 2004, the FDA ordered the withdrawal of Bextra® by Pfizer and issued a Public Health Advisory in April 2005, requiring manufacturers of all prescription products containing NSAIDs to provide warnings regarding potential adverse cardiovascular events as well as life-threatening gastrointestinal events associated with the use of NSAIDs. Moreover, subsequent to an FDA advisory committee meeting in February 2005 that addressed the safety of NSAIDs, and, in particular, the cardiovascular risks of COX-2 selective NSAIDs, the FDA has indicated that long-term studies evaluating cardiovascular risk will be required to approve new NSAID products that may be used on an intermittent or chronic basis. We believe that KIT-302 has a competitive advantage over other drugs in the market because, as a COX-2 inhibitor, it has limited gastrointestinal side effects, and due to the addition of amlodipine besylate it is designed to address existing hypertension and the cardiovascular side effects of NSAIDs.

Kitov Advantages

We believe there are several outstanding advantages to the products we are developing, such as:

provide a solution to the concerns of physicians who avoid prescribing an NSAID treatment for osteoarthritis due to its side effect of elevating blood pressure, in particular for patients with existing hypertension or pre-hypertension;

reassurance for physicians who are concerned that their patients be treated for both osteoarthritis and for hypertension, which is a known side effect of NSAID treatments for osteoarthritis. This is a particular concern for treatments of hypertension, which is usually not accompanied by tangible symptoms, and therefore patients may not be aware of their condition or the need to treat it. The concern of physicians also derives from their legal responsibility to provide a forward looking treatment that also includes treatment for known side effects;

using one drug that also includes an active ingredient that treats hypertension either as an existing condition or as a side effect of using other drugs, ensures that the patient receives the suitable treatment for their disease and for its side effect; and

purchasing just one drug as opposed to purchasing separate drugs leads to financial savings for patients in the U.S. by requiring payment of just one co-payment and prescription fee as opposed to a double co-payment and prescription fee. In addition, the use of one combination drug reduces the patient's discretion with respect to whether to purchase and use only one of the drugs and provides a comprehensive dual medical treatment in one combined drug.

In addition to the aforementioned medical advantages, we believe the combination drugs that we have developed have several commercial advantages, such as reduced development time compared to the development time of New Chemical Entities (NCE's) and decreased risk factors in the development process. These commercial advantages derive from the fact that combination drugs are based on known materials already approved for use by the FDA. The regulatory procedure required to approve combination drugs by the FDA is a unique and shortened procedure called “505(b)(2) NDA". This procedure may be used to file a request to approve a product that relies on the results of the safety and effectiveness trials performed for the components of the combination in the past by others and not by the filers of the request for approval. Accordingly, the approval process in a 505(b)(2) NDA is short and inexpensive compared to the approval process for NCE's and is typically completed within a period of approximately five years (rather than a period of up to 15 years for approval of NCE drugs). In addition, the use of known, proven and safe components recognized by physicians and medical organizations, and the enhanced medical effect of concurrently treating and preventing hypertension, may shorten the time and decrease the costs usually required for the acceptance of the new product in the drug marketplace.

Clinical Development

The founders of our subsidiary, Kitov Pharmaceuticals, began developing the first combination drug in 2008, prior to its incorporation, by way of filing regulatory requests to the FDA. Subsequent to its incorporation, Kitov Pharmaceuticals filed a pre-IND request, which led to two formal meetings with the FDA held during the first quarter of 2011, and during which the principles for the development of our products were determined.

In those meetings, the FDA approved in principle an outline for the development of the combination drug according to procedure 505(b)(2), without requiring the performance of any non-clinical (animal) studies and limiting the required clinical trials to a single pivotal Phase 3 trial and a standard bioequivalence study. This significantly shortened the timetable required to complete the development of KIT-302 to an estimated 20-24 months, as opposed to 10 years or more usually required for development.

In September 2011, Kitov Pharmaceuticals filed with the FDA an SPA in preparation for the pivotal Phase 3 clinical trial of KIT-301. In October 2011, it received the FDA's reply for the SPA, approving the outline for the pivotal Phase 3 trial and the conditions for receiving the FDA approval of the product. The FDA-approved development plan for KIT-301 also applies to the development plan of KIT-302. In June 2014, we commenced the pivotal Phase 3 clinical trial of the KIT-302.

Services and License Agreements

Services Agreement with DABL Limited

On August 2, 2013, we entered into a services agreement with DABL Limited, an Irish company in the ambulatory blood pressure monitoring technologies field. According to the agreement, DABL will provide protocol consultation services and coordinate the ambulatory blood pressure monitoring (ABPM) procedures and the analysis of the blood pressure tests during and after our pivotal Phase 3 trial of KIT-302. DABL's technology enables the collection of data from hundreds of blood pressure tests during the day on each patient during the clinical trials as opposed to the traditional individual tests that yield many fewer results for statistical analysis during the same time frame.

We may terminate the agreement at any time upon 90 days' notice. Either party may terminate the agreement due to a breach by the other party upon 90 days' notice and upon notice if a bankruptcy event occurring with respect to the other party.

Master Research Services Agreement with Java Clinical Research Ltd.

On February 4, 2014, we entered into a Master Research Services Agreement with Java Clinical Research Ltd, a contract research organization based in Dublin, Ireland. According to the terms of the agreement, Java will manage the pivotal Phase 3 clinical trial for KIT-302, including preparation and filing of the requests to the ethics boards and the necessary regulatory bodies of the European Union, recruiting the tested subjects, employment of the primary researchers, identification and evaluation of the medical centers and their subsequent management throughout the trial period and overall management of the trial process through its completion. The total cost of the agreement with Java will amount to approximately $2.0 million – $2.5 million, to be paid according to milestones determined between the parties, during the period of the trial. To date, Java has identified several medical centers, and two are under contract. The clinical trial began at one of the medical centers in June 2014.

Either party may terminate the agreement (or any work thereunder) (i) upon 60 days' notice, (ii) immediately if the other party commits a material breach and doesn't cure within 30 days of notice and (iii) immediately if a bankruptcy event occurs with respect to the other party.

In March 2014, we filed a request with the British Regulatory Authority (MHRA) to approve recruiting of patients for the trial. Approval of the request will enable us to recruit patients and perform the trial in medical centers in the United Kingdom. A similar request was made to the UK ethics committee. These entities approved the protocol allowing the trial to proceed. The initial patients in this trial were enrolled in June 2014.

Development Services Agreement with Dexcel

On April 1, 2014, we entered into a Development Services Agreement with Dexcel Ltd., a global pharmaceutical company, which has been involved in the manufacture and marketing of more than 55 branded and generic products. The agreement provides for Dexcel to develop the formulation for KIT-302 and the subsequent stability testing and manufacturing scale-up in quantities adequate for submission of a New Drug Application to FDA. Dexcel's services include performing compatibility testing of API's with excipients, screening to find at least two prototypes and identifying analytical methods for product analysis. We agreed to bear the cost of the API's as well as other materials or means required for Dexcel to perform the services under the Agreement. Subject to completing the chemical processes required to combine the component APIs and demonstrate stability, we will perform a relatively small clinical trial to check the pharmo-kinetics of the combination drug in order to show that the blood levels achieved with our combination are the same as that obtained with the individual components. In exchange for these services, we will pay Dexcel $2 million in cash (in four equal installments, $500,000 upon execution of the agreement and the remaining in three payments based on milestones during the development and manufacturing period) and $1.5 million in newly issued shares (in three equal installments, 2,051,176 ordinary shares issued upon execution of the agreement and the remaining two issuances payments based on milestones during the development and manufacturing period).

In addition, Dexcel will pay us $500,000 (in two equal installments based on milestones during the development and manufacturing period) in exchange for a right of first negotiation with regard to future global marketing rights for KIT-302 and for an option to negotiate the future commercial manufacture of KIT-302, payable as described below. Under the terms of the agreement, in the event we intend to enter into negotiations we any third party to enter into a commercial marketing or licensing agreement for the product, we are obligated to notify Dexcel of our intention to do so, and Dexcel has the right, within 21 days, to notify us whether it wishes to negotiate with us on mutually agreeable and commercially reasonable terms for this transaction, in which case we are required to negotiate exclusively with Dexcel in good faith in an attempt to reach a mutual agreement with 60 days. If Dexcel does not so notify us, or if upon expiration of this 60 day period the parties are unable to agree in good faith upon its terms and conditions, we will be free to enter into a commercial agreement with any party on any terms we determine.

The agreement provides that either party may terminate the agreement (i) by providing 90 days' notice to the other party, (ii) if the other party is in breach of the agreement and doesn't remedy the breach within 30 days of notice and (iii) upon a bankruptcy or liquidation event with respect to the other party.

Acquisition Agreement for Intellectual Property

Pursuant to an Asset Purchase Agreement, dated October 13, 2010, between Kitov Pharmaceuticals and JPW PCH LLC, or JPW, JPW sold to Kitov Pharmaceuticals JPW's rights and interests in and to U.S. and international patent applications relating to KIT-301 and KIT-302 in exchange for $100 plus 80% of the equity in Kitov Pharmaceuticals. Kitov Pharmaceuticals assumed all liabilities arising from ownership, use or exercise of rights under, the patent applications.

Under the terms of the agreement, JPW had the right to repurchase the patent applications from Kitov Pharmaceuticals along with any improvements in return for $100 and the equity of Kitov Pharmaceuticals then held by JPW if within 18 months of closing there was not either (i) a public offering of the equity of Kitov Pharmaceuticals or (ii) a financing of Kitov Pharmaceuticals approved by its board of directors. In 2013, JPW waived its right to repurchase the patent applications from Kitov Pharmaceuticals.

Manufacturing Agreements

Manufacturing Agreement with Sterling Pharmaceuticals Services LLC

In September 2013, we entered into an agreement with Sterling Pharmaceuticals Services LLC to produce the drugs for the pivotal Phase 3 trial of KIT-302. The clinical trial supplies include over encapsulated celecoxib, an over encapsulated anti-HTN drug, amlodipine besylate, and an over encapsulated placebo. Pursuant to the terms of the agreement, Sterling will manufacture the drugs and perform the stability and release tests, the packaging and the delivery to the various sites where the trial is be performed. In January 2014, Sterling notified us that the drug production process was completed successfully, and it subsequently notified us that the primary stability tests were completed successfully. In June 2014, the drugs were shipped to the medical center where the trial has begun.

Intellectual Property

Our success depends in part on our ability to obtain and maintain proprietary protection for our products, therapeutic applications, and related technology and know-how, to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. We also rely on our trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary position. We vigorously defend our intellectual property to preserve our rights and gain the benefit of our technological investments.

We own two patent applications acquired from JPW PCH LCC. See " - Acquisition Agreement for Intellectual Property" above. The following is a brief description of our patent applications:

An application for a patent relating to a drug which addresses the users of anti-inflammatory drugs, pain relief drugs or fever reducing drugs of the NSAID type, in combination with anti-hypertension treatment, aiming to prevent or reduce the side effects related to the cardiovascular system. The request was filed in the U.S., Australia, Canada and Europe in May 2009. Two preliminary applications for the patent were filed with priority dates in 2008; and

An application to approve a patent relating to a drug for treating hypertension or rapid pulse caused by a stimulating medical treatment (e.g., drugs against obesity or ADHD). The request for the patent includes a combination of a recognized and proven drug for treating hypertension caused by using drugs for treating ADHD, including stimulants (e.g., CNS stimulants), or from using the two drugs separately, to prevent increased hypertension or rapid pulse caused by using a stimulant. The patent application includes additional claims which are based on NSAID, which causes increased hypertension or rapid pulse. The request was filed in the U.S. in February 2011 with priority date in 2010. See "Item 3 - D. Risk Factors – Risks Related to Intellectual Property".

Government Regulations and Funding

Pharmaceutical companies are subject to extensive regulation by foreign, federal, state and local agencies, such as the U.S. Food and Drug Administration in the U.S., the Ministry of Health in Israel, or the various European regulatory authorities. The manufacture, distribution, marketing and sale of pharmaceutical products are subject to government regulation in the U.S. and various foreign countries. Additionally, in the U.S., we must follow rules and regulations established by the U.S. Food and Drug Administration requiring the presentation of data indicating that our products are safe and efficacious and are manufactured in accordance with current good manufacturing practices (cGMP) regulations. If we do not comply with applicable requirements, we may be fined, the government may refuse to approve our marketing applications or allow us to manufacture or market our products, and we may be criminally prosecuted. We and our manufacturers and clinical research organizations may also be subject to regulations under other foreign, federal, state and local laws, including, but not limited to, the U.S. Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Clean Air Act and import, export and customs regulations as well as the laws and regulations of other countries. The U.S. government has increased its enforcement activity regarding illegal marketing practices domestically and internationally. As a result, pharmaceutical companies must ensure their compliance with the Foreign Corrupt Practices Act and federal healthcare fraud and abuse laws, including the False Claims Act.

These regulatory requirements impact our operations and differ from one country to another, so that securing the applicable regulatory approvals of one country does not imply the approval of another country. However, securing the approval of a more stringent body, i.e. the U.S. Food and Drug Administration, may facilitate receiving the approval by a regulatory authority in a different country where the regulatory requirements are similar or less stringent. The approval procedures involve high costs and are manpower intensive, usually extend over many years and require highly skilled and professional resources.

U.S. Food and Drug Administration Approval Process

The steps required to be taken before a new drug may be marketed in the U.S. generally include:

completion of pre-clinical laboratory and animal testing;

completion of required chemistry, manufacturing and controls testing;

the submission to the U.S. Food and Drug Administration of an investigational new drug, or IND, the application for which must be evaluated and found acceptable by the U.S. Food and Drug Administration before human clinical trials may commence;

performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use;

submission and approval of an NDA; and

agreement with FDA of the language on the package insert.

Clinical studies are conducted under protocols detailing, among other things, the objectives of the study, what types of patients may enter the study, schedules of tests and procedures, drugs, dosages, and length of study, as well as the parameters to be used in monitoring safety, and the efficacy criteria to be evaluated. A protocol for each clinical study and any subsequent protocol amendments must be submitted to the FDA as part of the IND process.

In all the countries that are signatories of the Helsinki Declaration (including Israel), the prerequisite for conducting clinical trials (on human subjects) is securing the preliminary approval of the competent authorities of that country to conduct medical experiments on human subjects in compliance with the other principles established by the Helsinki Declaration.

The clinical testing of a drug product candidate generally is conducted in three sequential phases prior to approval, but the phases may overlap or be combined. A fourth, or post approval, phase may include additional clinical studies. The phases are generally as follows:

Phase 1. In Phase 1 clinical trials, the product is generally tested in a small number of healthy volunteers. These trials are designed to evaluate the safety, dosage tolerance, metabolism and pharmacokinetic actions of the product candidate in humans, side effects associated with increasing doses, and, in infrequent cases, to gain early evidence on efficacy. The number of participants included in Phase I trials is generally in the range of 20 to 80.

Phase 2. In Phase 2 trials, in addition to safety, the sponsor evaluates the efficacy of the product candidate on targeted indications (patients with the disease process the drug is intended to treat) to determine dosage tolerance and optimal dosage and to identify possible adverse effects and safety risks. Phase 2 trials typically are larger than Phase 1 but smaller than Phase 3 trials and may involve several hundred participants.

Phase 3. Phase 3 trials typically involve an expanded patient population at geographically-dispersed test sites. They are performed after preliminary evidence (Phase 2 trial results) suggesting effectiveness of the product candidate has been obtained and are designed to further evaluate clinical efficacy and safety, to establish the overall benefit-risk relationship of the product candidate and to provide an adequate basis for product approval. Phase 3 trials usually involve several hundred to several thousand participants.

Phase 4. Phase 4 clinical trials are studies required of, or agreed to by a sponsor, which are conducted after the FDA has approved a product for marketing. These trials are used to gain additional information from the treatment of patients in the intended therapeutic indication and to verify a clinical benefit in the case of drugs approved under accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase 4 clinical trial requirement. These clinical trials are often referred to as Phase 4 post-approval or post-marketing commitments. Failure to promptly conduct Phase 4 clinical trials could result in the inability to deliver the product into interstate commerce, misbranding charges, and civil monetary penalties.

Clinical trials must be conducted in accordance with the FDA’s good clinical practices, or GCP, requirements. The FDA may order the temporary or permanent discontinuation of a clinical study at any time or impose other sanctions if it believes that the clinical study is not being conducted in accordance with FDA requirements or that the participants are being exposed to an unacceptable health risk. An institutional review board, or IRB, generally must approve the clinical trial design and patient informed consent at study sites that the IRB oversees and also may halt a study, either temporarily or permanently, for failure to comply with the IRB’s requirements, or may impose other conditions. Additionally, some clinical studies are overseen by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board or committee. This group recommends whether or not a trial may move forward at designated check points based on access to certain data from the study. The clinical study sponsor may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.

As a product candidate moves through the clinical testing phases, manufacturing processes are further defined, refined, controlled and validated. The level of control and validation required by the FDA increases as clinical studies progress. We and the third-party manufacturers on which we rely for the manufacture of our product candidates and their respective components (including the active pharmaceutical ingredient, or API) are subject to requirements that drugs be manufactured, packaged and labeled in conformity with cGMP. To comply with cGMP requirements, manufacturers must continue to spend time, money and effort to meet requirements relating to personnel, facilities, equipment, production and process, labeling and packaging, quality control, recordkeeping and other requirements.

Assuming completion of all required testing in accordance with all applicable regulatory requirements, detailed information on the product candidate is submitted to the FDA in the form of an NDA, requesting approval to market the product for one or more indications, together with payment of a user fee, unless waived. An NDA includes all relevant data available from pertinent nonclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information on the chemistry, manufacture, controls and proposed labeling, among other things. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the product candidate for its intended use to the satisfaction of the FDA.

If an NDA submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Prescription Drug User Fee Act, or PDUFA, the FDA’s goal is to complete its initial review and respond to the applicant within ten months of submission, unless the application relates to an unmet medical need in a serious or life-threatening indication, in which case the goal may be within six months of NDA submission. However, PDUFA goal dates are not legal mandates and the FDA response often occurs several months beyond the original PDUFA goal date. Further, the review process and the target response date under PDUFA may be extended if the FDA requests or the NDA sponsor otherwise provides additional information or clarification regarding information already provided in the NDA. The NDA review process can, accordingly, be very lengthy. During its review of an NDA, the FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it typically follows such recommendations. Data from clinical studies are not always conclusive and the FDA and/or any advisory committee it appoints may interpret data differently than the applicant.

After the FDA evaluates the NDA and inspects manufacturing facilities where the drug product and/or its API will be produced, it will either approve commercial marketing of the drug product with prescribing information for specific indications or issue a complete response letter indicating that the application is not ready for approval and stating the conditions that must be met in order to secure approval of the NDA. If the complete response letter requires additional data and the applicant subsequently submits that data, the FDA nevertheless may ultimately decide that the NDA does not satisfy its criteria for approval. The FDA could also approve the NDA with a Risk Evaluation and Mitigation Strategies, or REMS, plan to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-marketing testing. Such post-marketing testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and efficacy after approval. Regulatory approval of products for serious or life-threatening indications may require that participants in clinical studies be followed for long periods to determine the overall survival benefit of the drug.

If the FDA approves one of our product candidates, we will be required to comply with a number of post-approval regulatory requirements. We would be required to report, among other things, certain adverse reactions and production problems to the FDA, provide updated safety and efficacy information and comply with requirements concerning advertising and promotional labeling for any of our products. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive and record keeping requirements. If we seek to make certain changes to an approved product, such as certain manufacturing changes, we will need FDA review and approval before the change can be implemented. For example, if we change the manufacturer of a product or our API, the FDA may require stability or other data from the new manufacturer, and such data will take time and are costly to generate, and the delay associated with generating these data may cause interruptions in our ability to meet commercial demand, if any. While physicians may use products for indications that have not been approved by the FDA, we may not label or promote the product for an indication that has not been approved. Securing FDA approval for new indications is similar to the process for approval of the original indication and requires, among other things, submitting data from adequate and well-controlled studies that demonstrate the product’s safety and efficacy in the new indication. Even if such studies are conducted, the FDA may not approve any change in a timely fashion, or at all.

Section 505(b)(2) New Drug Applications

We intend to submit applications for both of our therapeutic candidates via the 505(b)(2) regulatory pathway. As an alternate path for FDA approval of new indications or new formulations of previously-approved products, a company may file a Section 505(b)(2) NDA, instead of a “stand-alone” or “full” NDA. Section 505(b)(2) of the Food, Drug, and Cosmetic Act, or FDC, was enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Amendments. Section 505(b)(2) permits the submission of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Some examples of products that may be allowed to follow a 505(b)(2) path to approval are drugs that have a new dosage form, strength, route of administration, formulation or indication.

The Hatch-Waxman Amendments permit the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved product or the FDA’s conclusions from prior review of such studies. The FDA may require companies to perform additional studies or measurements to support any changes from the approved product. The FDA may then approve the new product for all or some of the labeled indications for which the reference product has been approved, as well as for any new indication supported by the NDA. While references to nonclinical and clinical data not generated by the applicant or for which the applicant does not have a right of reference are allowed, all development, process, stability, qualification and validation data related to the manufacturing and quality of the new product must be included in an NDA submitted under Section 505(b)(2).

To the extent that the Section 505(b)(2) applicant is relying on the FDA’s conclusions regarding studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book publication. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The Section 505(b)(2) application also will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the reference product has expired. Thus, the Section 505(b)(2) applicant may invest a significant amount of time and expense in the development of its products only to be subject to significant delay and patent litigation before its products may be commercialized.

FDA Guidelines on Anti-Hypertensive Drugs

In March 2011, the FDA published a new draft guidelines stating that drugs designed to be anti-hypertensive may include in the usage indication section of the package insert a statement that "Reduced blood pressure decreases the risk of suffering fatal and non-fatal cardiovascular events, mainly stroke and myocardial infarction". We do not intend to prove through our clinical trial that our products reduce the risk of suffering from the aforesaid diseases. Nevertheless, we expect that the said draft guideline will have a positive effect on the combination drugs we are developing because the combination drugs we are developing are intended to prevent hypertension. FDA has informed us in writing that the package insert of our combination drug product may contain the indication that “Reduced blood pressure decreases the risk of suffering fatal and non-fatal cardiovascular events, mainly stroke and myocardial infarction".

European Regulatory Authorities

In the event that we wish to perform trials in Europe or market or sell our products in Europe, we must apply to the individual country regulatory authorities with a request to approve our drugs according to the Mutual Recognition Procedure (MRP), which is a procedure applied by European Directive No. 2001/83/EC that enables access to medicinal products (drugs) in 27 countries of the European Union. The MRP approval process requires the applicant to receive approval in one of the EU countries and then apply for recognition of the other member countries to acknowledge the approval within their territory. It is not currently known whether the European regulatory authorities will require additional studies in order to grant their approval to market KIT-302 in Europe.

The Israeli Ministry of Health

Our operations are subject to permits from the Israeli Ministry of Health on two levels:

First, pertaining to the import of drugs and raw materials, we are required to apply to the Ministry of Health for approval from its medical accessories and devices unit (AMR).

Also, if we conduct trials in human beings, the trials will be subject to the approval of the Helsinki Committee, which acts by force of the Public Health Regulations (Trials in Human Beings), 1980 ("Trials in Human Beings Regulations") and according to the guidelines of the Helsinki declaration, or any other approval required by the Ministry of Health. According to the Trials in Human Beings Regulations, the Helsinki committee must plan and perform every experimental process that involved human beings. The Helsinki Committee is an institutional committee that acts in the medical institution where the trial is performed and is the party that approves and supervises the entire trial process. In practice, the physician, who is the chief researcher, submits a trial protocol to the committee on behalf of the requesting party. The committee forwards its decisions regarding the requests for medical trials that were approved by the committee to the manager of the medical institute and the manager has the authority to approve the requests without additional approval of the Ministry of Health. According to the procedure for medical trials in human beings of the Ministry of Health, the Helsinki Committee will not approve performance of a medical trial, unless it is absolutely convinced that the following conditions, among others, are fulfilled: (a) the expected benefits for the participant in the trial and to the company justify the risk and the inconvenience involved in the trial to its participant; (b) the available medical and scientific information justifies the performance to the requested medical trial; (c) the medical trial is planned in a scientific manner that enables a solution to the tested question and is described in a clear, detailed and precise manner in the protocol of the trial, conforming with the Helsinki principles declaration; (d) the risk to the participant in the trial is as minimal as possible; (e) optimal monitoring and follow-up of the participant in the trial; (f) the initiator, the chief researcher and the medical institute are capable and undertake to allocate the resources required for adequate execution of the medical trial, including qualified personnel and required equipment; and (g) the nature of the commercial agreement with the chief researcher and the medical institute does not impair the adequate performance of the medical trial.

Organizational Structure

Not applicable.

Property, Plant and Equipment

We have no material tangible fixed assets, including leased properties.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this Registration Statement on Form 20-F. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this registration statement on Form 20-F, particularly those in “Item 3. Key Information – Risk Factors.”

Company Overview

We are a biopharmaceutical company focused on the development of therapeutic candidates for the simultaneous treatment of two clinical conditions:

pain caused by osteoarthritis, and

hypertension, which can be pre-existing or caused by the treatment for osteoarthritis.

Where applicable, we intend to seek FDA approval for the commercialization of our therapeutic candidates through the Section 505(b)(2) regulatory path under the Federal Food, Drug, and Cosmetic Act of 1938, as amended, and in corresponding regulatory paths in other foreign jurisdictions. Our current pipeline consists of two clinical development therapeutic candidates, which have been cleared for pivotal Phase 3 clinical trials, which will then be subject to review and approval by the FDA. Upon and subject to receipt of the requisite approvals, we intend to commercialize our therapeutic candidates through licensing and other commercialization arrangements with pharmaceutical companies on a global and/or territorial basis. We may also evaluate, on a case by case basis, co-development and similar arrangements, as well as the independent commercialization of our therapeutic candidates.

On July 11, 2013, Kitov Holdings (then known as Mainrom Line Logistics Ltd.) acquired issued and outstanding shares of Kitov Pharmaceuticals Ltd., or Kitov Pharmaceuticals, a privately held Israel company, in exchange for the issuance by Kitov Holdings to Kitov Pharmaceuticals' shareholders of 17, 569,220 ordinary shares constituting, immediately following such issuance, approximately 63.75% of the fully diluted share capital of Kitov Holdings (subject to a potential issuance of an additional 17,927,776 shares to Kitov Pharmaceuticals’ shareholders upon the attainment of a milestone in connection with our pivotal Phase 3 clinical trial for KIT-302). See "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals". The acquisition was accounted for under International Financial Reporting Standards, or IFRS. as a reverse merger, and therefore the consolidated financial statements of Kitov Holdings presented in this report include the financial results of Kitov Pharmaceuticals for the three years ended December 31, 2011, 2012 and 2013 and of Kitov Holdings for the period from July 11, 2013 to December 31, 2013.

Components of Statement of Operations

Research and Development Expenses

See “– C. Research and Development, Patents and Licenses” below.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for directors, employees and consultants in executive and operational functions. Other significant general and administration costs include professional fees for outside accounting and legal services, travel costs and insurance premiums.

Expenses Related to Stock Exchange Listing

Expenses Related to Stock Exchange Listing represents the effective cost of the acquisition of Kitov Holdings, at that time a public shell company, from an accounting perspective, by Kitov Pharmaceuticals. The cost was determined based on the market value of the outstanding shares of Kitov Holdings that were held by the former shareholders of Kitov Holdings immediately following the acquisition.

Finance Income and Finance Expense

Finance Income and Finance Expense consist primarily of interest and fees in connection with loans granted to Kitov Holdings from third parties and related parties.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with International Financial Reporting Standards, or IFRS, requires companies to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are subject to an inherent degree of uncertainty and actual results may differ. Our significant accounting policies are more fully described in Note 3 to our annual financial statements included elsewhere in this Registration Statement on Form 20-F. Critical accounting estimates and judgments are evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are particularly important to the portrayal of our financial position and results of operations.

Share-based compensation

In accordance with IFRS 2, the grant of stock options to our employees for services rendered represents a supplementary benefit. Under IFRS 2, we estimate the fair value of these stock options at the grant date and record the value within shareholders’ equity. Fair value is determined using a standard option pricing model that takes into account the specific features of the stock option plan (net price, period of exercise, etc.), market data at the grant date (such as price, volatility, etc.) and behavioral assumptions relating to option holders. Different assumptions could result in material changes to the expense amounts recorded for these options.

Operating Results

History of Losses

Since commencement of our pharmaceutical research and development operations, we have generated significant losses mainly in connection with the research and development of our therapeutic candidates. Such research and development activities are expected to expand over time and will require further resources if we are to be successful. As a result, we expect to continue incurring operating losses, which may be substantial over the next several years, and will need to obtain additional funds to further develop our research and development programs. As of June 30, 2014, we had an accumulated deficit of approximately $6 million.

We expect to continue to fund our operations over the next several years through public or private equity offerings, debt financings or through commercialization of our therapeutic candidates.

As of June 30, 2014, we had approximately $1.3 million of cash and cash equivalents.

Comparison of the Three Month Period Ended March 31, 2014 to the Three Month Period Ended March 31, 2013

Research and Development Expenses

Research and development expenses increased to $412 thousand during the three-month period ended March 31, 2014 from $5 thousand during the three-month period ended March 31, 2013. This significant increase was the due to the commencement of our pivotal Phase 3 clinical trial for KIT-302.

General and Administrative Expenses

General and administrative expenses increased to $210 thousand during the three-month period ended March 31, 2014 from $110 thousand during the three-month period ended March 31, 2013. This increase was primarily due to additional professional fees as a public company following the acquisition of Kitov Pharmaceuticals by Kitov Holdings.

Other Expenses

Other Expenses increased to $720 thousand during the three-month period ended March 31, 2014 due to the payment to Mr. Sheer Roichman of a sum of NIS 2.5 million (approximately $720 thousand based on the representative rate of exchange on the date of payment, March 12, 2014) representing a percentage of the funds raised by us as required by the Share Transfer Agreement with Kitov Pharmaceuticals, Mr. Roichman and other parties. See "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals." During the three month period ended March 31, 2013 there were no Other Expenses.

Operating Loss

Operating loss increased to $1,342 thousand during the three-month period ended March 31, 2014 from $115 thousand during the three month period ended March 31, 2013 due to the increase in research and development, general and administrative, and other expenses described above.

Finance Expense

Finance Expense increased to $98 thousand during the three-month period ended March 31, 2014 from $4 thousand during the three-month period ended March 31, 2013 primarily resulting from interest and fees on loans granted to us by third parties and related parties.

Loss for the Period

Loss for the period increased to $1,440 thousand during the three-month period ended March 31, 2014 from $119 thousand during the three month period ended March 31, 2013 due to the increase in operating loss and finance expense described above.

Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012

Research and Development Expenses

Research and development expenses increased to $109 thousand during the year ended December 31, 2013 from $94 thousand during the year ended December 31, 2012. This increase was primarily due to costs associated with preparation for the pivotal Phase 3 clinical trial for KIT-302.

General and Administrative Expenses

General and administrative expenses increased to $1,061 thousand during the year ended December 31, 2013 from $608 thousand during the year ended December 31, 2012. This increase was primarily due to additional professional fees as a public company following the acquisition of Kitov Pharmaceuticals by Kitov Holdings.

Expenses Related to Stock Exchange Listing

Expenses Related to Stock Exchange Listing was $1,383 thousand during the year ended December 31, 2013 and represents the effective cost of the acquisition of Kitov Holdings, at that time a public shell company, from an accounting perspective, by Kitov Pharmaceuticals.

Operating Loss

Operating loss increased to $2,553 thousand during the year ended December 31, 2013 from $702 thousand during the year ended December 31, 2012 due to the increase in research and development, general and administrative, and expenses related to stock exchange listing described above.

Finance Expense

Finance Expense increased to $75 thousand during the year ended December 31, 2013 from $1 thousand during the year ended December 31, 2012 primarily resulting from interest and fees on loans granted to us by third parties and related parties.

Loss for the Year

Loss for the year increased to $2,628 thousand during the year ended December 31, 2013 from $703 thousand during the year ended December 31, 2012 due to the increase in operating loss and finance expense described above.

Comparison of the Year Ended December 31, 2012 to the Year Ended December 31, 2011

Research and Development Expenses

Research and development expenses increased to $94 thousand during the year ended December 31, 2012 from $37 thousand during the year ended December 31, 2011. This increase was due to costs associated with increased planning for the KIT-302 project.

General and Administrative Expenses

General and administrative expenses increased to $608 thousand during the year ended December 31, 2012 from $90 thousand during the year ended December 31, 2011. This increase was primarily due to professional fees associated with a proposed transactions that ultimately did not materialize.

Operating Loss

Operating loss increased to $1,342 thousand during the three-month period ended March 31, 2014 from $115 thousand during the three month period ended March 31, 2013 Operating loss increased to $702 thousand during the year ended December 31, 2012 from $127 thousand during the year ended December 31, 2011 due to the increase in research and development and general and administrative expenses described above.

Finance Income and Finance Expense

Finance Income and Finance Expense in the years ended December 31, 2012 and 2011 were immaterial.

Loss for the Year

Loss for the year increased to $703 thousand during the year ended December 31, 2012 from $125 thousand during the year ended December 31, 2011 primarily due to the increase in operating loss described above.

Quarterly Results of Operations

The following tables show our unaudited quarterly statements of operations for the periods indicated. We have prepared this quarterly information on a basis consistent with our audited financial statements and we believe it includes all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the information shown. Operating results for any quarter are not necessarily indicative of results for a full fiscal year.

	Three Months Ended
	March 31		June 30			Sept. 30		Dec. 31		March 31		June 30		Sept. 30			Dec. 31		March 31
	2012									2013									2014
	(U.S. dollars in thousands)

Statements of operations

Research and development expenses		51		28			5		10		5		6		98			-		412
General and administrative expenses		34		138			320		116		110		207		501			243		210
Expenses related to Stock Exchange Listing and Other expenses		-		-			-		-		-		-		1,383			23		720
Other income		-		-			-		-		-		-		(23	)		-		-
Operating loss		85		166			325		126		115		213		1,959			266		1,342
Finance expense (income)		2		(2	)		-		1		4		4		15			52		98
Loss for the Period		87		164			325		127		119		217		1,974			318		1,440

Our quarterly results of operations have varied in the past and are expected to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance.

Liquidity and Capital Resources

Liquidity and Capital Resources

Our therapeutic candidates are in the research and development stage and therefore do not generate revenues. Since commencement of our operations as a pharmaceutical research and development company, our activities have been financed by equity offerings and private loans. We have raised an aggregate of approximately NIS 2.5 million (approximately $707,000) from private loans and gross proceeds of approximately NIS 17.2 million (approximately $4.9 million based on the representative rates of exchange on the date of closing, March 3, 2014) from our public offering on the Tel Aviv Stock Exchange in February 2014 (described below). The proceeds from the February 2014 public offering were used to repay most of the private loans and will be used to fund ongoing operations. As of June 30, 2014, we had on hand approximately $1.3 million in cash and cash equivalents.

Below is a summary of our material financing transactions since January 2013.

On February 11, 2013, Mr. Sheer Roichman, a shareholder, loaned NIS 200 thousand (approximately $54 thousand based on the representative rate of exchange on the date of February 11, 2013) to Kitov Holdings (then known as Mainrom Line Logistics Ltd.) for its on-going operations, and on May 30, 2013, Mr. Roichman loaned NIS 50 thousand approximately $13.6 thousand based on the representative rate of exchange on the date of May 30, 2013) to Kitov Holdings for its on-going operation. These loans, which are still outstanding, are unsecured and do not bear interest and are linked to the CPI.

In July 2013, Mr. Sheer Roichman loaned Kitov Pharmaceuticals NIS 500 thousand (approximately $138 thousand based on the representative rate of exchange on July 11, 2013), free of interest and linkage. This loan was repaid in March 2014 upon the completion of our public offering on the Tel Aviv Stock Exchange.

In August 2013, we received loans in the aggregate amount of NIS 1.02 million (approximately $285 thousand based on the representative rate of exchange on August 25, 2013) pursuant to a loan agreement with Dr. Paul Waymack, our controlling shareholder (through JPW), Dr. Morris Laster, Mr. Sheer Roichman, Mr. Isaac Israel, Mr. Simcha Rock and a third party. The loan was linked to the CPI and was repayable in November 2013. The loan repayment date was later extended to May 25, 2014. The loan was repaid in March 2014 upon completion of our public offering on the Tel Aviv Stock Exchange in February 2014, except for a loan of NIS 200 thousand (approximately $58.2 thousand based on the representative rate of exchange on the date of June 30, 2014) made by the third party, which was repaid in August 2014.

In November 2013 to January 2014, we received loans in the aggregate amount of NIS 810 thousand (approximately $233 thousand based on the representative rate of exchange on December 31, 2013) pursuant to a loan agreement with several lenders, including Mr. Sheer Roichman and third parties, also called the November Loan. The loan did not bear interest and was not linked to the CPI. However, we paid to the lenders a credit allocation commission in the amount of approximately NIS 330 thousand (approximately $95 thousand based on the representative rate of exchange on December 31, 2013), which is to be paid to the lenders together with the principal of the loan on the loan repayment date. The loan was repayable within three business days from the completion of our public issuance of securities, if any, and no later than February 28, 2014, or alternately, was convertible into our ordinary shares based on market value at the time of conversion. Upon the actual receipt of the loan, we paid to a third party a commission equal to 7.5% of the principal amount of the loan plus VAT. The loan was repaid in March 2014 upon the completion of our public offering on the Tel Aviv Stock Exchange described below.

In February 2014, we received an additional a loan in the amount of NIS 180 thousand (approximately $51 thousand based on the representative rate of exchange on February 13, 2014) from a third party under the terms of the November Loan and under the same terms as the November Loans of NIS 810 thousand described above. The loan was repaid in March 2014 upon the completion of our offering on the Tel Aviv Stock Exchange described below.

On March 3, 2014, we issued 28,750,000 ordinary shares, at no par value, in exchange for approximately NIS 17.2 million (approximately $4.9 million based on the representative rate of exchange on the date of closing, March 3, 2014) in an offering on the Tel Aviv Stock Exchange pursuant to a prospectus we filed with the Israel Securities Authority. As part of the offering, we committed to our shareholders that we would commence a rights offering to all shareholders. The specific terms of the rights offering were not described in the prospectus.

On May 28, 2014, we published a prospectus for a rights offering under of which each shareholder received, at no cost, one series 1 traded option for each ten ordinary shares held by such shareholder. The aggregate number of series 1 traded options issued was 5,717,074. The options are exercisable any time until June 15, 2014 at an exercise price of NIS 0.75 (approximately $0.22 based on the representative rate of exchange on June 30, 2014) and are traded on the Tel Aviv Stock Exchange.

On July 18, 2014, we filed a shelf prospectus with the Israel Securities Authority for offering of our securities (up to 200,000,000 ordinary shares and/or up to 40,000,000 tradable options to purchase ordinary shares).

During the 12 months ended June 30, 2015, we estimate that we will spend approximately $2,650 thousand for research and development costs and approximately $1,115 for general and administrative costs, while our revenue during this period is expected to be approximately $250 thousand from our agreement with Dexcel. See “Item 4. Information on the Company – B. Business Overview – Development Services Agreement with Dexcel”. We estimate that so long as no significant revenues are generated from our therapeutic candidates, we will need to raise substantial additional funds to acquire, develop and commercialize therapeutic candidates, as our current cash and short-term investments are not sufficient to complete the research and development of all of our therapeutic candidates and fund our operations. However, additional financing may not be available on acceptable terms, if at all. Our future capital requirements will depend on many factors, including:

the regulatory path of each of our therapeutic candidates;

our ability to successfully commercialize our therapeutic candidates, including securing commercialization agreements with third parties and favorable pricing and market share;

the progress, success and cost of our clinical trials and research and development programs;

the costs, timing and outcome of regulatory review and obtaining regulatory approval of our therapeutic candidates and addressing regulatory and other issues that may arise post-approval;

the costs of enforcing our issued patents and defending intellectual property-related claims;

the costs of developing sales, marketing and distribution channels; and

we may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner than anticipated.

If we are unable to commercialize or out-license our therapeutic candidates or obtain future financing, we may be forced to delay, reduce the scope of, or eliminate one or more of our research and development programs related to the therapeutic candidates, which may have material adverse effect on our business, financial condition and results of operations.

Cash Flow

Operating activities

For the year ended December 31, 2013, net cash flow used in operating activities was approximately $512 thousand compared to approximately $253 thousand and $31 thousand for the years ended December 31, 2012 and 2011, respectively. The increase in net cash flow used in operating activities was due to costs associated with preparation for the pivotal Phase 3 clinical trial for KIT-302 following the acquisition of Kitov Pharmaceuticals Ltd. by Kitov Holdings. The operating activities consisted of regulatory, strategy, planning and preparations for the pivotal Phase 3 clinical trial for KIT-302, including increased payments to consultants and other service providers.

Investment activities

We had no investment activities during the years ended December 31, 2013, 2012, and 2011.

Financing activities

For the year ended December 31, 2013, financing activities consisted of loans received from related parties of $578 thousand and loans received from third parties of $108 thousand, compared to loans received from related parties of $253 thousand and $30 thousand for the years ended December 31, 2012, and 2011, respectively. The proceeds from the loans were used to finance the activities related to preparation for the pivotal Phase 3 clinical trial for KIT-302 following the acquisition of Kitov Pharmaceuticals. by Kitov Holdings .

Research and Development, Patents and Licenses

Our research and development expenses consist primarily of costs of clinical trials, salaries and consulting fees (including share-based payments), and fees paid to external service providers. We primarily use external service providers to manufacture our therapeutic candidates and to perform clinical trials with our therapeutic candidates. We charge all research and development expenses to operations as they are incurred. We expect our research and development expense to remain our primary expense in the near future as we continue to develop our therapeutic candidates.

Set forth below is a summary of the research and development costs for the years ended December 31, 2013, 2012 and 2011 and for the three month period ended March 31, 2014. Virtually all of the costs were incurred in connection with the development of KIT-302.

Year Ended December 31,
	2013		2012		2011		Three Months ended March 31, 2014		Total Costs Since Project Inception
	(U.S. dollars in thousands)
Total gross direct project costs		109		94		37		412		652

In addition to the major cost of clinical trials, research and development expenses include consulting expenses for regulatory and project management work required for development of our drug portfolio at the current stage of development. From the commencement of the pharmaceutical research and development activities of Kitov Pharmaceuticals through March 31, 2014, we incurred research and development expenses of approximately $652 thousand. Set forth below is a summary of our research and development expenses based on the type of expenditure. We estimate a total cost of approximately $2 million to $2.5 million of research and development expenses in order to execute the pivotal Phase 3 clinical trial for KIT-302 and $150 thousand to prepare for the pivotal Phase 3 clinical trial for KIT-301. In addition, we expect the final formulation PK trial for KIT-302 to cost approximately $500 thousand to $800 thousand.

	As of December 31
	2013		2012
	US dollars in thousands
Payroll expenses - related party		47		80
Sub-contractors - preparations for clinical trials		62		14

		109		94

In April 2014, we entered into an agreement with Dexcel Ltd. for the development of the drug formulation for KIT-302 and its manufacture in quantities sufficient to support the filing of a New Drug Application with FDA (see "Item 4. Information on the Company – Business Overview – Development Services Agreement with Dexcel"). We therefore have begun incurring costs in 2014 for the development of the drug formulation for KIT-302.

Due to the inherently unpredictable nature of clinical development processes, we are unable to estimate with any certainty the costs we will incur in the continued development of our therapeutic candidates for potential commercialization.

While we are currently focused on advancing our therapeutic candidates, our future research and development expenses will depend on the clinical success of each therapeutic candidate, as well as available resources and the ongoing assessments of each therapeutic candidate’s commercial potential. In addition, we cannot forecast with any degree of certainty which therapeutic candidates may be subject to future commercialization arrangements, when such commercialization arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. See “Item 3. Key Information – D. Risk Factors – If we and/or our potential commercialization partners are unable to obtain U.S. Food and Drug Administration or other foreign regulatory authority approval for our therapeutic candidates, we and/or our potential commercialization partners will be unable to commercialize our therapeutic candidates.”

As we obtain results from clinical trials, we may elect to discontinue or delay development and clinical trials for certain therapeutic candidates in order to focus our resources on more promising therapeutic candidates or projects. Completion of clinical trials by us or our licensees may take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended use of a therapeutic candidate. See “Item 3. Key Information – D. Risk Factors – Risks Related to Our Business and Regulatory Matters.”

We expect our research and development expenses to increase from current levels as we continue the advancement of our clinical trials and therapeutic candidates’ development. The lengthy process of completing clinical trials and seeking regulatory approvals for our therapeutic candidates requires substantial expenditures. Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating product revenue and cause our research and development expenses to increase and, in turn, have a material adverse effect on our operations. Due to the factors set forth above, we are not able to estimate with any certainty if and when we would recognize any net revenues from our projects.

Trend Information

We are a biopharmaceutical company which focuses its activities on the development of our therapeutic candidates. It is not possible for us to predict with any degree of accuracy the outcome of our research and development or commercialization efforts with regard to any of our therapeutic candidates. Our research and development expenditure is our primary expenditure. Increases or decreases in research and development expenditure are primarily attributable to the level and results of our clinical trial activities and the amount of expenditure on those trials.

Off-Balance Sheet Arrangements

Since commencement of our pharmaceutical research and development activities, we have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Disclosure of Contractual Obligations

The following table summarizes our significant contractual obligation as of June 30, 2014.

Total

Less than
1 year

1-3 years

3-5 years

More
than 5
years

(U.S. dollars in thousands)
(Unaudited)

Office lease obligations

Obligations to R&D service providers (1)

2,550

250

Total

2,558

250

(1)

Reflects payments payable to Java Clinical Research and its sub-contractors, DABL Limited and Dexcel Ltd. upon achievement of various performance milestones in accordance with current time estimates, pursuant to our service agreements with them. See “Item 4. Information on the Company– B. Business Overview - Services and License Agreements” and “Item 4. Information on the Company – B. Business Overview - Development Services Agreement with Dexcel”.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The following table sets forth the name, age and position of each of our executive officers and directors as of the date of this Registration Statement on Form 20-F.

Name	Age	Position(s)

Executive Officers
J. Paul Waymack	61	Chairman of the Board of Directors and Chief Medical Officer
Isaac Israel	36	Chief Executive Officer and Director
Simcha Rock	64	Chief Financial Officer and Director

Directors
Morris Laster	50	Director
Philip Serlin (1)(2)	54	Independent Director
Moran Sherf-Blau (1)(2)	34	External Director
Alain Zeitoun (1)(2)	53	External Director

(1)

Member of our audit committee that also serves as our financial statements committee.

(2)

Member of our compensation committee.

Executive officers

J. Paul Waymack, M.D., Sc.D. was one of the founders of Kitov Pharmaceuticals and has served as the Chairman of our Board of Directors and Chief Medical Officer since July 2013. Dr. Waymack has over 20 years of experience in the biopharma field. Dr. Waymack is a former academic transplant surgeon and a former FDA medical officer, with over fifteen years of experience in drug development as a consultant to major pharmaceutical companies, including Pfizer, Roche, Pharmacia, Warner Lambert and Searle. During his 10 years of academic career, Dr. Waymack published over 100 scientific essays, mainly in the fields of prostaglandins and immunology. In addition, Dr. Waymack volunteered to the U.S. army, where he was commissioned and served as a Major in the Medical Corp. in the position of Chief of Surgical Research in the U.S. Army’s Institute for Surgical Research. Dr. Waymack was also an associate professor of surgery at the University of Texas Medical Branch and at the University of Medicine and Dentistry of New Jersey.

Isaac Israel has served as our Chief Executive Officer and a member of the Board since July 2013 and as the CEO and member of the board of Kitov Pharmaceuticals since October 2012. Mr. Israel was the founding CEO of BeeContact Ltd. (formerly TASE:BCNT), from 2001 until 2007. From 2008 until 2011, Mr. Israel served as founding CEO of Unari Capital Ltd., a consulting firm in the capital markets field specializing in the healthcare sector. In providing such consulting services, Mr. Israel also serves as a member of the board of directors of various healthcare corporations, both private and public. From 2011 until 2012, Mr. Israel provided business development services to Capital Point Ltd. (TASE:CPTP).

Simcha Rock, CPA, MBA, has served as our Chief Financial Officer and a member of the Board since July 2013. Mr. Rock was a private equity manager at Edmond de Rothschild Private Equity Management, a firm specializing in the management of venture capital and other private equity investments funds, from February 2000 until January 2011, with responsibility for all financial, legal and administrative matters for several investment funds. Prior to 2000, Mr. Rock held financial management positions at Intel Electronics Ltd., The Jerusalem College of Technology, and JC Technologies Ltd. Mr. Rock holds a BA from Yeshiva University and an MBA from Cleveland State University.

Directors

Morris Laster, M.D., is a healthcare entrepreneur with over two decades of experience in the healthcare industry and has served as a member of our Board since July 2013 and was a co-founder of Kitov Pharmaceuticals in 2010. He is currently the medical venture partner at OurCrowd LLC a crowd funding platform, and the Chairman of Clil Medical Ltd., a privately held medical device company. From 2003 until 2010, he was the founding CEO of BioLineRx (NASDAQ/TASE: BLRX). In addition, from 2010 until 2012, Dr. Laster served as an external director in Proteologics and as a director in BioLineRx from 2003 to 2011. From 1996-2002, he was the founding CEO of Keryx Biopharmaceuticals (NASDAQ:KERX) and led a dual listing on the AIM and NASDAQ stock exchanges. From 1993-1995, he was a combat physician in the Paratrooper Corps of the IDF. From 1990-1996, he was a VP of medical venture capital at Paramount Capital a NY based merchant bank specializing in the biotech industry. He earned his MD from Downstate Medical Center in Brooklyn NY in 1990, did post-graduate work in Surgery at Case Western Reserve University Hospital in Cleveland, Ohio and in Orthopedic Surgery at Hadassah University Medical Center.

Philip Serlin ,CPA, MBA, has served as a member of our Board since July 2013. Mr. Serlin is the Chief Financial and Operating Officer of BioLineRx Ltd., a biopharmaceutical company traded on both NASDAQ and the Tel Aviv Stock Exchange. He formerly held senior financial positions with other publicly traded companies, as well as at Deloitte and the U.S. Securities and Exchange Commission (SEC). Mr. Serlin is a CPA and holds a B.Sc. in accounting from Yeshiva University and a Master’s degree in economics and public policy from The George Washington University.

Moran Sherf-Blau, CPA, M.A., MBA., has served as a member of our Board since December 2013. Ms. Sherf-Blau is the founder and owner of Total Finance Ltd. and acts as the CFO of Bio-cell Ltd. Ms. Sherf-Blau also serves as an executive CPA in PWC Israel.

Alain Zeitoun, M.D., M.A., has served as a member of our Board since December 2013. Dr. Zeitoun’s experience includes CEO of Chi2Gel, an Israeli medical device company, Business Unit Director and European Marketing Leader at Merck Sharp and Dohme Israel (Merck & Co) as well as medical and marketing positions at P&G Pharma and Boehringer Ingelheim pharmaceutical companies in France. In these positions, Dr. Zeitoun was in charge of several therapeutic fields, such as cardiology, rheumatology, orthopedics and gastroenterology. Dr. Zeitoun holds an MD degree from Paris Medical School and a Master from ESCP Europe Business School, Paris, France.

Compensation

Engagement Agreements

We have entered into engagement agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable laws.

For information on exemption and indemnification letters granted to our officers and directors, please see “ – 6.C. Board Practices – Board of Directors and Officers - Exemption, Insurance and Indemnification of Directors and Officers.”

Director Compensation

Under the Israeli Companies Law, 5754-1999, and related regulations, external directors are entitled to a fixed annual compensation and an additional payment for each meeting attended. We currently pay our external directors, Dr. Zeitoun and Ms. Sherf-Blau, an annual fee of NIS 21,258 (approximately $6,218) and a fee of NIS 1,231 (approximately $360) per meeting (or a smaller amount in case they do not physically attend the meeting). Mr. Phillip Serlin, an independent director, is compensated at the same rate.

Executives and Directors Compensation

The aggregate compensation paid, and benefits in-kind granted to or accrued on behalf of all of our directors and senior management for their services, in all capacities, to us during the year ended December 31, 2013, was approximately $460 thousand. No additional amounts have been set aside or accrued by us to provide pension, retirement or similar benefits.

Below is a breakdown of the annual compensation paid to each of our Chairman of the Board and executive officers during 2013:

Name

Position

Salary in
(in $ thousands)

Share-based payment
(in $ thousands)

Total
(in $ thousands)

Dr. J. Paul Waymack

Chairman of the Board and Medical Director

161

Isaac Israel

CEO and Director

Simcha Rock

CFO and Director

120

Our directors and executive officers hold exemption and indemnification letters and a valid D&O insurance policy.

Service Agreement with John Paul Waymack

In July 2013, we entered into a services agreement with Dr. John Paul Waymack, one of our founders, pursuant to which Dr. Waymack provides full time services to us as our chief medical director and as the Chairman of our Board of Directors. In return for Dr. Waymack's services, as of March 2014, we pay Dr. Waymack a monthly salary of NIS 29,880 (approximately $8,690 based on the representative rate of exchange on the date of June 30, 2014) plus VAT. The agreement may be terminated by either party upon 90 days’ advance notice to the other party.

Services Agreement with Uneri Capital Ltd.

In July 2013, we entered into a services agreement with Uneri Capital Ltd., a private company wholly owned by Mr. Isaac Israel. In return for the provision of part-time management services, according to our needs, we pay a monthly payment of NIS 25,000 (approximately $7.3 thousand based on the representative rate of exchange on the date of June 30, 2014) plus VAT.

Services Agreement with Mr. Simcha Rock

In July 2013, we entered into a services agreement with Mr. Rock pursuant to which Mr. Rock provides services to us as a CFO in a full time position and receives as of March 2014 a monthly payment of NIS 35,000 (approximately $10.2 thousand based on the representative rate of exchange on the date of June 30, 2014) plus VAT. The agreement may be terminated by either party upon 90 days’ advance notice to the other party.

In addition, we agreed to grant to Mr. Rock, in return for his services, up to 1,370,056 non tradable options to purchase up to 1,370,056 of our ordinary shares, as detailed below:

Subject to the adoption of an option plan: (a) following the adoption of the option plan and its approval by the tax authorities, we will grant to Mr. Rock options to purchase 177,467 of our ordinary shares (granted in November 2013); and (b) following the attainment of a milestone in connection with our pivotal Phase 3 trial for KIT-302, we will grant to Mr. Rock options to purchase 181,089 ordinary shares. See "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals" for a description of the milestone. All these options will be exercisable as of the date of grant at an exercise price of NIS 0.8 (approximately $0.23 based on the representative rate of exchange on the date of June 30, 2014) per ordinary share and will have a term of three years from the date of grant.

In addition, subject to a capital raising of NIS 1,000,000, we agreed to grant to Mr. Rock an additional 1,011,500 options to purchase 1,011,500 ordinary shares. The options will mature on a monthly basis over a period of 18 months from the date of grant and will be exercisable at an exercise price of NIS 0.8 (approximately $0.23 based on the representative rate of exchange on the date of June 30, 2014) per ordinary share for a period of three years commencing from the date of grant of the options. These options were granted on July 1, 2014 following completion of our financing of approximately NIS 17.2 million (approximately $4.9 million based on the representative rate of exchange on the date of closing, March 3, 2014) in March 2014.

All the options granted to Mr. Rock are subject to adjustments, as follows:

Dividend distribution - in the event of dividend distribution during the term of the options, the exercise price will be decreased by the amount of the dividend in NIS.

Bonus Shares - in the event that we distribute bonus shares during the term of the option, the rights of the option holders will be maintained, where the number of shares derived from the exercise to which the options holder will be entitled upon exercise thereof, will increase or decrease by the number of shares of the same type which the options holder would have been entitled to as bonus shares, if he exercised the options.

Issue of Rights - in the event that we will offer our shareholders securities by way of rights, during the term of the options, the number of shares derived from the exercise of the options will be matched with the bonus component in the rights, as it is expressed in the ratio between the closing rate of our share in the stock exchange on the last trading day prior to the "X" day and the basic rate of our share "X rights".

Change of Capital Structure - in the event of a change of our capital structure, including consolidation or splitting our share capital, we will adjust the conditions of the options granted according to this agreement, to reflect all of the said changes regarding the options, including the matter of the exercise price and/or the number of exercised shares and shall amend the option grant deed accordingly.

All other terms and conditions of the options will be according to our 2013 Option Plan.

Service Agreements with External Consultants

In August 2013, we entered a consulting agreement with Prof. Mark Hochberg, according to which Prof. Hochberg will provide consulting services, including in relation to the pivotal Phase 3 trial in KIT-302. Prof. Hochberg is a world renowned rheumatologist with an extensive background in non-steroidal drugs development, with a special emphasis on preventing cardiovascular complications deriving from the use of non-steroidal drugs and acts as a consultant to the FDA on this subject. Prof. Hochberg has extensive knowledge and clinical experience in our field of activity and we estimate that Prof. Hochberg may provide a considerable contribution to the planning, execution and success of the trial. As compensation for Prof. Hochberg's services, we pay as an hourly fee based on actual consulting provided to us against a lawful tax invoice.

In addition, we engage, from time to time, with various service providers with respect to our day to day business. Payment to such service providers is against a lawful tax invoice according to the scope of the services provided to us or as a monthly payment according to the agreement with such service provider.

Board Practices

Board of Directors and Officers

Our board of directors consists of seven directors, including Dr. Zeitoun and Ms. Sherf-Blau, who qualify as external directors and whose appointment fulfills the requirements of the Companies Law to have two external directors (see “− External Directors”). These two directors, as well as Mr. Serlin, also qualify as independent directors under the corporate governance standards of the Nasdaq Listing Rules and the independence requirements of Rule 10A-3 of the Exchange Act.

Under our articles of association, the number of directors on our board of directors will be no less than four and no more than 12 (including the two external directors). The number of directors may be changed, at any time and from time to time, by a simple majority vote of our shareholders at a shareholders’ meeting.

The directors will be elected by a majority vote of the shareholders at the shareholders' annual general meeting. Each director will hold office until the subsequent annual general meeting. Notwithstanding the foregoing, if no directors are appointed at an annual general meeting, the incumbent directors previously appointed by the shareholders shall continue to hold office.

Each director will hold office commencing as of such director's appointment by the annual general meeting; however the shareholders may determine a later date for such appointment.

The shareholders may at all times, by a simple majority vote of the shareholders, replace or dismiss a director (in the case of replacement, only if the appointed director is not a corporation). A director to be replaced shall be given a reasonable opportunity to address the shareholders at their meeting.

The tenure of a director expires pursuant to the provisions of the Companies Law, upon death or if s/he becomes incompetent, unless removed from office as described below. Notwithstanding the foregoing, the term of office for external directors under Israeli law is three years (see “− External Directors − Election and Dismissal of External Directors”).

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 Mr. Rock (who also serves as our CFO), Mr. Serlin and Ms. Sherf-Blau are each deemed to have such expertise.

Alternate Directors

Our articles of association provide, as allowed by the Companies Law, that any director may, at all times, appoint any person (which is not a corporation) by written notice to us to serve as an alternate director at the meeting of the board. 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, unless otherwise permitted by applicable law. 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. So long as the external director's appointment is valid, the alternate director shall be entitled to participate and vote in every meeting of the board of directors from which the appointing director is absent. Subject to the terms of appointment, the alternate director will be regarded as a director and shall have all of the authority of the director he is replacing. An appointing director may at any time cancel the appointment of an alternate director. The term of appointment of an alternate director will end if the appointing director notifies us in writing of the termination or cancellation of the appointment or if the appointing director's appointment is terminated.

External Directors

Qualifications of External Directors

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 Global Market, are required to appoint at least two external directors who meet the qualification requirements set forth in the Companies Law. Mr. Zeytoun and Ms. Sherf-Blau serve as our 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 purposes of determining the holding percentage stated above, two or more shareholders who have a personal interest in a transaction that is brought for the company’s approval are deemed as joint holders.

The term affiliation includes:

an employment relationship;

a business or professional relationship maintained on a regular basis;

control; and

service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering.

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 Listing 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.

Election and Dismissal of External Directors

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

the majority of the shares that are voted at the meeting in favor of the election of the external director, excluding abstentions, include at least a majority of the votes of shareholders who are not controlling shareholders and do not have a personal interest in the appointment (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder); or

the total number of shares held by non-controlling shareholders or any one on their behalf that are voted against the election of the external director does not exceed two percent of the aggregate voting rights in the company.

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.

Additional Provisions

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.

Audit Committee

Companies Law Requirements

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:

the chairman of the board of directors;

a controlling shareholder or a relative of a controlling shareholder;

any director employed by us or by one of our controlling shareholders or by an entity controlled by our controlling shareholders (other than as a member of the board of directors); or

any director who regularly provides services to us, to one of our controlling shareholders or to an entity controlled by our controlling shareholders.

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.

Listing Requirements

Under the Nasdaq Listing Rules, we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and one of whom has accounting or related financial management expertise.

Our audit committee consists of Mr. Serlin, Dr. Zeitoun and Ms. Sherf-Blau. Mr. Philip Serlin serves as the chairman of the audit committee. All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq Listing Rules. Our board of directors has determined that Ms. Sherf-Blau is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq Listing Rules.

Each of the members of the audit committee is “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for independence of board and committee members.

Approval of Transactions with Related Parties

The approval of either the audit committee or the compensation 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.”

Audit Committee Role

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 will adopt an audit committee charter setting forth the responsibilities of the audit committee consistent with the rules of the SEC and the Nasdaq Listing Rules, which will include:

retaining and terminating our independent auditors, subject to board of directors and shareholder ratification;

pre-approval of audit and non-audit services to be provided by the independent auditors;

reviewing with management and our independent directors our quarterly and annual financial reports prior to their submission to the SEC; and

approval of certain transactions with office holders and controlling shareholders, as described above, and other related-party transactions.

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 resolve whether transaction with a controlling shareholder shall be subject to an auction type process. The audit committee charter will state 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.

Compensation 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 need not 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 is composed of three members Mr. Serlin, Dr. Zeitoun and Ms. Sherf-Blau. The chairman of the compensation committee is Mr. Philip Serlin.

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

to recommend to the board of directors the compensation policy for directors and officers, and to recommend to the board of directors once every three years whether the compensation policy that had been approved should be extended for a period of more than three years;

to recommend to the board of directors updates to the compensation policy, from time to time, and examine its implementation;

to decide whether to approve the terms of office and employment of directors and officers that require approval of the compensation committee; and

to decide whether the compensation terms of the chief executive officer of the company which were determined pursuant to the compensation policy need not be brought for approval of the shareholders because it will harm the ability to engagement with the chief executive officer.

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, which became effective in December 2012 (“Amendment No. 20”),public companies, such as Kitov Holdings, must adopt a compensation policy with respect to the terms of service and employment of their directors and officers. The compensation policy must be approved by the compensation committee and board of directors, and subject to limited exceptions, by the shareholders. 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.

Compensation Policy

Under Amendment No. 20 to the Companies Law which came into effect in December 2012 (“Amendment No. 20”), public companies, such as Kitov Holdings, must adopt a compensation policy with respect to the terms of service and employment of their directors and officers (the “Compensation Policy”). On January 12, 2014, our shareholders approved our Compensation Policy which will be in effect for a period of three years from the date of approval. The Compensation Policy does not, on its own, grant any rights to our directors or officers. For purposes of the description below, "officers" refers to officers and directors.

The Compensation Policy includes both long term and short term compensation elements and is to be reviewed from time to time by Kitov Holdings’ Compensation Committee and Board, according to the requirements of the Companies Law.

In general, compensation for officers will be examined while taking into consideration the following parameters, including, among others (i) education, qualifications, expertise, seniority (in Kitov Holdings in particular, and in the officer’s profession in general), professional experience and achievements of the officer; (ii) meeting by the officer of the targets set for him, if relevant; (iii) the officer’s position, the scope of his responsibility and previous wage agreements that were signed with him; (iv) the ratio between the total cost of the proposed engagement terms of an officer and the total cost of the wages for all of Kitov Holdings' other employees, officers and contractors, and in particular compared to the average or median wage of such employees, officers and contractors and the effect of this ratio and difference, if any, on labor relations.

Under the Compensation Policy, Kitov Holdings is entitled to provide a compensation package to officers which may include fixed salary (a base salary and ancillary benefits), annual cash bonus and share-based compensation, or any combination thereof, and additional standard benefits (“Compensation Package”).

Fixed Compensation

Base Salary. Additional Base Benefits. The base salary of a new officer in Kitov Holdings will be determined based on the parameters specified above. The monthly base salary of the CEO will not exceed a gross amount of NIS 60,000 (approximately $17.5 thousand based on the representative rate of exchange on the date of June 30, 2014), and for other officers will not exceeding NIS 50,000 (approximately $14.6 thousand based on the representative rate of exchange on the date of June 30, 2014). The compensation package may include additional standard benefits such as social benefits, and exemption and indemnification, managers' insurance and pension, and other benefits.

Insurance. Officers of Kitov Holdings may be granted insurance as set forth in Kitov Holdings' articles of association as well as professional liability insurance if and as applicable. Kitov Holdings may acquire, prolong and/or renew directors and officers liability insurance for its officers and directors (including for controlling shareholders and/or for directors in which a controlling shareholder has a personal interest), including officers who serve at subsidiaries of Kitov Holdings, in Israel or abroad (the "Policy"), so long as the insurance is based on principles approved by Kitov Holdings' compensation committee and Board.

In the event that Kitov Holdings registers its securities for trade on a U.S. stock exchange, it may acquire, prolong and/or renew the Policy, so long as the insurance under the Policy is based on the principles described below and approved by Kitov Holdings' Compensation Committee and Board: The insurance policy will be on a claims basis, with a limit of up to $20 million for an event and a period (with an addition of 20% for legal expenses in Israel only) for all officers and directors who serve from time to time. The annual premium may not exceed $150,000 and the aggregate deductible for claims of up to $250,000.

Severance Terms. The amount or value of a severance payment will not exceed: (a) eight months for a CEO and an active chairman who have served at least three years; (b) four months for a CEO and an active chairman who have served at least 18 months up to three years; (c) six months for other officers who have served at least three years; and (d) three months for other officers who have served at least 18 months up to three years.

Cash Bonus

Cash Bonus. Cash bonuses may be provided annually, subject to the occurrence of an event or during the year on the basis of targets set for each officer. Except for severance pay (described above) and special bonuses (described below), the ratio of aggregate cash bonuses paid in any calendar year to any officer to the monthly salary payable to such officer will not exceed 12:1 (subject to reduction on a pro rata basis for officers who serve less than one year).

The annual cash bonus will be based principally (at least 80%) on measurable criteria, and, to a lesser extent (up to 20%), based on non-measurable criteria.

Special Bonuses. Special bonuses may be provided based on measurable targets set for each officer, including achieving Company financing of at least $2 million, merger or sale of Company for a value of at least $25 million and commercial transactions (such as license or distribution agreements for revenues to Kitov Holdings of at least $5 million). For bonuses payable based on financings, the maximum amounts payable to any one officer would be 5% of the amount raised (minus Company expenses) and not exceeding $300,000. For bonuses payable based on Company mergers or sales, the maximum amounts payable to any one officer would be 6% of Company value for any one officer and not exceeding $750,000. Bonuses payable based on commercial agreements will be based on revenue actually received by Kitov Holdings, and the maximum amounts payable to any one officer would be 6% of actual Company revenues for any one officer and not exceeding $750,000. For yearly bonus, up to 12 times the base salary or monthly payment may be paid, except for officers serving for less than 12 months, who will be entitled to reduced yearly bonus amounts based on the actual period of engagement.

The Compensation Plan includes provisions for non-payment of the above bonuses with the consent of Company officers to the extent Kitov Holdings does not have cash of at least NIS 2 million (approximately $580 thousand based on the representative rate of exchange on the date of June 30, 2014) or if there is an going concern in Kitov Holdings' financial statements.

Claw Back. In agreements with officers, there will be a provision providing for the repayment by Company officers of any bonus (or portion thereof) paid based on false and restated Company financial statements, provided that such re-payment obligation will cease following preparation of financial statements for four quarters after payment of the bonus in question (unless the officer had specific responsibility with respect to the relevant financial statements, in which case there shall be no time limit).

Share-Based Compensation

Share-Based Compensation. Subject to Kitov Holdings' adoption of an option plan, Kitov Holdings may grant officers options. The Compensation Committee and the Board of Directors will consider whether the aforesaid grant is a suitable incentive for increasing Kitov Holdings’ value in the long term and other factors. The maximum value of equity compensation granted to any one officer on date of grant may not exceed the greater of 5% of the value of Kitov Holdings at time of grant or NIS 4 million.

The maximum aggregate dilution resulting from time to time from the grant of equity compensation to all officers and employees of Kitov Holdings under Kitov Holdings' option plan will not exceed 25% on a fully diluted basis. The vesting period of equity grants will not be less than 12 months.

Limits on Non-fixed Compensation. The Compensation Policy establishes that the ratio between non-fixed compensation (equity-based and not) and base salary of each officer will not exceed nine times such officer’s base salary.

Internal Auditor

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 a related party or an office holder or a relative of a related party or of an office holder, nor may the internal auditor be the company’s independent auditor or the representative of the same.

A “related 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. Our internal auditor is Pinhas Bar-Shmuel, certified public accountant (Isr.), of RSM Shiff Hazenfratz & Co.

Fiduciary Duties and Approval of Specified Related Party Transactions and Compensation under Israeli Law

Fiduciary Duties of Office Holders

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 definition 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:

information on the business advisability of a given action brought for his or her approval or performed by virtue of his or her position; and

all other important information pertaining to such action.

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:

refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her other duties or personal affairs;

refrain from any activity that is competitive with the business of the company;

refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself or herself or others; and

disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.

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.

Disclosure of Personal Interests of an Office Holder and Approval of Transactions

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. The Companies Law provides that such a transaction, which is not an extraordinary transaction, may 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 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:

a transaction other than in the ordinary course of business;

a transaction that is not on market terms; or

a transaction that may have a material impact on the company’s profitability, assets or liabilities.

Disclosure of Personal Interests of a Controlling Shareholder and Approval of Transactions

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:

a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or

the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2.0% of the voting rights in the company.

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.

Compensation of Directors and Executive Officers

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:

at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or

the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed 2% of the aggregate voting rights in the company.

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.

Duties of Shareholders

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:

an amendment to the articles of association;

an increase in the company’s authorized share capital;

a merger; and

the approval of related party transactions and acts of office holders that require shareholder approval.

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.

Approval of Private Placements

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 “Item 10. Additional Information – B. Memorandum and Articles of Association - Description of Securities – Acquisitions under Israeli Law”) or a private placement which qualifies as a related party transaction (See “ – 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.

Exculpation, Insurance and Indemnification of Directors and Officers

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:

a monetary liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;

reasonable litigation expenses, including reasonable attorneys’ fees, incurred by the office holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent or in connection with a monetary sanction;

a monetary liability imposed on him or her in favor of a payment for a breach offended at an Administrative Procedure (as defined below) as set forth in Section 52(54)(a)(1)(a) to the Securities Law;

expenses associated with an Administrative Procedure conducted regarding an office holder, including reasonable litigation expenses and reasonable attorneys’ fees; and

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent.

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:

a breach of a fiduciary duty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder;

a monetary liability imposed on the office holder in favor of a third party;

a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and

expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonable attorneys’ fees.

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

a breach of fiduciary duty, except for indemnification and insurance for a breach of the fiduciary duty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;

an act or omission committed with intent to derive illegal personal benefit; or

a fine or forfeit levied against the office holder.

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 Registration Statement on Form 20-F, 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 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 Registration Statement on Form 20-F, to the extent that these liabilities are not covered by insurance. This indemnification is limited to events determined as foreseeable by the board of directors based on our activities, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances. When this Registration Statement on Form 20-F becomes effective, the maximum aggregate amount of indemnification that we may pay to our office holders based on such indemnification agreement is with respect to all permitted indemnification, including in connection with a public offering of our securities, an amount equal to 25% of our shareholders’ equity on a consolidated basis, based on our most recent financial statements made publicly available before the date on which the indemnification payment was made. 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.

To our knowledge, 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.

Directors’ Service Contracts

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, except as provided in certain employment or service agreements with our executive officers who also serve as directors.

Employment and Consulting Agreements with Executive Officers

We have entered into written employment or service agreements with each of our executive officers. See “– B. Compensation - Executives and Directors Compensation” for additional information.

Home Country Practices

As a foreign private issuer, we are permitted to follow Israeli corporate governance practices instead of Nasdaq Listing Rules, provided that we disclose which requirements we are not following and the equivalent Israeli requirement. We intend to rely on this “foreign private issuer exemption” with respect to the following items:

	·	Independent Directors - Our board of directors includes two external directors in accordance with the Israeli Companies Law, but does not require that a majority of our board members be independent as required by the Nasdaq Listing Rules. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only our independent directors are present.

	·	Shareholder Approval - We seek shareholder approval for all corporate actions requiring such approval in accordance with the requirements of the Israeli Companies Law, which are different from the shareholder approval requirements under the Nasdaq Listing Rules. The NASDAQ Listing Rules require that we obtain shareholder approval for certain dilutive events, such as for the establishment or amendment of certain equity-based compensation plans and arrangements, issuances that will result in a change of control of a company, certain transactions other than a public offering involving issuances of 20% or more of the shares or voting power in a company, and certain acquisitions of the stock or assets of another company involving issuances of 20% or more of the shares or voting power in a company or if any director, officer or holder of 5% or more of the shares or voting power of the company has a 5% or greater interest in the company or assets to be acquired or consideration to be paid and the transaction could result in an increase in the outstanding common shares or voting power by 5% or more. Under the Israeli Companies Law, shareholder approval is required for any transaction, including any grant of equity-based compensation, to a director or a controlling shareholder, but is not generally required to establish or amend an equity based compensation plan. Similarly, shareholder approval is required for a private placement that is deemed a “extraordinary private placement” or that involves a director or controlling shareholder. A “extraordinary private placement” is a private placement in which a company issues securities representing 20% or more of its voting rights prior to the issuance and the consideration received pursuant to such issuance is not comprised, in whole or in part, solely of cash or securities registered for trade on an exchange or which is not made pursuant to market conditions, and as a result of which the shareholdings of a 5% holder of the shares or voting rights of the company increases or as a result of which a person will become a holder of 5% of the shares or voting rights of the company or a controlling shareholder after the issuance.
	·	Quorum - As permitted under the Israeli Companies Law, pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person or by proxy who hold or represent at least 25% of the voting rights of our shares (and in an adjourned meeting, with some exceptions, any number of shareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq Listing Rules.

	·	Nominations Committee - As permitted under the Israeli Companies Law, our board of directors selects director nominees, subject to the terms of our articles of association, which provide that incumbent directors are re-nominated for additional terms. Directors are not selected, or recommended for board of director selection, by independent directors constituting a majority of the board's independent directors or by a nominations committee comprised solely of independent directors as required by the Nasdaq Listing Rules.

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

Employees

As of July 31, 2014, we had five consultants and one employee who provide management and administration services and three consultants who provide research and development services. As of December 31, 2013, we had three consultants who provide management and administration services and two consultants who provide research and development services.

While none of our employees is party to a collective bargaining agreement, certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (including the Industrialists’ Associations) are applicable to our employees by order of the Israel Ministry of Labor. These provisions primarily concern the length of the workday, minimum daily wages for professional workers, pension fund benefits for all employees, insurance for work-related accidents, procedures for dismissing employees, determination of severance pay and other conditions of employment. We generally provide our employees with benefits and working conditions beyond the required minimums.

Since the commencement of our operations as a pharmaceutical research and development company, we have not experienced any employment-related work stoppages and believe our relationship with our employees is good.

Share Ownership

The following table sets forth information regarding the beneficial ownership of our outstanding ordinary shares as of August 13, 2014 of each of our directors and executive officers individually and as a group based on information provided to us by our directors and executive officers. The information in this table is based on 57,504,068 ordinary shares outstanding as of such date (not including 270 shares held in treasury). The number of ordinary shares beneficially owned by a person includes ordinary shares subject to options by that person that were currently exercisable at, or exercisable within 60 days of, August 13, 2014. The ordinary shares issuable under these options are treated as if they were outstanding for purposes of computing the percentage ownership of the person holding these options but not the percentage ownership of any other person. None of the holders of the ordinary shares listed in this table have voting rights different from other holders of the ordinary shares.

	Number of Shares Beneficially Held		Percent of Class
Directors

J. Paul Waymack (1)		15,897,614		26.97	%
Isaac Israel		220,000		0.38	%
Simcha Rock (2)		287,467		0.50	%
Morris Laster (3)		3,865,228		6.68	%
Philip Serlin		-		-
Moran Sherf-Blau		-		-
Alain Zeitoun		-		-
Total (directors and executive officers)		20,270,309		34.53	%

(1)

Includes 14,055,376 ordinary shares and 1,405,538 series 1 traded options held directly by JPW PCH LLC, a Virginia limited liability company, held 51% by Paul Waymack. Dr. Waymack may be deemed to own all of the shares held directly by JPW PCH LLC. Does not include 14,342,221 shares to be issued to JPW PCH LLC upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement (see "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals"). For information on series 1 traded options, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources.”

(2)

Does not include 181,089 options to be granted to Mr. Rock upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement. See “Item 6. Directors, Senior Management and Employees – B. Compensation – Executive and Directors Compensation.”

(3)

Does not include 3,585,555 shares to be issued to Dr. Laster upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement.

Share Option Plan

On November 27, 2013, we adopted the Kitov Pharmaceutical Holdings Ltd. 2013 Option Plan. The 2013 Option Plan provides for the granting of options to our directors, officers, employees and consultants and to the directors, officers, employees and consultants of our subsidiaries and affiliates. The 2013 Option Plan provides for options to be granted at the determination of our board of directors in accordance with applicable laws. The exercise price and vesting period are determined by our Board of Directors in the grant letter provided to each grantee. As of August 13, 2014 there were 2,445,380 ordinary shares issuable upon the exercise of outstanding options under the 2013 Option Plan.

The Option Plan will be effective up to the earliest between (a) its cancellation by the Board of Directors and (b) October 31, 2023. Nevertheless, options granted up to the plan's expiration date, whether matured or not matured up to that date, will remain effective and will not expire prior to their expiration date (within 10 (ten) years from the allocation date).

Upon termination of employment for any reason, other than in the event of death or for cause, all unvested options will expire and all vested options at time of termination will generally be exercisable for 90 days following termination, subject to the terms of the 2013 Option Plan and the governing option agreement. If we terminate a grantee for cause (as defined in the 2013 Option Plan) the grantee's right to exercise all vested and unvested the options granted to him will expire immediately. Upon termination of employment due to death, all the vested options at the time of termination will be exercisable for 12 months by the grantee's heirs or estate , the latest of: (i) death or (ii) option expiration date, subject to the terms of the 2013 Option Plan and the governing option agreement.

The options plan enables us to grant options through one of the following tax programs, at its discretion and subject to the applicable legal limitations: (a) according to section 102 of the Israeli Income Tax Ordinance, through a program with a trustee that is appointed by the Company or (b) according to the provisions of section 3(i) in the Israeli Income Tax Ordinance.

The plan includes directives for protecting the option holders during the exercise period with respect to distribution of bonus stock, issue of rights, splitting or consolidating our share capital and dividend distribution. We will be entitled at its sole discretion, to change the terms of the plan and/or replace it and/or terminate it regarding future grants at any time, as it deems appropriate. It is also clarified that we will be entitled to change the terms of plan regarding grants that were granted to the grantees, provided that the terms of the options which were already granted will not be changed in a way that may materially impair the rights of the grantees, without the consent of the grantees. Our Board of Directors will determine, at its sole discretion, if a certain change may materially impair the rights of the grantee.

Without limiting the foregoing, in every case of a material event ((i) we will become a private company with shares no longer be traded on a stock exchange; (ii) a restructuring, including merger transaction in which we are not the surviving corporation or as a result of which there is a change in control; (iii) an arrangement between the Company and its creditors and/or shareholders and/or option holders; (iv) the sale of all or a substantial part of our assets; and (v) our liquidation), the Board of Directors, in its sole discretion, may adjust and change the terms of the options according to the plan for all the grantees or to certain grantees, in its sole discretion, including by (i) accelerating the vesting period of unvested options and (ii) replacing vested options with securities of the purchaser or any party related to the purchaser or other compensation to the grantee. Unless otherwise determined by the Board of Directors, non-vested options will expire soon before the material event or will be exercised, according to the decision of the Board of Directors. The Board of Directors will have the right to require the grantees to exercise all the vested options, soon before the occurrence of the material event and any option that will not be exercised will expire and will be devoid of any value.

Administration of Our Option Plan

Our option plan is administered by our board of directors, or a compensation committee to be appointed thereby, regarding the granting of options and the terms of option grants, including exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration of these plans. Options granted under the 2013 Option Plan to eligible Israeli employees, officers and directors are granted under Section 102 of the Israel Income Tax Ordinance pursuant to which the options or the ordinary shares issued upon their exercise must be allocated or issued to a trustee and be held in trust for two years from the date upon which such options were granted in order to benefit from the provisions of Section 102. Under Section 102, any tax payable by an employee from the grant or exercise of the options is deferred until the transfer of the options or ordinary shares by the trustee to the employee or upon the sale of the options or ordinary shares, and gains may qualify to be taxed as capital gains at a rate equal to 25%, subject to compliance with specified conditions.

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our outstanding ordinary shares as of August 13, 2014, by each person or entity known to beneficially own 5.0% or more of our outstanding ordinary shares. The information with respect to beneficial ownership of the ordinary shares is given based on information provided to us by the shareholders.

The information in this table is based on 57,504,068 ordinary shares outstanding as of such date (not including 270 shares held in treasury). The number of ordinary shares beneficially owned by a person includes ordinary shares subject to options held by that person that were currently exercisable at, or exercisable within 60 days of, August 13, 2014. The ordinary shares issuable under these options are treated as if they were outstanding for purposes of computing the percentage ownership of the person holding these options but not the percentage ownership of any other person. None of the holders of the ordinary shares listed in this table have voting rights different from other holders of ordinary shares.

	Number of Shares Beneficially Held		Percent of Class
JPW PCH LLC ⁽¹⁾		15,460,914		26.25	%
J. Paul Waymack ⁽²⁾		15,897,614		26.97	%
Morris Laster ⁽³⁾		3,865,228		6.68	%

(1)

Includes 14,055,376 ordinary shares and 1,405,538 series 1 traded options. JPW PCH LLC is a Virginia limited liability company held 51% by Paul Waymack. Dr. Waymack may be deemed to own all the shares held directly by JPW PCH LLC. Does not include 14,342,221 shares to be issued to JPW PCH LLC upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement (see "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals"). For information on series 1 traded options, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources.”

(2)

Includes 14,055,376 ordinary shares and 1,405,538 series 1 traded options held by JPW PCH LLC and 397,000 ordinary shares and 39,700 series 1 traded options held directly by Dr. Waymack. JPW PCH LLC is a Virginia limited liability company held 51% by Paul Waymack. Dr. Waymack may be deemed to own all the shares held directly by JPW PCH LLC. Accordingly, the number of shares listed as owned by Dr. Waymack includes the shares that are owned by JPW PCH LLC. Does not include 14,342,221 shares to be issued to JPW PCH LLC upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement (see "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals").

(3)

Includes 3,513,844 ordinary shares and 351,384 series 1 traded options. Does not include 3,585,555 shares to be issued to Dr. Laster upon achievement of the milestone in connection with our pivotal Phase 3 trial for KIT-302 described in the April 2013 Share Transfer Agreement.

Related Party Transactions

For information regarding loans made by Dr. Paul Waymack, JPW, Dr. Morris Laster, Mr. Sheer Roichman, Mr. Isaac Israel and Mr. Simcha Rock to Kitov Holdings and to Kitov Pharmaceuticals, see "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources".

For information regarding the sale of control of Kitov Holdings (then known as Mainrom Line Logistics Ltd.) in October 2012 by the former controlling shareholders to Mr. Sheer Roichman for NIS 1.8 million, see "Item 10. Additional Information – C. Material Contracts – Arrangement with Creditors and Sale of Kitov Holdings to Mr. Sheer Roichman".

For information regarding an arrangement between Kitov Holdings and its creditors pursuant to which the activities, assets, rights, obligations and liabilities of Kitov Holdings were transferred to a private company held by the then controlling shareholders of Kitov Holdings for approximately NIS 7.3 million (approximately $ 2.12 million based on the representative rate of exchange on the date of June 30, 2014), see Item 10. Additional Information – C. Material Contracts – Arrangement with Creditors and Sale of Kitov Holdings to Mr. Sheer Roichman".

For information regarding the share transfer agreement in April 2013 by and between Kitov Pharmaceuticals, Kitov Pharmaceutical's shareholders at the time, Dr. Morris Laster and JPW PCH LLC, and the controlling shareholder in Kitov Holdings at such time, Mr. Sheer Roichman and Haiku Capital Ltd., a private company wholly owned by Mr. Roichman, pursuant to which Kitov Holdings acquired shares of Kitov Pharmaceutical in exchange for the issuance of ordinary shares of the Company to Kitov Pharmaceutical's shareholders, see "Item 10. Additional Information – C. Material Contracts – Share Transfer Agreement with Kitov Pharmaceuticals".

For information regarding the service agreements with Dr. J. Paul Waymack, Uneri Capital Ltd. and Mr. Simcha Rock, see "Item 6. Directors, Senior Management and Employees – B. Compensation - Executives and Directors Compensation."

Since its founding in 2010, our subsidiary, Kitov Pharmaceuticals, financed its operations through a shareholders loan made by Kitov Pharmaceutical's founders, JPW and Dr. Morris Laster, amounting to date to approximately $356 thousand. These loans were made without interest and have no stated maturity date. JPW has notified Kitov Holdings that it will not demand repayment of its $300 thousand loan until the earlier of (i) receipt of successful results of the pivotal Phase 3 trial for KIT-302 and (ii) March 23, 2015.

Interests of Experts and Counsel

Not applicable.

ITEM 8.

FINANCIAL INFORMATION

Financial Statements and Other Financial Information

The financial statements required by this item are found at the end of this Registration Statement, beginning on page F-1.

Legal Proceedings

From time to time, we may become party to legal proceedings and claims in the ordinary course of business. We are not currently a party to any significant legal proceedings.

Dividend Policy

Currently, we have not set any dividend distribution policies and we have no profits fit for distribution.

In connection with an arrangement between Kitov Holdings and its creditors under Section 350 to the Companies Law, 1999, Kitov Holdings (then known as Mainrom Line Logistics Ltd.) distributed a dividend on November 13, 2012. See "Item 10. Additional Information – C. Material Contracts – Arrangement with Creditors and Sale of Kitov Holdings to Mr. Sheer Roichman".

Significant Changes

Except as otherwise disclosed in this Registration Statement on Form 20-F, no significant change has occurred since December 31, 2013.

ITEM 9.

THE OFFER AND LISTING

Offer and Listing Details

Our ordinary shares have been trading on the Tel Aviv Stock Exchange since 1978 and are currently traded under the symbol “KTOV”. No trading market currently exists for our American Depositary Shares or ordinary shares in the U.S. We intend to apply to have our American Depositary Shares listed on the Nasdaq Capital Market under the symbol “KTOV.”

The following table sets forth, for the periods indicated, the reported high and low closing sales prices of our ordinary shares on the Tel Aviv Stock Exchange in NIS and U.S. dollars. U.S. dollar per ordinary share amounts are calculated using the U.S. dollar representative rate of exchange on the date to which the high or low market price is applicable, as reported by the Bank of Israel.

	NIS						$ U.S.
	Price Per Ordinary Share						Price Per Ordinary Share
	High			Low			High			Low
Annual
2013		2.60			0.24			0.736			0.065
2012		0.39	*		0.29	*		0.100	*		0.076	*
2011		1.155	*		0.366	*		0.324	*		0.096	*
2010		1.577	*		0.451	*		0.417	*		0.117	*
2009		3.465	*		1.239	*		0.881	*		0.328	*
Quarterly
Second Quarter 2014		0.653			0.462			0.188			0.134
First Quarter 2014		1.412			0.633			0.403			0.182
Fourth Quarter 2013		2.601			0.804			0.736			0.232
Third Quarter 2013		2.480			0.450			0.701			0.124
Second Quarter 2013		0.575			0.450			0.159			0.124
First Quarter 2013		0.575			0.238			0.158			0.065
Fourth Quarter 2012		0.378	*		0.379	*		0.099	*		0.097	*
Third Quarter 2012		0.310	*		0.324	*		0.079	*		0.083	*

Most Recent Six Months

January 2014		1.412			0.813			0.403			0.234
February 2014		1.320			0.920			0.376			0.261
March 2014		0.890			0.633			0.255			0.182
April 2014		0.653			0.570			0.188			0.164
May 2014		0.569			0.472			0.165			0.135
June 2014		0.500			0.462			0.144			0.134

* Price adjusted due to the distribution of dividends

On August 12, 2014 the last reported sale price of our ordinary shares on the Tel Aviv Stock Exchange was NIS 0.457 per share, or $0.13 per share (based on the representative U.S. dollar – NIS rate of exchange of 3.493 on August 12, 2014). As of August 12, 2014 there was one shareholder of record of our ordinary shares. The number of record holders is not representative of the number of beneficial holders of our ordinary shares, as the shares of all shareholders listed on the Tel Aviv Stock Exchange are recorded in the name of our Israeli share registrar, Bank Leumi Le’Israel Registration Company Ltd. There were no record holders of our ordinary shares in the U.S. as of August 12, 2014.

Plan of Distribution

Not applicable.

Markets

Our ordinary shares are listed and traded on the Tel Aviv Stock Exchange. We intend to apply to the Nasdaq Capital Market to have our ordinary shares in the form of American Depositary Shares traded on the Nasdaq Capital Market.

Selling Shareholders

Not applicable.

Dilution

Not applicable.

Expenses of the Issue

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

Share Capital

Our registered share capital consists of a single class of 500,000,000 ordinary shares, no par value.

As of August 13, 2014, we had 57,504,068 issued and outstanding ordinary shares (not including 270 shares held in treasury). All outstanding ordinary shares are validly issued, fully paid and non-assessable. The ordinary shares do not have preemptive rights.

As of August 13, 2014, we had outstanding 7,154,574 series 1 traded options at an exercise price of NIS 0.75 (approximately $0.22 based on the representative rate of exchange as of June 30, 2014), with an expiration date of June 15, 2015. These options were fully exercisable as of their issuance date. In addition we had outstanding options under our 2013 Option Plan to purchase an aggregate of 2,445,380 ordinary shares, of which 583,880 are exercisable. Each of these options is exercisable into one ordinary share for an exercise price of between NIS 0.45 and NIS 1.20 (approximately $0.13 and $0.35) per share. All the options will be fully vested within three years. These options have expiration dates of between May 2016 and August 2024.

Below is information regarding changes in our ordinary share capital from December 31, 2010 through August 13, 2014.

Period	Description		Number of Ordinary Shares
Balance on December 31, 2010 and 2011				760,599,250
During 2012	Capital consolidation 1:100
Balance on December 31, 2012				7,605,723	(*)
During 2013	Private placement of shares to shareholders of Kitov Pharmaceuticals	17,569,220
	Exercise of options	960,000
Balance on December 31, 2013				26,135,213
During 2014	Exercise of options	234,616
	Issuance of shares pursuant a public offering in Israel	28,750,000
	Issuance of ordinary shares to Dexcel Ltd. in a private placement	2,051,176
	Exercise of options	333,333
Balance on August 13, 2014				57,504,068	(*)

(*) Not including 270 shares held in treasury

Memorandum and Articles of Association

Securities Registers

Our transfer agent and registrar will be the depositary for our ADRs, Bank of New York Mellon, and its address is 101 Barclay Street, New York, NY.

Objects and Purposes

According to Section 8 of our articles of association, we shall engage in any legal business. Our registration number with the Israeli Registrar of Companies is 520031238.

Private Placements

Under the Israeli Companies Law, if (i) as a result of a private placement a person would become a controlling shareholder or (ii) a private placement will entitle investors to receive 20% or more of the voting rights of a company as calculated before the private placement, and all or part of the private placement consideration is not in cash or in public traded securities or is not in market terms and if as a result of the private placement the holdings of a substantial shareholder shall increase or as a result of it a person shall become a substantial shareholder, then in either case, the allotment must be approved by the board of directors and by the shareholders of the company. A “substantial shareholder” is defined as a shareholder who holds five percent or more of the company’s outstanding share capital, assuming the exercise of all of the securities convertible into shares held by that person. In order for the private placement to be on “market terms” the board of directors has to determine, on the base of detailed explanation, that the private placement is on market terms, unless proven otherwise.

Board of Directors

Under our articles of association, resolutions by the board of directors shall be decided by a majority of votes of the directors present, or participating, in the case of voting by media, and voting, each director having one vote. In the event of a tie, the chairman of the board does not hold a tie-breaking vote.

In addition, the Israeli Companies Law requires that certain transactions, actions and arrangements be approved as provided for in a company’s articles of association and in certain circumstances by the audit committee and by the board of directors itself. Those transactions that require such approval pursuant to a company’s articles of association must be approved by its board of directors. In certain circumstances, audit committee and shareholder approval is also required. The vote required by the audit committee and the board of directors for approval of such matters, in each case, is a majority of the directors participating in a duly convened meeting. Under the Israeli Companies Law, the audit committee is to be comprised of at least three members appointed by the board of directors, which members must include all of the external directors. The majority of members of the audit committee should be independent directors, and the chairman of the audit committee should be an external director.

The Israeli Companies Law requires that a member of the board of directors or senior management of the company promptly and, in any event, not later than the first board meeting at which the transaction is discussed, disclose any personal interest that he or she may have, either directly or by way of any corporation in which he or she is, directly or indirectly, a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one director or the general manager, as well as all related material information known to him or her, in connection with any existing or proposed transaction by the company. In addition, if the transaction is an extraordinary transaction, (that is, a transaction other than in the ordinary course of business, otherwise than on market terms, or is likely to have a material impact on the company’s profitability, assets or liabilities), the member of the board of directors or senior management must also disclose any personal interest held by his or her spouse, siblings, parents, grandparents, descendants, spouse’s descendants, siblings and parents, and the spouses of any of the foregoing.

Once the member of the board of directors or senior management complies with the above disclosure requirement, a company may approve the transaction in accordance with the provisions of its articles of association. Under the provisions of the Israeli Companies Law, whoever has a personal interest in a matter, which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless it is not an extraordinary transaction as defined in the Israeli Companies Law. 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 for the presentation of a matter, such officer holder may be present at the meeting. Notwithstanding the foregoing, if the majority of the directors have a personal interest in a matter, they shall be allowed to participate and vote on this matter, but an approval of the transaction by the shareholders in the general meeting shall be required.

Our articles of association provide that, subject to the Israeli Companies Law, all actions executed in good faith by the board of directors or by a committee thereof or by any person acting as a director or a member of a committee of the board of directors, will be deemed to be valid even if, after their execution, it is discovered that there was a flaw in the appointment of these persons or that any one of these persons was disqualified from serving at his or her office.

Our articles of association provide that, subject to the provisions of the Israeli Companies Law, the board of directors may appoint board of directors’ committees. The committees of the board of directors shall report to the board of directors their resolutions or recommendations on a regular basis, as shall be prescribed by the board of directors. The board of directors may cancel the resolution of a committee that has been appointed by it; however, such cancellation shall not affect the validity of any resolution of a committee, pursuant to which we acted, vis-à-vis another person, who was not aware of the cancellation thereof. Decisions or recommendations of the committee of the board which require the approval of the board of directors will be brought to the directors’ attention a reasonable time prior to the discussion at the board of directors.

According to the Israeli Companies Law, a contract of a company with its directors, regarding their conditions of service, including the grant to them of exemption from liability from certain actions, insurance, and indemnification as well as the company’s contract with its directors on conditions of their employment, in other capacities, require the approval of the audit committee, the board of directors, and the shareholders.

Description of Securities

Ordinary Shares

The following is a description of our ordinary shares. Our authorized share capital is 500,000,000 ordinary shares, with no par value.

The ordinary shares do not have preemptive rights, preferred rights or any other right to purchase our securities. Neither our articles of association nor the laws of the State of Israel restrict the ownership or voting of ordinary shares by non-residents of Israel, except for subjects of countries which are enemies of Israel.

Transfer of Shares. Fully paid ordinary shares are issued in registered form and may be freely transferred pursuant to our articles of association unless that transfer is restricted or prohibited by another instrument.

Notices. Under the Israeli Companies Law and our articles of association, we are required to publish notices in two Hebrew-language daily newspapers at least 21 days’ prior notice of a shareholders’ meeting. However, under regulations promulgated under the Israeli Companies Law, we are required to publish notice in two daily newspapers at least 35 calendar days prior any shareholders’ meeting in which the agenda includes matters which may be voted on by voting instruments. Regulations under the Israeli Companies Law exempt companies whose shares are listed for trading both on a stock exchange in and outside of Israel, from some provisions of the Israeli Companies Law. An amendment to these regulations exempts us from the requirements of the Israeli proxy regulation, under certain circumstances.

According to the Israeli Companies Law and the regulations promulgated thereunder, for purposes of determining the shareholders entitled to notice and to vote at such meeting, the board of directors may fix the record date not more than 40 nor less than four calendar days prior to the date of the meeting, provided that an announcement regarding the general meeting shall be given prior to the record date.

Election of Directors. The number of directors on the board of directors shall be no less than four but no more than twelve, including the external directors. The general meeting is entitled, at any time and from time to time, in a resolution approved by a regular majority of the votes of the shareholders present and voting at the meeting in person, by proxy or by a voting instrument, not taking into consideration abstaining votes, or by a regular majority of the board of directors to change the minimum or maximum number of directors as stated above. For more information, please see “Item 6. Directors, Senior Management and Employees – C. Board Practices – Board of Directors and Officers.”

Dividend and Liquidation Rights. Our profits, in respect of which a resolution was passed to distribute them as dividend or bonus shares, shall be paid pro rata to the amount of shares held by the shareholders. In the event of our liquidation, the liquidator may, with the general meeting’s approval, distribute parts of our property in specie among the shareholders and he may, with similar approval, deposit any part of our property with trustees in favor of the shareholders as the liquidator, with the approval mentioned above deems fit.

Voting, Shareholders’ Meetings and Resolutions. Holders of ordinary shares are entitled to one vote for each ordinary share held on all matters submitted to a vote of shareholders. The quorum required for an ordinary meeting of shareholders consists of at least two shareholders present, in person or by proxy, or who has sent us a voting instrument indicating the way in which he is voting, who hold or represent, in the aggregate, at least 25% of the voting rights of our outstanding share capital. A meeting adjourned for lack of a quorum is adjourned to the same day in the following week at the same time and place or any time and place as prescribed by the board of directors in notice to the shareholders. At the reconvened meeting one shareholder at least, present in person or by proxy constitutes a quorum except where such meeting was called at the demand of shareholders. With the agreement of a meeting at which a quorum is present, the chairman may, and on the demand of the meeting he must, adjourn the meeting from time to time and from place to place, as the meeting resolves. Annual general meetings of shareholders are held once every year within a period of not more than 15 months after the last preceding annual general shareholders’ meeting. The board of directors may call special general meetings of shareholders. The Israeli Companies Law provides that a special general meeting of shareholders may be called by the board of directors or by a request of two directors or 25% of the directors in office, whichever is the lower, or by shareholders holding at least 5% of our issued share capital and at least 1% of the voting rights, or of shareholders holding at least 5% of our voting rights.

An ordinary resolution requires approval by the holders of a majority of the voting rights present, in person or by proxy, at the meeting and voting on the resolution.

Allotment of Shares. Our board of directors has the power to allot or to issue shares to any person, with restrictions and condition as it deems fit.

Acquisitions under Israeli Law

Full Tender Offer

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 Israeli 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 an Israeli public 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 same class for the purchase of all of the issued and outstanding shares of the same class.

If the shareholders who do not respond to or accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class of the shares, 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 be accepted if the shareholders who do not accept it hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of the 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 the 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 determine 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 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, 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 description above regarding a full tender offer shall also apply, with necessary changes, when a full tender offer is accepted and the offeror has also offered to acquire all of the company’s securities.

Special Tender Offer

The Israeli 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 at least 25% of the voting rights in the company. This rule does not apply if there is already another holder of at least 25% of the voting rights in the company.

Similarly, the Israeli 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.

These requirements do not apply if the acquisition (i) occurs in the context of a private offering, on the condition that the shareholders meeting approved the acquisition as a private offering whose purpose is to give the acquirer at least 25% of the voting rights in the company if there is no person who holds at least 25% of the voting rights in the company, or as a private offering whose purpose is to give the acquirer 45% of the voting rights in the company, if there is no person who holds 45% of the voting rights in the company; (ii) was from a shareholder holding at least 25% of the voting rights in the company and resulted in the acquirer becoming a holder of at least 25% of the voting rights in the company; or (iii) was from a holder of more than 45% of the voting rights in the company and resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company.

The special tender offer may be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (ii) the special tender offer is accepted by a majority of the votes of those offerees who gave notice of their position in respect of the offer; in counting the votes of offerees, the votes of a holder in control of the offeror, a person who has personal interest in acceptance of the special tender offer, a holder of at least 25% of the voting rights in the company, or any person acting on their or on the offeror’s behalf, including their relatives or companies under their control, are not taken into account.

In the event that a special tender offer is made, a company’s board of directors is required to express its opinion on the advisability of the offer or shall abstain from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention.

An office holder in a target company who, in his or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing or foreseeable special tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser and shareholders for damages resulting from his acts, unless such office holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit of the company. However, office holders of the target company may negotiate with the potential purchaser in order to improve the terms of the special tender offer, and may further negotiate with third parties in order to obtain a competing offer.

If a special tender offer was accepted by a majority of the shareholders who announced their stand on such offer, then shareholders who did not respond to the special offer or had objected to the special tender offer may accept the offer within four days of the last day set for the acceptance of the offer. In the event that a special tender offer is accepted, then the purchaser or any person or entity controlling it and any corporation controlled by them shall refrain from making a subsequent tender offer for the purchase of shares of the target company and may not execute a merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.

Merger

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

The board of directors of a merging company is required pursuant to the Israeli Companies Law to discuss and determine whether in its opinion there exists a reasonable concern that, as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, taking into account the financial condition of the merging companies. If the board of directors has determined that such a concern exists, it may not approve a proposed merger. Following the approval of the board of directors of each of the merging companies, the boards of directors must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.

For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares voting at the shareholders meeting (excluding abstentions) that are held by parties other than the other party to the merger, any person who holds 25% or more of the means of control (See “Item 6. Directors, Senior Management and Employees - C. Board Practices – Board of Directors and Officers – Audit Committee – Approval of Transactions with Related Parties” for a definition of means of control) of the other party to the merger or any one on their behalf including their relatives (See “Item 6. Directors, Senior Management and Employees - C. Board Practices – External Directors – Qualifications of External Directors” for a definition of relatives) or corporations controlled by any of them, vote against the merger.

In addition, if the non-surviving entity of the merger has more than one class of shares, the merger must be approved by each class of shareholders.

If the transaction would have been approved but for the separate approval of each class of shares or the exclusion of the votes of certain shareholders as provided above, a court may still rule that the company has approved 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 appraisal of the merging companies’ value and the consideration offered to the shareholders.

Under the Israeli Companies Law, each merging company must send a copy of the proposed merger plan to its secured creditors. Unsecured creditors are entitled to receive notice of the merger, as provided by the regulations promulgated under the Israeli Companies Law. 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 target company. The court may also give instructions in order to secure the rights of creditors.

In addition, a merger may not be completed unless at least 50 days have passed from the date that a proposal for approval of the merger was filed with the Israeli Registrar of Companies and 30 days from the date that shareholder approval of both merging companies was obtained.

Material Contracts

Share Transfer Agreement with Kitov Pharmaceuticals

On April 2, 2013, Kitov Holdings (then called Mainrom Line Logistics Ltd.), entered into a Share Transfer Agreement with Kitov Pharmaceuticals, Kitov Pharmaceutical's shareholders at the time, Dr. Morris Laster and JPW PCH LLC, and the controlling shareholder in Kitov Holdings at such time, Mr. Sheer Roichman and Haiku Capital Ltd., a private company wholly owned by Mr. Roichman, pursuant to which Kitov Holdings acquired shares of Kitov Pharmaceutical, as described below, in exchange for the issuance of 17,569,220 Company ordinary shares to Kitov Pharmaceutical's shareholders representing 63.75% of the fully diluted share capital of Kitov Holdings. In addition, pursuant to the agreement, if within 28 months from the completion of the acquisition we complete our pivotal Phase 3 trial and the data analyses have demonstrated that the reduction in blood pressure in the group treated with KIT-302 was at least half of that achieved with amlodipine monotherapy, known as the milestone, Kitov Holdings must issue 17,927,776 additional shares to the former shareholders of Kitov Pharmaceutical. The transactions contemplated by the Share Transfer Agreement closed on July 11, 2013.

At the closing of the Share Transfer Agreement, Kitov Pharmaceutical's shareholders transferred (i) 80% of the shares of Kitov Pharmaceutical to Kitov Holdings, and (ii) 20% of the shares of Kitov Pharmaceutical to a trustee, which will hold such shares for the sole benefit of Kitov Holdings until the earlier of the occurrence of the milestone referred to above or 28 months from the completion of the acquisition.

Pursuant to the agreement, Kitov Holdings granted to its external consultants, Lior Tamar Investments Ltd., held by Mr. Shay Itzhak Lior and Mr. Yossi Tamar, options to acquire 1,194,616 ordinary shares of Kitov Holdings and agreed to grant to Mr. Simcha Rock, our current CFO and a director, options to acquire 1,370,056 ordinary shares of Kitov Holdings, subject to the adoption of an option plan (of this amount, 181,089 of the options to be granted to Mr. Rock are subject to Kitov Holdings attaining the milestone referred to above and 1,011,500 options are subject to fund raising by Kitov Holdings in the amount of NIS 1,000,000).

At closing, Mr. Sheer Roichman granted Kitov Holdings a loan in the amount of NIS 500,000, free of interest and linkage. Kitov Holdings was to repay the loan to the lender on the date on which it and/or Kitov Pharmaceuticals will raise after the transaction, an amount of no less than NIS 500,000. In the event that the loan is not paid when due, Mr. Roichman would be entitled to convert the loan to securities of Kitov Holdings at a conversion price reflecting a 30% discount to the average price of Kitov Holdings' shares during 30 trading days preceding the date on which Mr. Roichman notified Kitov Holdings of his intention to convert the loan. This loan was repaid in March 2014.

As part of the agreement, Mr. Roichman agreed that in the event Kitov Holdings issues its shares to the public and receives early commitments to purchase its securities in an amount of no less than NIS 500,000, Mr. Roichman will participate in the offering by placing an order for Kitov Holdings shares in an amount of no less than NIS 750,000. If the offering to the public will include the grant of options to acquire Kitov Holdings shares for a cash payment, Mr. Roichman will place orders for Kitov Holdings' securities offered to the public in an amount of NIS 750,000 minus the exercise price of the offered options which he will acquire (in the event that all orders placed by Mr. Roincham under the public offering will be fully received). It is noted, that insofar as the amount of the loan made by Mr. Roichman to Kitov Holdings referred to above is not repaid on issuance date, Mr. Roichman will only pay the exercise price to Kitov Holdings in exchange for the purchased options on the option exercise date insofar as he elects to exercise the options, and the purchase price will be offset against repayment of the loan. This requirement was satisfied at the time of Kitov Holdings' March 2014 offering of ordinary shares on the Tel Aviv Stock Exchange.

In addition, under the terms of the agreement, Mr. Roichman is entitled to receive out of all the funds that will be raised by the Company from public and private financings, including through convertible loans, in one or more transactions and including funds invested by Mr. Roichman himself the following sums: (a) 10% of the amounts invested up to a total cumulative sum of NIS 9 million and (b) 25% of the invested amounts exceeding NIS 9 million, up to a cumulative amount of NIS 2.5 million, also called the maximum remuneration sum, plus VAT if required. This amount was paid by the Company in March 2014.

As part of the agreement, the parties agreed that all the loans granted to Kitov Holdings and/or to Kitov Pharmaceuticals by Mr. Roichman and/or by controlling stakeholders of Kitov Pharmaceuticals, as the case may be, up to the closing, except the loan made by Mr. Roichman to Kitov Holdings on the closing date, will be repaid to Mr. Roichman and/or to the controlling stakeholders of Kitov Pharmaceuticals on a pro rata basis according to their relative share in the debts of the Company, subject to payment of the maximum remuneration sum referred to above.

The shareholders of Kitov Pharmaceuticals prior to the transactions also committed to Mr. Roichman that until Kitov Holdings completes financing of NIS 15 million (either privately or publicly) that they would vote in every general meeting of Kitov where the agenda includes appointment of a director on behalf of Mr. Roichman, to vote in favor of such appointment. The shareholders also undertook that every transfer and/or sale of Kitov Holdings shares held by them (all or part) after the closing date (except for a sale on the stock exchange or the sale of all the issued share capital of Kitov Holdings to a third party), will be subject to the agreement of the buyer to satisfy this appointment commitment. The agreement provides that Mr. Roichman will not be entitled to appoint more than one director to Kitov Holdings' board of directors. In March 2014, the Company completed a financing of NIS 17.2 million.

Upon closing of the transaction, Dr. Paul Waymack, Dr. Morris Laster and Mr. Simcha Rock were appointed to the board of directors of Kitov Holdings, replacing Mr. Erez Goldstmidt, Mr. Hedan Orenstein and Mr. Oren Giditz, who resigned.

Kitov Holdings repaid all obligations to Mr. Sheer Roichman (other than a loan in the amount of NIS 250,000 loaned by Mr. Roichman prior to the transaction with Kitov Pharmaceuticals) under the agreement and satisfied all of its obligations under the agreement to pay the maximum remuneration sum by the payment of NIS 2.5 million at such time as Kitov Holdings completed its approximately NIS 17.2 million financing in March 2014 pursuant to a prospectus published and approved by the Israel Securities Authority. See "Item 5. Operating and Financial Review and Prospectus – B. Liquidity and Capital Resources".

Arrangement with Creditors and Sale of Kitov Holdings to Mr. Sheer Roichman

On October 22, 2012, the District Court in Lod, Israel, confirmed an arrangement between Kitov Holdings (then known as Mainrom Line Logistics Ltd.) and its creditors under Section 350 to the Companies Law, 1999, pursuant to which the activities, assets, rights, obligations and liabilities of Kitov Holdings were transferred to a private company held by the then controlling shareholders of Kitov Holdings for approximately NIS 7.3 million (approximately $ 2.12 million based on the representative rate of exchange on the date of June 30, 2014), and all rights of Kitov Holdings' creditors against Kitov Holdings were extinguished. On October 31, 2012, the former controlling shareholders sold control of Kitov Holdings to Mr. Sheer Roichman for NIS 1.8 million. From the completion of these transactions until the completion date of the transaction with Kitov Pharmaceuticals described above, Kitov Holdings did not have any business activities.

As part of the arrangement between Kitov Holdings and its creditors, on November 13, 2012, Kitov Holdings distributed a dividend in cash to its shareholders as of October 29, 2013 in the total amount of approximately NIS 7.3 million, which was equal to consideration received by Kitov Holdings for the sale of its activities, assets, rights, obligations and liabilities. Following such distribution, Kitov Holdings remained without any assets, debt and/or liabilities.

Other Agreements

For a description of other material agreements, please see "Item 4. Information on the Company – B. Business Overview – Services and License Agreements", "Item 4. Information on the Company – B. Business Overview – Development Services Agreement with Dexcel", "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources" and "Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions".

For information on exemption and indemnification letters granted to our officers and directors, please see “Item 6 – Directors, Senior Management and Employees – C. Board Practices – Exemption, Insurance and Indemnification of Directors and Officers.”

On February 27, 2014, Kitov Holdings entered into an agreement with Clal Finance Underwriting, or Clal Finance, in connection with Kitov Holdings' financing for approximately NIS 17.2 million (approximately $4.9 million based on the representative rate of exchange on the date of closing, March 3, 2014) completed in March 2014. Pursuant to the agreement, Kitov Pharmaceuticals agreed to pay Clal Finance management and distribution fees equal to 5% to 8% of the gross investment in the offering (excluding actual investment by related parties not exceeding NIS 4 million) depending on the price per share in the offering. In addition, Kitov Holdings agreed that immediately following its rights offering, it would grant to Clal Finance options in a private placement of the type issued in the rights offering, for no additional consideration, equal to between 5% and 7.5% of the total amount of shared issued in the rights offering depending on the price per share in the offering. The agreement also contained provisions for the issuance of option if the rights offering was not completed within six months of the March 2014 financing. For information regarding the March 2014 financing, see "Item 5. Operating and Financial Review and Prospectus – B. Liquidity and Capital Resources".

Exchange Controls

Israeli law and regulations do not impose any material foreign exchange restrictions on non-Israeli holders of our ordinary shares. In May 1998, a new “general permit” was issued under the Israeli Currency Control Law, 1978, which removed most of the restrictions that previously existed under the law and enabled Israeli citizens to freely invest outside of Israel and freely convert Israeli currency into non-Israeli currencies. Dividends, if any, paid to holders of our ordinary shares, and any amounts payable upon our dissolution, liquidation or winding up, as well as the proceeds of any sale in Israel of our ordinary shares to an Israeli resident, may be paid in non-Israeli currency or, if paid in Israeli currency, may be converted into U.S. dollars at the rate of exchange prevailing at the time of conversion.

Taxation

Israeli Tax Considerations

Government Programs

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.

Israeli Tax Considerations and Government Programs

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.

General Corporate Tax Structure in Israel

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.

Taxation of Our Shareholders

Capital Gains

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.

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.

Financial institutions through which shareholders typically hold securities 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).

Foreign Exchange Regulations

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.

Estate and Gift Tax

Israeli law presently does not impose estate or gift taxes.

U.S Federal Income Tax Considerations

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:

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banks, financial institutions or insurance companies;

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real estate investment trusts, regulated investment companies or grantor trusts;

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dealers or traders in securities, commodities or currencies;

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tax exempt entities or organizations;

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certain former citizens or residents of the United States;

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persons that received our shares as compensation for the performance of services;

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persons that will hold our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;

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partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass-through entities, or holders that will hold our shares through such an entity;

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U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; or

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holders that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares.

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 we are 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.

Taxation of Dividends and Other Distributions on Our Ordinary Shares

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 we are 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:

•

you conduct a trade or business in the U.S. and such income is effectively connected with that trade or business (and, if required by an applicable income tax treaty, the dividends are attributable to a permanent establishment or fixed base that such holder maintains in the U.S.); or

•

you are an individual and have been present in the U.S. for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met.

Sale, Exchange or Other Disposition of Our Ordinary Shares

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:

•

such gain is effectively connected with your conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that you maintain in the United States); or

•

you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met.

Passive Foreign Investment Company Consequences

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.

A non-U.S. corporation will be classified as a PFIC for federal income tax purposes in any taxable year in which, after applying certain look-through rules with respect to the income and assets of subsidiaries, either:

• at least 75% of its gross income is "passive income"; or

• at least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce "passive income" or are held for the production of passive income.

Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income, and includes amounts derived by reason of the temporary investment of funds raised in offerings of our ordinary shares. If a non-U.S. corporation owns at least 25% by value of the stock of another corporation, the non-U.S. corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation's income. If we are classified as a PFIC in any year with respect to which a U.S. Holder owns our ordinary shares, we will generally continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns our ordinary shares, regardless of whether we continue to meet the tests described above.

We have not performed tests to determine whether we will be classified as a PFIC, and we therefore do not know whether we will be classified as a PFIC for the taxable year ending December 31, 2014. Furthermore, because PFIC status is based on our income, assets and activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for the 2014 taxable year until after the close of the year. Moreover, we must determine our PFIC status annually based on tests which are factual in nature, and our status in future years will depend on our income, assets and activities in those years. In addition, our status as a PFIC may depend on how quickly we utilize the cash proceeds from this offering in our business. There can be no assurance that we will not be considered a PFIC for any taxable year.

If we were a PFIC, and you are a U.S. Holder, then unless you make one of the elections described below, a special tax regime will apply to both (a) any "excess distribution" by us to you (generally, your ratable portion of distributions in any year which are greater than 125% of the average annual distribution received by you in the shorter of the three preceding years or your holding period for our ordinary shares) and (b) any gain realized on the sale or other disposition of the ordinary shares. Under this regime, any excess distribution and realized gain will be treated as ordinary income and will be subject to tax as if (i) the excess distribution or gain had been realized ratably over your holding period, (ii) the amount deemed realized in each year had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated to the current period or any taxable period before we became a PFIC, which would be subject to tax, at the U.S. Holder's regular ordinary income rate for the current year and would not be subject to the interest change discussed below), and (iii) the interest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. In addition, dividend distributions made to you will not qualify for the lower rates of taxation applicable to long-term capital gains discussed above under "Distributions." Certain elections may be available that would result in an alternative treatment (such as mark-to-market treatment) of our ordinary shares.

If a U.S. Holder makes the mark-to-market election, then, in lieu of being subject to the tax and interest charge rules discussed above, the U.S. Holder generally will recognize as ordinary income any excess of the fair market value of the ordinary shares at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the mark-to-market election). If a U.S. Holder makes the election, the U.S. Holder's tax basis in the ordinary shares will be adjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election).

The mark-to-market election is available only if we are a PFIC and our ordinary shares are "regularly traded" on a "qualified exchange." Our ordinary shares will be treated as "regularly traded" in any calendar year in which more than a de minimis quantity of the ordinary shares are traded on a qualified exchange on at least 15 days during each calendar quarter. The NASDAQ Global Market is a qualified exchange for this purpose. Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the tax and interest charge rules discussed above with respect to such holder's indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes, including stock in any of our subsidiaries that are treated as PFICs. If a U.S. Holder makes a mark-to market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless our ordinary shares are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election.

We do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified as a PFIC. U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and if so, what the consequences of the alternative treatments would be in their particular circumstances.

If we are determined to be a PFIC, the general tax treatment for U.S. Holders described in this section would apply to indirect distributions and gains deemed to be realized by U.S. Holders in respect of any of our subsidiaries that also may be determined to be PFICs.

If a U.S. Holder owns ordinary shares during any year in which we are a PFIC, the U.S. Holder generally will be required to file an IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with respect to us, generally with the U.S. Holder's federal income tax return for that year.

U.S. Holders should consult their tax advisors regarding whether we are a PFIC and the potential application of the PFIC rules.

Medicare Tax

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.

Certain Reporting Requirements with Respect to Payments of Offer Price

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.

Backup Withholding Tax and Information Reporting Requirements

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.

Foreign Asset Reporting

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 DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN ORDINARY SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.

Dividends and Paying Agents

We have not appointed any paying agent.

Statement by Experts

Not applicable.

Documents on Display

When this Registration Statement on Form 20-F becomes effective, we will be subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended, applicable to foreign private issuers, and under those requirements we will file reports with the Securities and Exchange Commission. Those other reports or other information may be inspected without charge at the Securities and Exchange Commission’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of the material may be obtained by mail from the Public Reference Branch of the Securities and Exchange Commission at such address, at prescribed rates. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference room. Our filings with the Securities and Exchange Commission are also available to the public through the Securities and Exchange Commission’s website at http://www.sec.gov.

As a foreign private issuer, we will be exempt from the rules under the Securities Exchange Act of 1934, as amended, 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 Securities Exchange Act of 1934, as amended. In addition, we will not be required under the Securities Exchange Act of 1934, as amended, to file annual, quarterly and current reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Securities Exchange Act of 1934, as amended. However, we will be required to comply with the informational requirements of the Securities Exchange Act of 1934, as amended, and, accordingly, will file current reports on Form 6-K, annual reports on Form 20-F and other information with the Securities and Exchange Commission.

In addition, since our ordinary shares are traded on the Tel Aviv Stock Exchange, we have filed Hebrew language periodic and immediate reports with, and furnish information to, the Tel Aviv Stock Exchange and the Israeli Securities Authority, as required under Chapter Six of the Israel Securities Law, 1968. Copies of our filings with the Israeli Securities Authority can be retrieved electronically through the MAGNA distribution site of the Israeli Securities Authority (www.magna.isa.gov.il) and the Tel Aviv Stock Exchange website (www.maya.tase.co.il).

We maintain a corporate website at www.kitovpharma.com. Information contained on, or that can be accessed through, our website does not constitute a part of this Registration Statement on Form 20-F.

Subsidiary Information

Not applicable.

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss related to changes in market prices, including interest rates and foreign exchange rates, of financial instruments that may adversely impact our financial position, results of operations or cash flows. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance.

Risk of Interest Rate Fluctuation and Credit Exposure Risk

We do not anticipate undertaking any significant long-term borrowings. At present, our credit and interest risk arises from cash and cash equivalents, deposits with banks as well as accounts receivable. A substantial portion of our liquid instruments is invested in short-term deposits in highly-rated institutions.

We estimate that because the liquid instruments are invested mainly for the short-term and with highly-rated institutions, the credit and interest risk associated with these balances is immaterial. The primary objective of our investment activities is to preserve principal while maximizing the income we receive from our investments without significantly increasing risk and loss. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments. We manage this exposure by performing ongoing evaluations of our investments.

Equity Price Risk

We may be exposed to equity securities price risk because of investments held by us and classified in our financial statements on as financial assets at fair value through profit or loss. To manage the price risk arising from investments in equity securities, we invest in marketable securities with high ratings and diversify our investment portfolio.

Foreign Currency Exchange Risk

Our foreign currency exposures give rise to market risk associated with exchange rate movements of the U.S. dollar, our functional and reporting currency, mainly against the NIS and other currencies. Although the U.S. dollar is our functional currency and reporting currency, a portion of our expenses are denominated in NIS. Our NIS expenses consist principally of payments to employees or service providers and short term investments in currencies other than the U.S. dollar. We anticipate that a sizable portion of our expenses will continue to be denominated in currencies other than the U.S. dollar. If the U.S. dollar fluctuates significantly against the NIS it may have a negative impact on our results of operations. We manage our foreign exchange risk by aligning the currencies for holding short term investments with the currencies of expected expenses, based on our expected cash flows.

Portfolio diversification is performed based on risk level limits that we set. To date, we have not engaged in hedging transactions. In the future, we may enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

(A)

Set forth below is a sensitivity test to possible changes in U.S. dollars/ NIS exchange rate as of December 31, 2013:

Sensitive instrument	Income (loss) from change in exchange rate (U.S. dollars in thousands)						Value (U.S. dollars in thousands)			Income (loss) from change in exchange rate (U.S dollars in thousands)
	Down 2%			Down 5%						Up 5%			Up 2%
Cash and cash equivalents		2			6			112			(6	)		(2	)
Accounts receivable		2			6			118			(6	)		(2	)
Accounts payable		(9	)		(24	)		(474	)		24			9
Liabilities to related parties		(8	)		(21	)		(420	)		21			8
Total loss		(13	)		(33	)		(664	)		33			13

(B) As of the date of this Registration Statement on Form 20-F, our interest rate risk exposure is in respect to bank deposits, which expose us to risk due to change in fair value interest rates. As of December 31, 2013 we had no interest-bearing deposits. As of June 30, 2014 we had bank deposits carrying annual interest of 0.52%. Under these low interest rates, reasonable changes in interest rates are expected have negligible impact on the fair value of these assets.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Debt Securities

Not applicable.

Warrants and Rights

Not applicable.

Other Securities

Not applicable.

American Depositary Shares

The Bank of New York Mellon, as depositary, will register and deliver American Depositary Shares. Each American Depositary Share will represent forty of our ordinary shares (or a right to receive ten of our ordinary shares) deposited with the principal Tel Aviv office of either of Bank Leumi Le-Israel or Bank Hapoalim B.M., as custodian for the depositary. Each American Depositary Share will also represent any other securities, cash or other property which may be held by the depositary. The depositary’s corporate trust office at which the American Depositary Shares will be administered is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon’s principal executive office is located at One Wall Street, New York, New York 10286.

You may hold American Depositary Shares either (A) directly (i) by having an American Depositary Receipt, which is a certificate evidencing a specific number of American Depositary Shares, registered in your name, or (ii) by having American Depositary Shares registered in your name in the Direct Registration System, or (B) indirectly by holding a security entitlement in American Depositary Shares through your broker or other financial institution. If you hold American Depositary Shares directly, you are a registered American Depositary Share holder. This description assumes you are an American Depositary Share holder. If you hold the American Depositary Shares indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of American Depositary Share holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, also referred to as DTC, pursuant to which the depositary may register the ownership of uncertificated American Depositary Shares, which ownership is confirmed by periodic statements sent by the depositary to the registered holders of uncertificated American Depositary Shares.

As an American Depositary Share holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Israeli law governs shareholder rights. The depositary will be the holder of the ordinary shares underlying your American Depositary Shares. As a registered holder of American Depositary Shares, you will have American Depositary Share holder rights. A deposit agreement among us, the depositary and you, as an American Depositary Share holder, and all other persons indirectly holding American Depositary Shares sets out American Depositary Share holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the American Depositary Shares.

In connection with this Registration Statement on Form 20-F, a Registration Statement on Form F-6 has been filed with the Securities and Exchange Commission to register the American Depositary Shares under the Securities Act of 1933, as amended.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of American Depositary Receipt, each of which has been filed as an exhibit to the Registration Statement on Form F-6 filed with the Securities and Exchange Commission.

Dividends and Other Distributions

How will you receive dividends and other distributions on the shares?

The depositary has agreed to pay to American Depositary Share holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your American Depositary Shares represent.

Cash. The depositary will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the U.S. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those American Depositary Share holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the American Depositary Share holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. See “Item 10. Additional Information – E. Taxation – U.S. Federal Income Tax Considerations.” It will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.

Shares. The depositary may distribute additional American Depositary Shares representing any shares we distribute as a dividend or free distribution. The depositary will only distribute whole American Depositary Shares. It may sell shares which would require it to deliver a fractional American Depositary Share and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional American Depositary Shares, the outstanding American Depositary Shares will also represent the new shares. The depositary may sell a portion of the distributed shares sufficient to pay its fees and expenses in connection with that distribution.

Rights to Purchase Additional Shares. If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to American Depositary Share holders. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

If the depositary makes rights available to American Depositary Share holders, it will exercise the rights and purchase the shares on your behalf. The depositary will then deposit the shares and deliver American Depositary Shares to the persons entitled to them. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay. U.S. securities laws may restrict transfers and cancellation of the American Depositary Shares represented by shares purchased upon exercise of rights. For example, you may not be able to trade these American Depositary Shares freely in the U.S. In this case, the depositary may deliver restricted depositary shares that have the same terms as the American Depositary Shares described in this section except for changes needed to put the necessary restrictions in place.

Other Distributions. The depositary will send to American Depositary Share holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case American Depositary Shares will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than American Depositary Shares) to American Depositary Share holders unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any American Depositary Share holders. We have no obligation to register American Depositary Shares, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of American Depositary Shares, shares, rights or anything else to American Depositary Share holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

Deposit, Withdrawal and Cancellation

How are American Depositary Shares issued?

The depositary will deliver American Depositary Shares if you or your broker deposits shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of American Depositary Shares in the names you request and will deliver the American Depositary Shares to or upon the order of the person or persons that made the deposit.

How can American Depositary Share holders withdraw the deposited securities?

You may surrender your American Depositary Shares at the depositary’s corporate trust office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares and any other deposited securities underlying the American Depositary Shares to the American Depositary Share holder or a person the American Depositary Share holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, if feasible.

How do American Depositary Share holders interchange between certificated American Depositary Shares and uncertificated American Depositary Shares?

You may surrender your American Depositary Receipt to the depositary for the purpose of exchanging your American Depositary Receipt for uncertificated American Depositary Shares. The depositary will cancel that American Depositary Receipt and will send to the American Depositary Share holder a statement confirming that the American Depositary Share holder is the registered holder of uncertificated American Depositary Shares. Alternatively, upon receipt by the depositary of a proper instruction from a registered holder of uncertificated American Depositary Shares requesting the exchange of uncertificated American Depositary Shares for certificated American Depositary Shares, the depositary will execute and deliver to the American Depositary Share holder an American Depositary Receipt evidencing those American Depositary Shares.

Voting Rights

How do you vote?

American Depositary Share holders may instruct the depositary to vote the number of deposited shares their American Depositary Shares represent. The depositary will notify American Depositary Share holders of shareholders’ meetings and arrange to deliver our voting materials to them if we ask it to. Those materials will describe the matters to be voted on and explain how American Depositary Share holders may instruct the depositary how to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary. Otherwise, you won’t be able to exercise your right to vote unless you withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares.

The depositary will try, as far as practical, subject to the laws of Israel and of our articles of association or similar documents, to vote or to have its agents vote the shares or other deposited securities as instructed by American Depositary Share holders. The depositary will only vote or attempt to vote as instructed.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested.

In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we agree to give the depositary notice of any such meeting and details concerning the matters to be voted upon at least 45 days in advance of the meeting date.

Fees and Expenses

Persons depositing or withdrawing shares or American Depositary Share holders must pay:		For:
$5.00 (or less) per 100 American Depositary Shares (or portion of 100 American Depositary Shares)	· ·	Issuance of American Depositary Shares, including issuances resulting from a distribution of shares or rights or other property Cancellation of American Depositary Shares for the purpose of withdrawal, including if the deposit agreement terminates
$.05 (or less) per American Depositary Share	·	Any cash distribution to American Depositary Share holders
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of American Depositary Shares	·	Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to American Depositary Share holders
$.05 (or less) per American Depositary Shares per calendar year	·	Depositary services
Registration or transfer fees	·	Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
Expenses of the depositary	·	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)

	·	converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian have to pay on any American Depositary Share or share underlying an American Depositary Share, for example, stock transfer taxes, stamp duty or withholding taxes	·	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	·	As necessary

The depositary collects its fees for delivery and surrender of American Depositary Shares directly from investors depositing shares or surrendering American Depositary Shares for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

From time to time, the depositary may make payments to us to reimburse or share revenue from the fees collected from American Depositary Share holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the American Depositary Share program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and that may earn or share fees or commissions.

Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on your American Depositary Shares or on the deposited securities represented by any of your American Depositary Shares. The depositary may refuse to register any transfer of your American Depositary Shares or allow you to withdraw the deposited securities represented by your American Depositary Shares until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your American Depositary Shares to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of American Depositary Shares to reflect the sale and pay to American Depositary Share holders any proceeds, or send to American Depositary Share holders any property, remaining after it has paid the taxes.

Reclassifications, Recapitalizations and Mergers

If we:

Then:

· Change the nominal or par value of our shares

· Reclassify, split up or consolidate any of the deposited securities

· Distribute securities on the shares that are not distributed to you

· Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action

The cash, shares or other securities received by the depositary will become deposited securities. Each American Depositary Share will automatically represent its equal share of the new deposited securities.

The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new American Depositary Receipts or ask you to surrender your outstanding American Depositary Receipts in exchange for new American Depositary Receipts identifying the new deposited securities.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the American Depositary Receipts without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of American Depositary Share holders, it will not become effective for outstanding American Depositary Shares until 30 days after the depositary notifies American Depositary Share holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your American Depositary Shares, to agree to the amendment and to be bound by the American Depositary Receipts and the deposit agreement as amended.

How may the deposit agreement be terminated?

The depositary will terminate the deposit agreement at our direction by mailing notice of termination to the American Depositary Share holders then outstanding at least 30 days prior to the date fixed in such notice for such termination. The depositary may also terminate the deposit agreement by mailing notice of termination to us and the American Depositary Share holders if 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment.

After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property, and deliver shares and other deposited securities upon cancellation of American Depositary Shares. Four months after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the American Depositary Share holders that have not surrendered their American Depositary Shares. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination our only obligations will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay.

Limitations on Obligations and Liability

Limits on Our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of American Depositary Shares

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

are not liable if we are or it is prevented or delayed by law or circumstances beyond our control from performing our or its obligations under the deposit agreement;

are not liable if we or it exercises discretion permitted under the deposit agreement;

are not liable for the inability of any holder of American Depositary Shares to benefit from any distribution on deposited securities that is not made available to holders of American Depositary Shares under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;

have no obligation to become involved in a lawsuit or other proceeding related to the American Depositary Shares or the deposit agreement on your behalf or on behalf of any other person; and

may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.

Requirements for Depositary Actions

Before the depositary will deliver or register a transfer of an American Depositary Share, make a distribution on an American Depositary Share, or permit withdrawal of shares, the depositary may require:

payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;

satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver American Depositary Shares or register transfers of American Depositary Shares generally when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

Your Right to Receive the Shares Underlying Your American Depositary Shares

American Depositary Share holders have the right to cancel their American Depositary Shares and withdraw the underlying shares at any time except:

when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our shares;

when you owe money to pay fees, taxes and similar charges; or

when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to American Depositary Shares or to the withdrawal of shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-release of American Depositary Shares

The deposit agreement permits the depositary to deliver American Depositary Shares before deposit of the underlying shares. This is called a pre-release of the American Depositary Shares. The depositary may also deliver shares upon cancellation of pre-released American Depositary Shares (even if the American Depositary Shares are canceled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying shares are delivered to the depositary. The depositary may receive American Depositary Shares instead of shares to close out a pre-release. The depositary may pre-release American Depositary Shares only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer owns the shares or American Depositary Shares to be deposited; (2) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; and (3) the depositary must be able to close out the pre-release on not more than five business days’ notice. In addition, the depositary will limit the number of American Depositary Shares that may be outstanding at any time as a result of pre-release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so.

Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC under which the depositary may register the ownership of uncertificated American Depositary Shares, which ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated American Depositary Shares. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of American Depositary Shares, to direct the depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the American Depositary Share holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an American Depositary Share holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the American Depositary Share holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the depositary.

Shareholder Communications; Inspection of Register of Holders of American Depositary Shares

The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The depositary will send you copies of those communications if we ask it to. You have a right to inspect the register of holders of American Depositary Shares, but not for the purpose of contacting those holders about a matter unrelated to our business or the American Depositary Shares.

Glossary of Industry Terms

For convenience, the following terms used in this Form 20-F are defined as follows:

"cGMP"		Current Good Manufacturing Practice - the rules and standards defined by the regulatory authorities for the production of drugs at the quality required for use in human beings.
"Clinical"		Measureable effect or trial performed in human beings.
"Formulation"		All the inactive materials contained in a final medical product.
"Generic Product"		A product developed by others than the original innovator, yet contains the same active substance as the original product; a generic product may be completely identical with the original product or differ from the original product, based on the active substance contained in the original product. Limits of the difference from the original product within which the product may be recognized by the regulations as generic are determined separately for each product by the related regulatory authorities, during the approval process. Regulatory recognition of a product as a generic product is performed through the majority of approval procedures adapted to this type of product, which differ from the approval procedures applied to a new chemical entity (NCE).
"HTN"		Hypertension.
"IND"		Investigational New Drug - a new trial drug approved by the FDA for clinical trials in human beings.
"NCE"		New Chemical Entity - a new chemical product, approved through a unique regulatory procedure, that differs from the approval procedure of the existing products.
"NDA"		New Drug Application - an application submitted to the FDA to approve marketing a new drug.
"Preclinical"		Measureable effect or trial performed on cells or animals.
"Pharmacokinetics" "PK"		The specific properties of a certain preparation, of absorption, distribution and material disappearance from the body; the pharmacokinetic indices provide, among other things, information on the extent and time of the patient's exposure to the material.
"therapeutic effect"		Measurable change in the clinical condition of patients, resulting from the use of a certain medical drug or preparation.

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable

ITEM 15.

CONTROLS AND PROCEDURES

Not applicable.

ITEM 16.

[RESERVED]

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.

ITEM 16B.

CODE OF ETHICS

Not applicable.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

Not applicable

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.

Not applicable

ITEM 16G.

CORPORATE GOVERNANCE

Not applicable

ITEM 16H.

MINE SAFETY DISCLOSURE

Not applicable

ITEM 17.

FINANCIAL STATEMENTS

Not applicable

ITEM 18.

FINANCIAL STATEMENTS

The financial statements required by this item are found at the end of this Registration Statement, beginning on page F-1.

ITEM 19.

EXHIBITS

The exhibits filed with or incorporated into this Registration Statement are listed in the index of exhibits below:

Exhibit Number		Exhibit Description

1.1		Articles of Association of the Registrant and Certificate of Company Name Change (both unofficial English translations from Hebrew).

2.1 (1)		Form of Deposit Agreement among the Registrant, the Bank of New York Mellon, as Depositary, and all Owners and Holders from time to time of American Depositary Shares issued hereunder.

2.2 (1)		Form of American Depositary Receipt.

4.1†		Development Services Agreement, dated as of April 1, 2014, by and between Kitov Pharmaceuticals Holdings Ltd. and Dexcel Ltd.

4.2		Master Research Services Agreement, dated February 4, 2014, between Kitov Pharmaceuticals Holdings Ltd. and Java Clinical Research Limited.

4.3		Share Transfer Agreement, dated as of April 2, 2013, Kitov Pharmaceuticals Holdings Ltd. (then known as Mainron Line Logisitics Ltd.), Kitov Pharmaceuticals Ltd., the shareholders of Kitov Pharmaceuticals, Sheer Roichman and Haiku Capital Ltd.

4.4		Form of Loan Agreement, dated November 25, 2013, between the Company and several lenders, including Mr. Sheer Roichman, a stake holder in the Company and third parties (unofficial English translation from Hebrew).

4.5		Loan Agreement, dated August 25, 2013, between the Company, Dr. Paul Waymack (through JPW), Dr. Morris Laster, Mr. Sheer Roichman, Mr Isaac Israel and Mr. Simcha Rock and also a third party, as extended.

4.6		Agreement, dated February 27, 2014, between Clal Finance Underwriting and Kitov Pharmaceuticals Holdings Ltd. (unofficial English translation from Hebrew).

4.7		Form of Letter of Exemption adopted on July 2013 (unofficial English translation from Hebrew).

4.8		Form of Letter of Indemnity adopted on July 2013 (unofficial English translation from Hebrew).

4.9		2013 Stock Option Plan, as amended (unofficial English translation from Hebrew).

15.1 (2)		Consent of Somekh Chaikin, Certified Public Accountant (Isr.), a Member Firm of KPMG International, independent registered public accounting firm for the Registrant.

†	Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

(1) To be filed by amendment.

(2) To be filed at a later date.

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Registration Statement on its behalf.

KITOV PHARMACEUTICALS HOLDINGS LTD.


By:
	Name:	Isaac Israel
	Title:	Chief Executive Officer


By:
	Name:	Simcha Rock
	Title:	Chief Financial Officer

Date: ___, 2014

Kitov Pharmaceuticals

Holdings Ltd.

Condensed Consolidated

Interim Financial

Statements

As of March 31, 2014

(Unaudited)

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Financial Statements as of March 31, 2014

Contents

	Page

Condensed Consolidated Interim Financial Statements as of March 31, 2014

Condensed Consolidated Interim Statements of Financial Position	F-2

Condensed Consolidated Interim Statements of Operations	F-3

Condensed Consolidated Interim Statements of Changes in Equity (Deficit)	F-4-F-6

Condensed Consolidated Interim Statements of Cash Flows	F-7

Notes to the Condensed Consolidated Interim Financial Statements	F-8-F-13

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Statements of Financial Position

			March 31			March 31			December 31
			2014			2013			2013
			Unaudited			Unaudited			Audited
	Note		USD thousand			USD thousand			USD thousand

Assets
Cash and cash equivalents				2,813			22			193
Receivables				275			4			118

Total current assets				3,088			26			311

Total assets				3,088			26			311

Liabilities
Accounts payables				266			71			54
Other payables				314			21			420
Liabilities to interested parties		5		418			395			783

Total current liabilities				998			487			1,257


Equity (deficit)

Share capital, no par value				-			-			-
Share premium				7,193			1,089			2,654
Capital reserve for share-based payments				176			-			141
Interested parties’ investment				-			-			141
Capital reserve from transactions with interested parties				761			541			*718
Accumulated deficit				(6,040	)		(2,091	)		(4,600	)

Total equity (deficit)				2,090			(461	)		(946	)

Total liabilities and equity (deficit)				3,088			26			311

August 15, 2014

/s/ Simcha Rock

/s/ Isaac Israel

/s/ Paul Waymack

Approval date of

Financial Statements

Simcha Rock

CFO and Board
Member

Isaac Israel

CEO and Board
Member

Paul Waymack

Chairman of the
Board of Directors

Reclassified.

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-2

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Statements of Operations

									For the year
			For the three months ended						ended
			March 31						December 31
	Note		2014			2013			2013
			Unaudited			Unaudited			Audited
			USD thousand			USD thousand			USD thousand

Research and development expenses				412			5			109
General and administrative expenses				210			110			1,061
Other expenses		6		720			-			1,383

Operating loss				1,342			115			2,553

Finance expense				98			4			75

Loss for the period				1,440			119			2,628

Loss per share
Basic and diluted loss per share - USD				(0.04	)		(0.01	)		(0.12	)
Number of shares used in calculating basic and diluted loss per share –thousand				35,306			17,569			21,335

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-3

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (Deficit)

								Capital
								reserve from
					Capital			transactions
					reserve for			with		Interested
	Share		Share		share-based			interested		parties’			Accumulated
	capital		premium		payments			parties		investments			loss			Total
	USD thousands

For the period ended March 31, 2014 (unaudited):

Balance as of January 1, 2014		-		2,654		141			*718		*141			(4,600	)		(946	)

Issuance of shares, net of issuance costs		-		4,493		57			-		-			-			4,550
Share-based payments		-		-		17			-		-			-			17
Options exercised		-		46		(39	)		-		-			-			7
Capital reserve from transactions with interested parties		-		-		-			43		-			-			43
Repayment of loans from interested parties		-		-		-			-		(141	)		-			(141	)
Total comprehensive loss for the period		-		-		-			-		-			(1,440	)		(1,440	)

Balance as of March 31, 2014		-		7,193		176			761		-			(6,040	)		2,090

Reclassified.

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-4

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (Deficit)

					Capital
					reserve from
					transactions
					with
	Share		Share		interested		Accumulated
	capital		premium		parties		loss			Total
	USD thousands

For the period ended
March 31, 2013 (unaudited)

Balance as of January 1, 2013		-		1,089		476		(1,972	)		(407	)

Capital reserve from transactions
with interested parties		-		-		65		-			65

Total comprehensive loss for the period		-		-		-		(119	)		(119	)

Balance as of March 31, 2014		-		1,089		541		(2,091	)		(461	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-5

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (Deficit)

								Capital
								reserve from
					Capital			transactions
					reserve for			with		Interested
	Share		Share		share-based			interested		parties		Accumulated
	capital		premium		payments			parties		investments		loss			Total
	USD thousands

For the year ended December 31, 2013 (audited)

Balance as of January 1, 2013		-		1,089		-			476		-		(1,972	)		(407	)

Issuance of shares pursuant to merger transaction		-		1,383		-			-		-		-			1,383
Share-based payments		-		-		296			-		-		-			296
Options exercised		-		182		(155	)		-		-		-			27
Capital reserve from transactions with interested parties		-		-		-			242		-		-			383
Loan from interested parties											*141

Total comprehensive loss for the year		-		-		-			-		-		(2,628	)		(2,628	)

Balance as of December 31, 2013		-		2,654		141			*718		*141		(4,600	)		(946	)

Reclassified

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-6

Kitov Pharmaceuticals Holdings Ltd.

Condensed Consolidated Interim Statements of Cash Flows

							For the year
	For the three months ended						ended
	March 31						December 31
	2014			2013			2013
	(Unaudited)			(Unaudited)			(Audited)
	USD thousands

Cash flows from operating activities:
Loss for the period		(1,440	)		(119	)		(2,628	)

Adjustments:
Finance expense, net		98			4			75
Expenses related to stock exchange listing		-			-			1,383
Payroll expense to share-based payments		17			-			296
Payroll expense to interested parties		37			65			228

		(1,288	)		(50	)		(646	)

Changes in assets and liabilities:
Changes in receivables		(157	)		4			(110	)
Changes in accounts payables		219			5			(10	)
Changes in other payables		(53	)		(15	)		255

		9			(6	)		135

Net cash used in operating activities		(1,279	)		(56	)		(512	)

Cash flows from financing activities:
Loan received from interested parties		-			78			578
Repayment of loan from interested parties		(516	)		-
Loan received from third parties		132			-			108
Repayment of loans from third parties		(245	)		-
Proceeds from issuance of shares		4,964			-
Share issuance expenses paid		(414	)		-
Receipts from options exercised		-			-			27
Interest paid		(10	)		-			(12	)
Net cash provided by financing activities		3,911			78			701

Net increase in cash and cash equivalents		2,632			22			189
Cash and cash equivalents at the beginning of the period		193			-			-
Effect of translation adjustments on cash and cash equivalents		(12	)		-			4

Cash and cash equivalents at the end of the period		2,813			22			193

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F-7

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 1 - General

Reporting entity

Kitov Pharmaceuticals Holdings Ltd. (formerly Mainrom Line Logistics Ltd.) is a public company engaged in the development of innovative chemical drugs with a clinical and commercial added value, based on known and approved drugs. In October 2012, the Company disposed of all of its previous operations, and on July 11, 2013, the Company acquired shares of Kitov Pharmaceuticals Ltd. from its shareholders, in exchange for the Company’s shares.

The Company has incurred losses and negative cash flows from operations and has an accumulated deficit of USD 6 million. The Company has financed its operations through the issuance and sale of shares and loans. The Company’s cash as of balance sheet date will allow the Company to fund its operations through at least the next 12 months. However, if the Company does not obtain additional funding prior to year end, it will need to curtail its operations including clinical trials, until such financing is found.

The Company may incur significant additional losses as it continues to focus resources on prioritizing, selecting and advancing therapeutic candidates. The ability to generate revenue and achieve profitability depends mainly upon the ability, alone or with others, to successfully develop therapeutic candidates, obtain the required regulatory approvals in various territories and then commercialize the therapeutic candidates.

Material events in the reported period

(a)

On February 13, 2013, the Company entered into a loan agreement with a third party, amounting to NIS 180 thousand (USD 52 thousand). This loan and other loans amounting to NIS 2,654 thousand (USD 761 thousand) were repaid during March 2014. This amount included USD 516 thousand of loans from interested parties, of which USD 141 thousand was included in equity, and an amount of USD 245 thousand from third parties. An amount of USD 58 thousand from third parties was repaid in August 2014. An amount of USD 67 thousand from interested parties have not yet been repaid. A repayment date has not yet been set.

(b)

On March 3, 2014, the Company issued ordinary shares with no par value, in accordance with a prospectus issued by the Company on February 24, 2014 and a supplemental notice issued on February 27, 2014. The Company offered to the public 25,000,000 ordinary shares (no par value) bundled into 25,000 units, by way of a uniform offering by auction for the unit price. The minimum unit price was set at NIS 200.

F-8

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 1 – General (continued)

Material events in the reporting period (continued)

(b)

(continued)

As a result of this auction, the Company issued 28,750,000 shares at a price of NIS 0.60 per share. Total gross proceeds received by the Company amounted to NIS 17,250,000 (USD 4.9 million).

In addition, the Company committed to conduct a rights issuance by which it would offer to Company shareholders by way of rights, for no consideration, options to purchase Company shares. The Company published a rights offering prospectus on May 28, 2014. See Note 7B.

Regarding a payment to Haiku, a company wholly owned by a former controlling shareholder, see note 6.

(c)

In connection with a prospectus published on February 24, 2014, the Company entered into an agreement with a broker, according to which the Company committed, that if the Company publishes a rights offering, registered options would be issued to the broker for no consideration. Following the rights offering on May 28, 2014, the Company issued the broker 1,437,500 options.

Note 2 - Basis of Preparation

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the financial statements as at and for the year ended December 31, 2013 (hereinafter – “the annual financial statements”). Furthermore, these financial statements have been prepared in accordance with Section D of the Securities Regulations (Periodic and Immediate Reports) - 1970.

The Company Board of Directors approved publication of these condensed consolidated interim financial statements in a 20-F form on August 15, 2014.

F-9

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 2 - Basis of Preparation (continued)

The Company’s presentation currency is the US dollar.

The following is USD rates and Consumer Price Index (CPI) data:

					As of
	As of March 31				December 31
	2014		2013		2013

CPI (in points)		107.1		105.7		107.6
USD		3.487		3.648		3.471

The following represents changes in USD rates and CPI:

	For the three months ended						For the year ended
	March 31						December 31
	2014			2013			2013
	%			%			%

CPI (in points)		(0.1	)		-			1.8
USD		0.5			(2.3	)		(7.0	)

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Note 3 - Significant Accounting Policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its annual financial statements.

Note 4 – Share Capital and Share Premium

The Group recognized the following amounts within share capital and premium during the period:

	For the three
	months ended
	March 31, 2014
	(Unaudited)
	USD thousands

Shares issued for cash, net of issuance costs		4,493
Exercise of options during the period		46

		4,539

Issuance expenses amounted to USD 471 thousand and are presented as a deduction from equity.

F-10

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 5 – Transactions and Balances with Interested Parties

Balances with interested parties are included in the statement of financial position in the following items:

	March 31,				December 31,
	2014		2013		2013
	(Unaudited)				(Audited)
	USD thousands		USD thousands		USD thousands

Other payables		40		-		5

Liabilities to interested parties		418		395		783

The statements of operations include the following transactions with interested parties and related parties:

					For the
	For the three months ended				year ended
	March 31				December 31
	2014		2013		2013
	(Unaudited)				(Audited)
	USD thousands		USD thousands		USD thousands

General and administrative expenses*		109		60		382

Research and development expenses *		-		5		47

Other expenses		720		-		-

Financing expenses		30		-		31

During the reported period and the year ended December 31, 2013 interested parties in Kitov forgave payroll owed to them in the amounts of USD 37 thousand and USD 228 thousand, respectively. The cost of these services was determined based on an hourly rate which reflects market terms.

Note 6 – Other Expenses

As part of the share acquisition transaction, in which the Company acquired the subsidiary’s shares in exchange for shares issued to the subsidiary’s shareholders (hereinafter – “the acquisition transaction”), it was determined that Haiku would be eligible to receive, out of all funds raised by the Company in one or multiple transactions, an amount of up to NIS 2.5 million. After the share issuance described in Note 1.B.b, an amount of NIS 2,500 thousand (USD 720 thousand) was paid to Haiku. This amount was recorded to other expenses.

F-11

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 7 - Subsequent Events

On April 1, 2014, the Company signed an agreement with Dexcel Ltd. (hereinafter: “Dexcel”) for strategic cooperation, including formulation development services for the drug KIT-302 (hereinafter: “the drug”), the right to negotiate the commercial manufacture of the drug and the right to negotiate the marketing of the drug.

In consideration of the services to be provided by Dexcel, the Company will pay USD 2 million in four equal USD 0.5 million payments, of which the first one was paid on April 30, 2014, and the remaining three payments will be paid according to milestones that were stipulated in the agreement. In addition, the Company will pay USD 1.5 million worth of shares in three tranches of USD 0.5 million each. The first tranche of 2,051,176 shares was issued at a share price of NIS 0.85 per share. The remaining two tranches will be issued upon reaching milestones as stipulated in the agreement, at a price per share based on the average price per share during the 45 days prior to the date of completing the relevant milestone.

In addition, Dexcel will pay the Company USD 0.5 million in two payments upon reaching milestones as stipulated in the agreement, for the right to negotiate the commercial manufacture of and the global marketing rights for the drug.

According to the agreement, the intellectual property (hereinafter – “IP”) owned by the Company prior to this agreement will remain the Company’s. Dexcel will be given the right to use the Company’s IP for the purpose of development and marketing of the drug. Any IP developed in the process of the drug’s development and manufacturing will be owned by both the Company and Dexcel, and the Company and Dexcel will give each other the right to use this IP. In addition, any IP developed by Dexcel in the process of the drug’s development and manufacturing, and which is not under the common IP, will be owned by Dexcel, and Dexcel will give the Company the right to use it in connection with the drug.

On May 28, 2014 the Company filed a rights offering prospectus, in which it issued 5,717,074 warrants (series 1), exercisable from their issuance date through June 30, 2015. Each option can be exercisable for one share with no par value, for a cash payment of NIS 0.75. The exercise price is not linked to any index. The options were registered on June 11, 2014. Any option that is not exercised during the exercise period will expire, and the holder will not have any right or claim on it.

The Company entered into an agreement with two advisors that are entitled to payment for their services, amounting to NIS 55 thousand ($16 thousand). In addition, the Company will pay one of its advisors an additional amount equal to 1% of the total proceeds from the exercise options. Furthermore, the Company contracted another issuance advisor, who will be entitled to 2.5% of the total proceeds of the exercised options.

F-12

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Condensed Consolidated Interim Financial Statements a of March 31, 2014 (Unaudited)

Note 7 - Subsequent Events (continued)

On July 3, 2014 the Company granted options to an advisor as follows: (i) 600,000 non-tradable options, exercisable to ordinary shares with no par value with an exercise price of NIS 1.20 per share. The options are exercisable commencing their issuance date for a period of 4 years. The options vest on a quarterly basis in equal parts as of the grant date for a period of 2 years, such that 12.5% of the options vest at the end of each quarter, provided that the advisor continues to provide services to the Company. (ii) 333,333 non tradable options to purchase 333,333 shares with no par value. The options are exercisable as of the date of the grant and for a period of 4 years thereafter, against payment of an exercise price of NIS 0.6 per share. The options are fully vested, as of the grant date. On August 12, 2014, 333,333 options were exercised at an exercise price of NIS 200 thousand (USD 58 thousand). All options were granted in accordance with the terms and conditions set forth in the Company’s 2013 Israeli Share Options Plan.

On July 3, 2014 the Company granted an employee 250,000 non tradable options to purchase 250,000 shares with no par value. The options are exercisable as of the grant date and for a period of 10 years thereafter, with an exercise price of NIS 0.6525. The options vest on a quarterly basis in equal parts as of the grant date for a period of 3 years thereafter. The grant of the options is subject to the approval of TASE and are granted in accordance with the Company’s 2013 Israeli Share Options Plan.

On July 18, 2014 the Company filed a shelf prospectus, according to which the Company may issue to the public up to 200,000,000 ordinary shares with no par value, and up to 5 series of options (series 2 – 6), each, including up to 40,000,000 options exercisable to Company’s ordinary shares with terms to be determined by the Company.

F-13

Kitov Pharmaceuticals

Holdings Ltd.

Consolidated Financial

Statements

As of December 31, 2013

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Financial Statements as of December 31, 2013

Contents

	Page

Auditors’ Report	F-2

Consolidated Financial Statements as of December 31, 2013

Consolidated Statements of Financial Position	F-3

Consolidated Statements of Operations	F-4

Consolidated Statements of Changes in Deficit	F-5-F-7

Consolidated Statements of Cash Flows	F-8

Notes to the Consolidated Financial Statements	F-9-F-25

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Kitov Pharmaceuticals Holdings Ltd.

We have audited the accompanying consolidated statements of financial position of Kitov Pharmaceuticals Holdings Ltd. (hereinafter – “the Company”) and subsidiary as of December 31, 2013 and 2012 and the related consolidated statements of operations, changes in deficit and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and its subsidiary of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ Somekh Chaikin

Somekh Chaikin

Certified Public Accountants (Isr.)

Member firm of KPMG International

Tel-Aviv, Israel

August 15, 2014

F-2

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Financial Position

			December 31			December 31
			2013			2012*
	Note		USD thousands			USD thousands
Assets
Cash		4		193			-
Receivables		5		118			8

Total current assets				311			8

Total assets				311			8

Liabilities
Accounts payable		7		54			61
Other payables		8		420			37
Liabilities to interested parties		9,12		783			317

Total current liabilities				1,257			415


Deficit

Share capital, no par value				-			-
Share premium		10		2,654			1,089
Capital reserve for share-based payments		11		141			-
Capital reserve from transactions with interested parties				859			476
Accumulated deficit				(4,600	)		(1,972	)

Total deficit				(946	)		(407	)

Total liabilities and deficit				311			8

August 15, 2014

/s/ Simcha Rock

/s/ Isaac Israel

/s/ Paul Waymack

Approval date of
Financial Statements

Simcha Rock

CFO and Board Member

Isaac Israel

CEO and Board Member

Paul Waymack

Chairman of the Board of Directors

Restated – see Note 3C.

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Operations for the year ended

			December 31
			2013			2012*			2011*
	Note		USD thousands			USD thousands			USD thousands

Research and development expenses		13		109			94			37
General and administrative expenses		14		1,061			608			90
Expenses related to stock exchange listing		10		1,383			-			-

Operating Loss				2,553			702			127

Finance expense		15		75			1			-
Finance income				-			-			2

Loss for the year				2,628			703			125

Loss per share data
Basic and diluted loss per share – USD				(0.12	)		(0.04	)		(0.01	)
Number of shares used in calculating basic and diluted loss per share –thousand				21,335			17,569			17,569

Restated – see Note 3.C.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Changes in Deficit

								Capital
								reserve from
					Capital			transactions
					reserve for			with
	Share		Share		share-based			interested		Accumulated
	capital		premium		payments			parties		deficit			Total
	USD thousands

For the year ended December 31, 2013:
Balance as of January 1, 2013*		-		1,089		-			476		(1,972	)		(407	)

Changes for the year ended December 31, 2013:

Issuance of shares pursuant to share purchase transaction (see Note 1.B)		-		1,383		-			-		-			1,383
Share-based payments (see Note 11)		-		-		296			-		-			296
Options exercise		-		182		(155	)		-		-			27
Capital reserve from transactions with interested parties (see Note 1C)		-		-		-			383		-			383
Total comprehensive loss for the year		-		-		-			-		(2,628	)		(2,628	)

Balance as of December 31, 2013		-		2,654		141			859		(4,600	)		(946	)

Restated – see Note 3C.

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Changes in Deficit

					Capital
					reserve from
					transactions
					with
	Share		Share		interested		Accumulated
	capital		premium		parties		deficit			Total
	USD thousands

For the year ended December 31, 2012:*

Balance as of January 1, 2012		-		1,089		72		(1,269	)		(108	)

Changes for the year ended December 31, 2012:

Capital reserve from transactions with interested parties		-		-		404		-			404

Total comprehensive loss for the year		-		-		-		(703	)		(703	)

Balance as of December 31, 2012		-		1,089		476		(1,972	)		(407	)

Restated – see Note 3C.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Changes in Deficit

					Capital
					reserve from
					transactions
					with
	Share		Share		interested		Accumulated
	capital		premium		parties		deficit			Total

For the year ended December 31, 2011:*

Balance as of January 1, 2011		-		1,089		-		(1,144	)		(55	)

Changes for the year ended December 31, 2011:

Capital reserve from transactions with interested parties		-		-		72		-			72

Total comprehensive loss for the year		-		-		-		(125	)		(125	)

Balance as of December 31, 2011		-		1,089		72		(1,269	)		(108	)

Restated – see Note 3C.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Kitov Pharmaceuticals Holdings Ltd.

Consolidated Statements of Cash Flows for the year ended

	December 31
	2013			2012*			2011*
	USD thousands

Cash flows from operating activities:
Loss for the year		(2,628	)		(703	)		(125	)

Adjustments:
Finance expense, net		75			1			(2	)
Expenses related to stock exchange listing (see Note 3.I.)		1,383			-			-
Payroll expense to share-based payments		296			-			-
Payroll expense to interested parties (see Note 12.B)		228			403			-

		646			(299	)		(127	)

Changes in assets and liabilities:
Changes in receivables		(110	)		(1	)		6
Changes in accounts payable		(11	)		14			48
Changes in other payables		255			33			42

		134			46			96

Net cash used in operating activities		(512	)		(253	)		(31	)

Cash flows from financing activities:
Loan received from interested parties		578			253			30
Loans received from third parties		108			-			-
Receipts from option exercise		27			-			-
Interest paid		(12	)		-			-

Net cash provided by financing activities:		701			253			30

Net increase (decrease) in cash		189			-			(1	)
Cash at the beginning of the year		-			-			1
Effect of translation adjustments on cash		4			-			-

Cash at end of the year		193			-			-

Restated – see Note 3C.

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 1 - General

Reporting entity

The Company has incurred losses and negative cash flows from operations and has an accumulated deficit of USD 4.6 million. The Company has financed its operations through the issuance and sale of shares and loans. The Company’s cash as of December 31, 2013, as well as its proceeds from the issuance of shares subsequent to balance sheet date in the amount of USD 4.9 million as detailed in Note 17 "Events subsequent to the balance sheet date", will allow the Company to fund its operations through at least the next 12 months. However, if the Company does not obtain additional funding prior to year end, it will need to curtail its operations including clinical trials, until such financing is found.

Material events in the reported period

On April 9, 2013, the Company entered into an agreement (hereinafter: "the share purchase agreement") with Kitov Pharmaceuticals Ltd. (hereinafter: "Kitov"), with Kitov shareholders (hereinafter: "the shareholders"), with the Company's former controlling shareholder, Mr. Sheer Roichman (hereinafter: "Roichman") and with Haiku Capital Ltd., a company wholly owned by Mr. Sheer Roichman (hereinafter: "Haiku"). Accordingly, the Company acquired from the shareholders 100% of Kitov's fully diluted share capital in exchange for a private issuance of ordinary shares with no par value (hereinafter: "Company shares" or "Company ordinary shares") to the shareholders, comprising up to 63.75% of the Company's share capital, on a fully diluted basis. In addition, the Company will issue additional shares to the shareholders (hereinafter: "additional issuance") should the Company achieve a milestone reflecting success in the Phase 3 clinical trial (hereinafter: "the milestone"), such that after the additional issuance, the shareholders would hold 77.73% of the Company's share capital, on a fully diluted basis - without accounting for any potential dilution upon future equity issue.

F-9

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 1 – General (continued)

Material events in the reported period (continued)

(continued)

Furthermore, in accordance with the agreement the Company awarded to its external advisors, options to purchase 1,194,616 Company ordinary shares in exchange for advisory services provided to Kitov in accordance with the share acquisition transaction. The Company also awarded Mr. Simcha Rock, the Company's CFO and Board member, options to acquire 1,370,056 ordinary shares in exchange for services to be provided pursuant to his engagement contract (of which 181,089 options are contingent on achieving the milestone). For more information regarding the options awarded, see Note 11 below.

On June 27, 2013, at the annual General Meeting of the Company, the Shareholders approved the aforementioned transaction, which was completed on July 11, 2013. As a result of the transaction, Mr. Sheer Roichman ceased being the controlling shareholder of the Company, and instead JPW PCH LLC became the controlling shareholder.

In addition, Mr. Sheer Roichman provided the Company with a NIS 500 thousand loan. Subsequent to the balance sheet date, the loan was repaid in full.

In accordance with the agreement, Haiku became eligible to receive, out of all funds raised by the Company, an amount of up to NIS 2.5 million. Following the issuance of shares on the basis of the February 2014 prospectus, Haiku was paid the aforementioned amount in full, see Note 17.

For the accounting treatment of the aforementioned transactions, see Note 3 "Significant accounting policies".

F-10

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 1 – General (continued)

Material events in the reported period (continued)

On November 25, 2013, the Company signed loan agreements with several lenders, including Mr. Sheer Roichman, an interested party in the Company, and with third parties, totaling NIS 810 thousand (USD 233 thousand). The loans bear no interest and are not linked to the CPI; however, the Company will pay the lenders a credit facility fee of NIS 270 thousand (USD 78 thousand) payable to the lenders, together with the loan principal, upon maturity of the loans. Upon receipt of the loans, the Company paid a fee of 7.5% of the loan principal, plus VAT.

As of the balance sheet date, the Company had received loans amounting to NIS 530 thousand (USD 153 thousand). The remaining loan balance, amounting to NIS 280 thousand (USD 80 thousand) was received after the balance sheet date.

Subsequent to balance sheet date, these loans were repaid in full.

On November 27, 2013, the Company Board of Directors approved the adoption of an Employee Stock Option Plan pursuant to section 102 of the Income Tax Ordinance and Income Tax Regulations (Tax relief for share issuance to employees), 2003 whereby the Board would award options to purchase shares to Company employees and advisors, to be selected from time to time by the Board of Directors at its sole discretion. In conjunction with this plan, the Company may issue non-tradable options exercisable into ordinary shares with no par value, subject to an exercise price and vesting periods to be determined by the Board of Directors in the award letter for each offeree.

On November 28, 2013, the Company signed a term sheet with Java Clinical Research Ltd., a contract research organization based in Dublin, Ireland. A binding Master Research Services Agreement was signed on February 4, 2014. According to the terms of the agreement, Java will manage the pivotal Phase 3 clinical trial for KIT-302, including preparation and filing of the requests to the ethics boards and the necessary regulatory bodies of the European Union, recruiting the tested subjects, employment of the primary researchers, identification and evaluation of the medical centers and their subsequent management throughout the trial period, and overall management of the trial process through its completion. The total cost of the agreement with Java is approximately USD 2.0 – 2.5 million, to be paid to Java or directly to their subcontractors according to milestones determined between the parties, during the trial period. To date, Java has identified several medical centers, and two are under contract. The clinical trial began at one of the medical centers in June 2014.

Either party may terminate the agreement (or any work thereunder) if: (i) the party provides 60 days’ notice, (ii) immediately if the other party commits a material breach and doesn't cure it within 30 days of notice and (iii) immediately if the other party declares bankruptcy.

F-11

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 1 – General (continued)

Definitions

In these financial statements:

(1)

The Company – Kitov Pharmaceuticals Holdings Ltd.

(2)

The Group – Kitov Pharmaceuticals Holdings Ltd. and its subsidiary.

(3)

Related party – As defined in IAS 24 (2009), “Related Party Disclosures”.

(4)

Interested party – As defined in Paragraph (1) in Section 1 of the Israeli Securities Law - 1968.

Note 2 – Basis of Preparation of the Financial Statements

Statement of compliance with International Financial Reporting Standards

The Company has prepared the financial statements in accordance with International Financial Reporting Standards (hereinafter: "IFRS"), as issued by the International Accounting Standard Board (“IASB”).

The Board of Directors approved publication of these consolidated financial statements in a 20-F form on August 15, 2014.

Functional and presentation currency

These financial statements are presented in USD, which is the Company’s functional currency as described in Note 3.B below, rounded to the nearest one thousand, unless otherwise noted.

Use of estimates and judgment

The preparation of accounting estimates used in the preparation of the Group’s financial statements requires management of the Company to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the Company prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Fair value determination - share-based payments

In preparing these financial statements, the Group is required to determine the fair value of share-based payment arrangements. In order to determine the fair value, the Company conducted a valuation. For more information about assumptions used in determination of the fair value of granted options, see Note 11.

F-12

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 3 – Significant Accounting Policies

The following accounting policies have been consistently applied, with adjustments necessary for presentation as set forth in sections B. and C. below.

Functional currency and presentation currency

The Company's functional currency and presentation currency is the USD, since it represents the economic environment in which the Company operates, the major target market for the drug (the US market) as well as agreements signed with some sub-contractors.

Acquisition of entity as part of re-structuring (As Pooling)

The financial statements include the operations acquired through the As Pooling acquisition - see Note 1B. In conformity with IFRS 3, the Company acquired Kitov operations, as described in Note 1B above. Since the Company is the acquired entity for accounting purposes and is not an actual business (but rather a public company shell) - this is in fact a re-structuring made for the purpose of the issuance of shares. Accordingly, the transaction was accounted for using the As Pooling method, with assets and liabilities of the acquired operations recognized on the financial statements at their carrying amounts by Kitov immediately prior to the transaction.

Furthermore, the Company's comparative figures were re-stated to reflect the Company's financial standing and operating results as if it has always owned the operations acquired in the share purchase transaction. Therefore, balances of assets, liabilities, expenses and revenues which refer to the Company's past operations are excluded from these financial statements.

Foreign currency transactions

Transactions in foreign currency are translated to the respective functional currencies of Group companies at exchange rates as of the transaction dates. Monetary assets and liabilities denominated in foreign currency as of the reporting date are translated into the functional currency at the exchange rate as of said date. Exchange rate differences with respect to monetary items are the differences between the amortized cost in the functional currency as of the start of the year, adjusted for the effective interest during the year, and the amortized cost in foreign currency, translated at the exchange rate as of the end of the year. Non-monetary items denominated in foreign currency and measured at historical cost, are translated using the exchange rate as of the transaction date. Exchange rate differences arising from translation into the functional currency are recognized on the statement of operations.

F-13

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 3 – Significant Accounting Policies (continued)

Non-derivative financial liabilities

Non-derivative financial liabilities include: borrowings from related parties and others, trade payables and accounts payable.

Initial recognition of financial liabilities

The Group initially recognizes debt instruments issued as they are created. Other financial liabilities are initially recognized on the trade date on which the Group becomes party to contractual terms of the instrument.

Financial liabilities are initially recognized at fair value less any attributable transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.

Transaction costs directly related to a specific instrument are classified as financial liabilities and are recognized as an asset under deferred expenses on the statement of financial position. These transaction costs are deducted from the financial liability upon initial recognition thereof, or are amortized as finance expenses on the statement of operations when the issuance of the instrument is no longer expected to take place.

De-recognition of financial liabilities

Financial liabilities are de-recognized upon expiration of the Group's liability, as set forth in the agreement, or when reversed or cancelled.

Intangible assets – research and development costs

Expenditures related to research activities carried out in order to acquire new scientific or technical knowledge and understanding are charged to the statement of operations as they are incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes.

Loss per share

The Group presents loss per share data for its ordinary share capital. Loss per share is calculated by dividing the loss attributable to holders of ordinary shares, by the weighted average number of ordinary shares outstanding during the period.

Transactions with controlling shareholder

Assets and liabilities which are subject to a transaction with a controlling shareholder are measured at fair value upon the transaction date. Due to the fact that this is an equity-based transaction, the Group recognized the difference between fair value and transaction proceeds in equity.

F-14

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 3 – Significant Accounting Policies (continued)

Share purchase transaction cost

The consideration for the share purchase transaction constitutes trade listing expenses, recognized on the statement of operations. According to IFRS 2, the Company recognized expenses related to stock exchange listing of USD 1,383 thousand on the statement of operations. The amount of the expense represents the effective cost of the acquisition of the Company, at that time a public shell, from an accounting perspective, by Kitov Pharmaceuticals Ltd.

Share-based payment transactions

The fair value of share-based payment awards to employees and officers is recognized as payroll expense, against equity, over the period in which non-contingent eligibility for such award is earned. The amount charged as share-based payment awards expense is contingent on vesting conditions, which are service or performance conditions and is adjusted to reflect the number of awards expected to vest. As for share-based payment awards contingent on non-vesting conditions, or on vesting conditions which are performance conditions that are market conditions, the Company accounts for these conditions when estimating the fair value of such awards; therefore the Company recognizes an expense with respect to these awards, regardless of fulfillment of these conditions.

Financing income and expense

Finance expenses include loss from exchange rate differences and interest paid on loans received. Interest expense is recognized, using the effective interest method.

Share issuance expense

Share issuance expense is recognized when incurred, as pre-paid expenses, when an issuance is expected to take place. Expenses are recognized under Share Premium upon the issuance of shares.

Note 4 – Cash

	As of December 31
	2013		2012
	USD thousands

Balance in USD		80		-
Balance in other currencies		113		-
Total cash		193		-

F-15

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 5 – Receivables

	As of December 31
	2013		2012
	USD thousands

Institutions - VAT		38		8
Pre-paid expenses		80		-

Total receivables		118		8

Note 6 – Subsidiary

The following is condensed information about the subsidiary directly held by the Company:

Incorporated

Group’s
ownership

Company’s
direct
ownership of

Amounts provided by the
Company to the subsidiary

Total
investment

equity

Loans

Guarantees

in subsidiary

USD thousands

Kitov Pharmaceuticals Ltd.

Israel

100%*

375

(845

)

20% of Kitov share capital is held in trust on behalf of the Company, to be transferred to the Company upon the earlier of: (1) 28 months after the closing of the transaction described in Note 1.B; (2) achievement by Kitov of the milestone set forth in the agreement.

Note 7 – Accounts Payable

For information regarding trade payable which are due to related and interested parties, see Note 12 "Related parties and interested parties".

Note 8 – Other Payables

	As of December 31
	2013		2012
	USD thousands

Due to interested parties		40		-
Accrued expenses		266		37
Other*		114		-

		420		37

For information regarding other payables to related and interested parties, see Note 12 "Related parties and interested parties".

Includes loans obtained from lenders other than related parties. For terms of these loans, see Note 9 below.

F-16

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 9 – Liabilities to Interested Parties and Others

Composition as of December 31, 2013:

	USD thousands

Interested parties		783
Others - presented under Other Payables, see Note 8		114

		897

Below is information regarding the balances as of December 31, 2013:

Loan currency	Interest and linkage terms	Note	USD thousands

USD	No interest or linkage	(1)		363
NIS	No interest, linked to CPI	(2)		69
NIS	No interest, linked to CPI	(3)		298
NIS	No interest or linkage	(4)		167

				897

(1)

Amounts received from interested parties in Kitov for financing operations, prior to the date of the share purchase agreement. In March 2014, the Company announced that USD 299 thousand would be repaid in March 2015 or upon receiving positive results from a clinical trial, whichever is earlier.

(2)

Loans from an interested party totaling NIS 250 thousand (USD 72 thousand), received by the Company in 2013 prior to the share purchase agreement . Of this amount, a loan of NIS 200 thousand (USD 58 thousand), whose outstanding balance as of the balance sheet date was USD 54 thousand, matured in February 2014. As of the date of the financial statements this loan has yet to be repaid. Although these loans do not bear interest, the Company recognized imputed interest at an annual rate of 10.67%.

(3)

The balance includes USD 238 thousand in loans from interested parties and USD 60 thousand from third parties loans. The lenders extended the maturity date of these loans to May 25, 2014. On March 6, 2014, the Company repaid loans from interested parties, with an original amount of NIS 820 thousand and a balance amounting to USD 238 thousand as of the balance sheet date. The loan from a third party, with an original amount of NIS 200 thousand and a balance amounting to USD 60 thousand as of the balance sheet date, was repaid in August 2014. Although these loans do not bear interest, the Company recognized imputed interest at an annual rate of 10.67%.

(4)

For information about these loans, see Note 1.B.2 above. With respect to these loans, in 2013 the Company recognized interest of USD 14 thousand. These loans were fully repaid in March 2014 - see also Note 17.B.

F-17

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 10 – Share Capital, Reserves and Share Premium

The Company's share capital

	As of December 31, 2013
	Authorized		Issued and paid-in

Ordinary shares, no par value		500,000,000		26,135,213

During the year, the Group recognized the following amounts under share capital, reserves and share premium

	For the year ended December 31
	2013		2012
	USD thousands

Share premium for shares issued in conjunction
with as pooling acquisition*		1,383		-
Share-based payments		296		-
Options exercised during the reported period		27		-
Capital reserve from interested parties**		383		404

		2,089		404

See Note 3.I.

The change in 2013 in capital reserve from Interested Parties consists of the foregoing of payroll expenses of the controlling shareholder, who also serves as Chairman of the Board of Directors and as Chief Medical Officer of the Company, and by the CFO, who also serves as a Board member and holds equity interest, amounting to USD 228 thousand, and of loans from an interested party, as set forth in Note 9 below, amounting to USD 155 thousand. In 2012, the increase in capital reserve is due to the foregoing of expenses by the controlling shareholder, amounting to USD 404 thousand.

F-18

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 11 – Share-based Payment Arrangements

A. Below are details of options awarded during the reporting period. These options are non-tradable.

	Award date and		Number of instruments	Exercise	Expenses recognized
	offerees	Terms of the instrument	(in thousands)	period	In 2013
					USD thousands
1.	Option award to Lior Tamar Investments Ltd., serving as advisors to the Company. The options were awarded on July 11, 2013.	Each option may be immediately exercised for one ordinary share with no par value, for an exercise price of NIS 0.10 per share.	1,195	60 months	197

2.	Option award to the Company's CFO and Board member, Mr. Simcha Rock. *	Each option may be exercised for one ordinary share with no par value, for an exercise price of NIS 0.80 per share.	1,370	36 months	64

3.	Option award to an external advisor to the Company.	200 thousand options may be immediately exercised for ordinary shares with no par value, for an exercise price of NIS 0.45 per share; the remaining 200 thousand options - for an exercise price of NIS 0.55.	400	24 months	35

Includes 181 thousand options subject to the achievement of milestone (success in clinical trial), the outcome of which is expected by the end of 2014. Also includes 177 thousand options immediately exercisable and 1,012 thousand options which vest over 18 months (in equal monthly portions) as from the date in which the Company will raise NIS 1,000,000 or more. For public issuance after the balance sheet date, see Note 17.

Below are weighted average parameter values used to measure fair value upon option award:

Share Price	0.65
Expected volatility	73%-97.2%
Expected duration	2 years – 5 years
Dividend yield	0%
Risk-free interest rate	1.2%-2.3%

F-19

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 12 – Transactions and Balances with Interested Parties

Interested party balances are included on the balance sheet under the following items:

	As of December 31
	2013		2012
	USD thousands

Accounts payable		5		-
Loans from interested parties		783		317

The statement of operations includes amounts referring to transactions with interested parties and related parties, as follows:

	For the year ended December 31
	2013		2012
	USD thousands

General and administrative expenses*		382		335
Research and development expenses*		47		80
Interest and linkage expenses		31		-

In 2013 and 2012 interested parties in Kitov forgave payroll owed to them in the amounts of USD 228 thousand and USD 404 thousand, respectively. The cost of these services was determined based on an hourly rate which reflects market terms.

Agreements with controlling shareholder and officers

Upon the closing of the share purchase transaction, agreements were signed with the controlling shareholder and with Company officers, as follows:

Agreement for consulting services with a company owned by Dr. Paul Waymack. The monthly payment amounts to NIS 30 thousand (USD 9 thousand). Payments for consulting services will only be made after completion of a funding round amounting to NIS 1 million (USD 288 thousand) or more. Expenses for services rendered by Dr. Waymack, beginning as of the closing of the share purchase transaction, are included on the financial statements against a capital reserve.

Agreement with Mr. Simcha Rock, for his services to the Company as the Company's CFO. The monthly payments amount to NIS 35 thousand (USD 10 thousand). Payment will only be made after completion of a funding round amounting to NIS 1 million (USD 288 thousand) or more. Expenses with respect to services rendered by Mr. Rock beginning as of the closing of the share purchase transaction, are included on the financial statements against a capital reserve.

F-20

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 12 – Transactions and Balances with Related Parties (continued)

Agreement with Uneri Capital Ltd. - a company wholly owned by Mr. Isaac Israel, who has served as Company CEO and Board member since October 31, 2012, for no remuneration. According to the agreement, subject to the completion of a funding round amounting to NIS 1 million (USD 288 thousand) or more, he will be eligible to receive a monthly salary amounting to NIS 25 thousand (USD 7 thousand). The first payment will be payable upon completion of the funding round, retroactively from the share purchase agreement closing date. Expenses with respect to services rendered by Mr. Israel beginning as of the closing of the share purchase transaction, are included on the financial statements against a liability.

Note 13 - Research and Development Expenses

Research and development expenses include consulting expenses for development of drug formulations for non-clinical, clinical, regulatory and project management work required for the Company's drug portfolio at the current stage.

	For the year ended December 31
	2013		2012
	USD thousands

Payroll expenses - interested party		47		94
Sub-contractors - preparations for clinical trials		62		-

		109		94

Note 14 - General and Administrative Expenses

	For the year ended December 31
	2013		2012		2011
	USD thousands

Payroll expenses (see also Note 11 with regard to share-based payment arrangements)
		554		-		18
Professional consulting		385		601		56
Board member insurance and remuneration		57		7		-
Rent and office maintenance		26		-		-
Other general and administrative expenses		39		-		16

		1,061		608		90

F-21

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 15 – Finance Expense (Income)

	For the year ended December 31
	2013		2012		2011
	USD thousands

Fees and interest expense		17		-		2
Expenses (income) from exchange rate differences		27		1		(4	)
Interest and linkage on interested party loans		31		-		-

		75		1		(2	)

Note 16 – Taxes on Income

Corporate tax rate

(1)

The tax rates applicable to the Company for 2011-2013 are:

For 2011 - 24%

For 2012 - 25%

For 2013 - 25%

On August 5, 2013, the Knesset enacted the National Re-Prioritization Act (Legislative amendments for achieving budget targets for 2013-2014), 2013 which stipulated, inter alia, an increase in the corporate tax rate in 2014 of 1.5% to 26.5%.

The Company and its subsidiary have incurred losses in 2013 and have carry-forward losses which are not likely to be utilized in the foreseeable future. Therefore, the Group companies have not recognized any current or deferred taxes.

(2)

On February 4, 2010, Amendment no. 174 to the Income Tax Ordinance (New version), 1961 was officially published (hereinafter: "the Ordinance"), which added Section 87a to the Ordinance, stipulating an interim provision whereby Accounting Standard no. 29 "Adoption of IFRS" of the Israeli Institute of Accounting Standards shall not apply to determination of taxable income for the 2007, 2008 and 2009 tax years - even if this standard has been applied to the financial statements (hereinafter: "the interim provision"). On January 12, 2012, Amendment 188 to the Ordinance was published, which revised the interim provision such that Standard 29 would not be applied when determining taxable income for the 2010-2011 tax years as well.

The carry-forward loss for tax purposes for the Company and its subsidiary, plus the balance of research and development expenses to be recognized in coming years, pursuant to IAS 12, amounts to USD 4 million as of the reporting date.

The Company's 2008 tax assessment is deemed finalized, pursuant to section 145 of the Income Tax Ordinance. The subsidiary has no finalized tax assessments to date.

F-22

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 17 – Events Subsequent to the Balance Sheet Date

For repayment of certain loans after the balance sheet date and for extension of terms of certain loans after the balance sheet date, see Note 9.

As a result of this auction, the Company issued 28,750,000 shares at a price of NIS 0.60 per share. Total gross proceeds received by the Company amounted to NIS 17,250,000 (USD 4.9 million).

In March 2014, after the issuance , the Company paid NIS 2,500,000 to Haiku; see also Note 1.B.1.

F-23

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 17 – Events Subsequent to the Balance Sheet Date (continued)

(cont’d)

In connection with the prospectus published on February 24, 2014, the Company entered into an agreement with a broker, according to which the Company committed that if the Company publishes a rights offering, registered options would be issued to the broker for no consideration. Following the rights offering on May 28, 2014, the Company issued the broker 1,437,500 options.

Further to Note 1.B.4., the company signed an agreement with an additional subcontractor for the clinical trial, an Irish company by the name of Celerion GB Limited.

The Company entered into an agreement with two advisors that are entitled to payment for their services, amounting to NIS 55 thousand (USD16 thousand). In addition, the Company will pay one of its advisors an additional amount equal to 1% of the total proceeds from the exercise options. Furthermore, the Company contracted another issuance advisor, who will be entitled to 2.5% of the total proceeds of the exercised options.

F-24

Kitov Pharmaceuticals Holdings Ltd.

Notes to the Consolidated Financial Statements

U.S. dollars in thousands (except share and per share data)

Note 17 – Events Subsequent to the Balance Sheet Date (continued)

On July 18, 2014 the Company filed a shelf prospectus, according to which the Company may issue to the public up to 200,000,000 ordinary shares with no par value, and up to 5 series of options (series 2 – 6), each including up to 40,000,000 options exercisable to Company’s ordinary shares with terms to be determined by the Company. Securities may be offered as a rights offering, a uniform offering, or a non-uniform offering.

F-25

Exhibit 1.1

[Unofficial English Translation From Hebrew]

Articles of Association

Mainrom Line Logistics Limited

Paragraph	Page
Interpretation	1
Name of the Company	2
Objects of the Company	2
Essential purpose of the Company	3
Registered Share Capital	3
Liability of the Shareholders	3
Public company	3
Shares	3
Share Certificates; Share Warrants	4
Calls	5
Forfeiture of shares	6
Transfer and Transmission of Shares	8
Redeemable securities	9
Alteration of capital	10
General Meetings	11
Proceedings and resolutions adopted at general meetings	15
The Board of Directors	16
Powers and duties of the Directors	18
Meetings of the Board	19
Committees of the Board	20
The managing director	21
Officeholders	22
Internal auditor	22
Auditors	22
Validity of acts and approval of other than irregular transactions	23
Distribution	23
Dividends and bonus shares	23
Merger	24
Minutes	24
Register of Shareholders	25
Notices	26
Winding-up of the Company	27
Exemption from liability	27
Insurance of liability	27
Indemnity	28
Liability of the Company	29
Alteration of the Articles	30

Exhibit 1.1

Interpretation

In these Articles, unless the context otherwise prescribes, the meaning of the following words shall be as follows:

“person”	-	includes a corporate body (unless otherwise stated herein);

“Shareholder”	-	a person who is a Registered or Unregistered Shareholder. If any ‘effective date’ exists (as defined in section 182 of the Companies Law), for such purpose, a shareholder will be deemed to be a holder who is registered as such on the effective date.

“Registered Shareholder”	-	a Shareholder registered in the Company’s register of members.

“Unregistered Shareholder”	-	a person in whose favour a share is registered at a stock exchange member and such share is included amongst those that are registered the Company’s register of members, in the name of a nominees company.

“the TASE”	-	the Tel Aviv Stock Exchange Ltd.

“the Board” or
“the Board of Directors”	-	the Board of Directors duly appointed in accordance with the provisions of these Regulations.

“Director”	-	A member of the Board of Directors of the Company and who effectively acts as a director, whatever his title may be.

“the Companies Law”	-	the Companies Law, 5759-1999, as amended from time to time, as well as the Regulations that have been or will be promulgated by virtue thereof;

“Securities Law”	-	the Securities Law, 5728-1968

“the Law”	-	the Companies Law, the Securities Law, as amended from time to time, as well as the Regulations that have been or will be promulgated by virtue thereof and any other valid statute relating to companies that applies to the Company for the time being;

“the Company”	-	the Company mentioned above.


“the Register”	-	the shareholders register to be maintained pursuant to section 127 of the Companies Law and also, if the Company holds another register outside of Israel – any other register, pursuant to the circumstances.

“the Office”	-	the registered office of the Company as existing for the time being, and which will vary from time to time, as determined by the Board of the Company;


“writing”	-	printing, lithography, photocopy, cable, telex, fax, e-mail and any other form of creating or impressing words in any visible form.

“securities”	-	includes, shares, debentures, capital notes, certificates and other documents conferring the right to sell, convert or sell and the like.

"the Companies Ordinance"	-	means the Companies (New Version) Ordinance, 5743-1983.

“the Articles”	-	the articles of association as presently framed, or as varied.

The provisions contained in sections 2, 3, 4, 5, 6, 7, 8 and 10 of the Interpretation Law, 5741-1981, will, mutatis mutandis, apply also to the interpretation of the Articles, in the absence of any other provision relating thereto and unless otherwise repugnant to or inconsistent with such application.

Save as stated in this paragraph, unless repugnant to or inconsistent with the context or the content, words and expressions defined in the Companies Law, shall bear the same meaning when used in these Articles.

Provisions that cannot be varied by contract will apply to the Company unless otherwise stated herein, and in the event of any deviation between the provisions of the Companies Law mentioned and these Articles, the provisions of these Articles shall apply.

Reference made herein to any provision contained in the Companies Law and which has been amended or repealed, the provision in question shall be regarded as valid and form part of these Articles, unless otherwise prohibited by law.

Unless these articles make reference to the particular majority required for adopting a resolution at the general meeting or by the Board, the majority required for adopting such a resolution shall be a simple majority.

Name of the Company

The name of the Company is: Mainrom Line Logistics Ltd.

Objects of the Company

The Company may engage in any lawful business, subject to the objects of the Company set forth in the Company’s memorandum of association.

Essential purpose of the Company

The essential purpose of the Company is to act in accordance with business considerations to generate profits save that the Company may contribute reasonable amounts to worthy causes even if the contribution does not fall within the scope of such business considerations, in accordance with the discretion of the Company’s Board.

Registered Share Capital

10.

(a)

The registered share capital of the Company is 500,000,000 (five hundred million) ordinary shares of no par value (hereinafter: “the Shares”);

(b)

All the ordinary shares shall have equal rights inter se for all purposes and every ordinary share for which all the calls have been paid in full, will confer upon the holder thereof:

(1)

the right to be invited to and attend all of the general meetings of the Company and the right to a single vote in respect of each ordinary share that he/she holds, at every vote, at every general meeting of the Company at which he/she participates;

(2)

the right to receive dividends (if and when distributed) and the right to receive bonus shares, if distributed;

(3)

the right to participate on a distribution of the Company’s surplus assets, on a winding-up.

Liability of the Shareholders

11.

The liability of the Shareholders is limited as stated in the Company’s memorandum of association, and in the Companies Law.

Public company

12.

Subject to the provisions of the Companies Law, and as long as the Company’s securities are listed for trading on the TASE or as long as the Company’s securities that have been offered to, are held by, the public, the Company shall be public.

13.

Without prejudice to any special rights previously conferred on the holders of existing shares in the Company, any share in the Company may be issued with such preferred or deferred rights or rights of redemption or other special rights or such restrictions, whether in regard to dividend, voting, sight or otherwise, as the Company may from time to time by resolution adopted at the general meeting by a majority of the Shareholders, determine.

14.

If at any time the share capital of the company is divided into different classes of shares, the Company may, by resolution adopted by a simple majority at the general meeting, the rights, privileges, concessions, limitations and provisions for the time being attached to or otherwise in relation to any class, may, unless otherwise provided by the terms of issue of the shares of that class, be varied, converted, extended, added to or otherwise altered with the consent in writing of the holders of all the issued shares of that class, or as determined by a resolution adopted at a general meeting by simple majority of the shareholders of such class.

15.

The special or other rights conferred upon the Shareholders or the holders of a class of shares that have been issued, including shares that have been issued with preferential or other special rights, will not be deemed to have been varied by the creation or issue of additional shares of any class, ranking equally therewith unless otherwise stipulated by the terms of issue of such shares. The provisions contained in these Articles regarding general meetings will, mutatis mutandis, apply to every class meeting as above.

16.

The unissued shares in the capital of the Company shall be under the control of the Board of Directors who may allot the same up to the limit of the registered share capital of the Company, to such persons for cash or other consideration otherwise than cash, with such reservations and on such conditions, and on such dates as the Board shall deem fit, and the Board shall have the power to make calls on any person regarding such shares or any of them during such period and on such consideration and on such terms as the Board shall deem fit.

17.

Upon the allotment of shares, the Board of Directors may provide for differences among the holders of such shares as to the amount of calls and/or the times of payment thereof.

18.

If by the terms of allotment of any share, the whole or any part of the price thereof shall be payable in instalments, every such instalment shall, when due, be paid to the Company by the then registered holder of the share or by his representatives.

19.

The Company may pay at any time, commission to any person for subscribing or procuring the subscription, or agreeing to subscribe or procuring a subscription to the shares of the Company, whether conditionally or unconditionally, for any security, debentures or debenture stock of the Company. In any event, the commission may be payable or discharged in cash, or in securities or debentures, or stock of debentures of the Company.

Share Certificates; Share Warrants

20.

Subject and pursuant to the provisions of the Companies Law, share certificates attesting to the right of title to a share, shall bear the stamp of the Company or its printed name together with the signature of one Director and of the secretary, or as determined by the Company’s Board from time to time.

21.

Every Registered Shareholder (including the nominees company) is entitled to receive from the Company, at his request, one share certificate in respect of the shares registered in his name or, if the Board so approve (after he pays the amount prescribed from time to time by the Directors) to a number of share certificates each for one or more of such shares; each share certificate shall specify the name of the shareholder, the number of the shares, subject to the provisions of the Companies Law.

22.

A certificate relating to a share that is registered in the name of two or more persons, shall be delivered to the person whose name appears first in the Shareholders Register in relation to such share unless all of the registered owners of that share shall have instructed the Company in writing to deliver the same to any other registered holder.

23.

(a)

The Company may deliver a share warrant in respect of shares that have been fully paid to the Company, which confer upon the holder thereof the right to the shares therein specified and the right to transfer the same by delivery of the share, and the provisions of these Articles concerning the transfer of shares will not apply to the shares specified in such share warrant;

(b)

A Shareholder lawfully holding a share warrant shall, on surrender of the warrant to the Company for cancellation and on payment of such sum as the Board may prescribe, be entitled to have his name entered as a member in the register of members in respect of the shares included in the warrant, and to a share certificate issued in his name;

(c)

The holder of a share warrant may deposit the share warrant at the Office, and as long as it is so deposited, the depositor shall have the right to demand the convening of a meeting of the Company pursuant and subject to the provisions of the Companies Law and these Articles, and attend the same, vote and exercise rights of a shareholder at every meeting convened upon his requisition following 48 hours of the deposit, as if his name were registered in the register of shareholders as the owner of the shares comprised in the share warrant. Only one person shall be recognized as the depositor of the share, and the Company shall be bound to return the share warrant to the depositor if he requests the same in writing, two days at least in writing in advance.

Should such share warrant not be deposited, the holder thereof shall not have the rights set forth in this sub-regulation (c) but shall have, subject to the provisions of these Articles, all other rights that are conferred upon a shareholder of the Company.

24.

If any share certificate or share warrant has been lost or defaced, the Board may issue a new certificate respectively in lieu thereof, provided the original certificate has not been cancelled by the Company, or it has been proved to its satisfaction that the certificate or warrant has been lost or destroyed, and satisfactory indemnity has been received for any possible damage, all against payment, if imposed, as resolved by the Board. The provisions of paragraphs 20-23 above shall, mutatis mutandis, apply also with respect to the issue of a new share certificate.

Calls

25.

The Directors may, from time to time, at their discretion make calls upon members for all monies unpaid in respect of the shares held by each of the members, and which are not by the terms of issue thereof required to be paid at a fixed date or dates, and each member shall pay the Company the amount of such calls made upon him at the time and place prescribed by the Board. A call may be effected by making payment in installments. A call shall be deemed to have been made on the date on which the decision of the Directors approving the making of the call, has been passed.

26.

Fourteen (14) days' prior notice will be given for each call specifying the amount and place of payment thereof save that the Directors may, before the time prescribed for payment of such call, revoke by notice in writing to the members, such call or extend the time for payment thereof, provided that such resolution has been adopted prior to the payment date of the call.

27.

Joint holders of a share shall be jointly and severally liable for payment of all calls and installments due in respect of such share.

28.

If, by the terms of allotment of any share or otherwise an amount or installments are payable on a fixed date or dates on account of such sum or installment shall be discharged as if it were a call duly made and notified by the Board, and all the provisions contained in these Articles relating to calls shall apply to such amount or installment.

29.

If a sum called or installment payable is not discharged on or prior to the date of payment thereof, the person who is for the time being the holder of such share in respect of which such call or installment has been made, shall pay interest on such amount at the rate determined by the Board from time to time, or at the rate as permitted by law for the time being, from the date prescribed for payment thereof until actually paid, save that the Board of Directors may waive the payment of interest in whole or in part.

30.

If the Directors deem fit, they may receive from a member wishing to advance such amounts which have not been called or have not become payable and remain outstanding on account of all or some of his shares, an advance payment and may pay him on such monies so prepaid as aforesaid or any part thereof, interest until the date on which such monies would have otherwise become payable at the rate agreed to between the Directors and such member.

Forfeiture of shares

31.

If a Shareholder fails to pay any call or installment of a call at or before the day appointed for payment thereof and on the conditions prescribed, regardless of whether a call has been issued or not, the Board may serve a notice on him requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued and all the expenses that the Company has borne in respect of such non-payment.

32.

The notice shall name a further day (which shall be at least 14 days after the date of the notice) and the place or places at which the above call or installment is to be paid together with such interest and expenses. The notice shall further state that in the event of non-payment on the date prescribed or by such day, and at the place specified in the notice, the shares in respect of which the call was made or the date of the payment of the installment has fallen due, may be forfeited by the Company.

33.

If the requirements of any such notice as aforesaid are not complied with, the Directors shall be entitled according to a resolution passed in this connection, at any time thereafter prior to payment of the call or the installment, the interest and the expenses due in connection with the shares, forfeit the shares in respect of which such notice was given such forfeiture to extend to all the dividends declared in relation to the forfeited shares and not actually paid prior to the forfeiture.

34.

A share so forfeited shall be deemed to be the property of the Company and the Directors will be entitled, subject as provided in these Regulations, to sell the same re-allot the share or otherwise transfer the share as they deem fit, subject to the provisions of the Companies Law.

35.

Shares that have been forfeited and prior to the sale thereof, will be dormant, and shall not confer any rights whatsoever as long as they are in the ownership of the Company.

36.

The Directors may, at any time, prior to the sale, re-allotment or transfer of any share so forfeited, revoke the forfeiture on such terms as the Board deem fit.

(a)

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall notwithstanding, remain liable to pay forthwith to the Company all calls, installments, interest and expenses due on account of or for such shares at the time of forfeiture, together with the interest on such sums from the date of forfeiture until the date of payment, at the maximum permitted rate at such time according to law, unless the shares that have been forfeited have been sold and the Company has received the full amount of the consideration undertaken to be paid by the shareholder, with the addition of the expenses incidental to the sale;

37.

(b)

Where the proceeds received on account of a sale of the shares forfeited exceed the consideration undertaken to be paid by the Shareholder for the shares so forfeited, the Shareholder shall be entitled to a partial refund of the consideration that he/she has given for them, if any, subject to the provisions of the agreement issuing the shares, provided the consideration remaining in the hands of the Company will not be less than the full amount of the consideration undertaken by the holder of the shares that have been forfeited, with the addition of the expenses incidental to the sale. The provisions of these Articles regarding forfeiture of shares shall likewise apply to cases of non-payment of an amount known which, according to the terms of the issue of the share, falls due on a fixed date as if such sum were payable by virtue of a call duly made and notified in regard thereto.

38.

The Company shall have a first and paramount lien upon all the shares registered in the name of each member, apart from fully paid-up shares, as well as over the proceeds of sale thereof for the discharge of the debts and liabilities of such member to the Company solely or jointly with any other persons whether the period for the payment or discharge thereof shall have actually arrived or not and howsoever arising, and save as provided by Regulation 11 hereof no right in equity shall be created with respect to any such share. Such lien and charge shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise resolved, the registration of a transfer of any shares by the Company shall operate as a waiver of the Company's lien or charge (if any) upon the shares.

39.

For enforcing the above charge, the Company may sell the shares subject to any such lien at such time or times and in such manner as they shall think fit, but no sale of any share shall be made until the period specified in paragraph 32 above shall have passed and notice in writing given to the Shareholder (or to whomsoever is entitled to receive notice following the death or bankruptcy or winding-up or receivership of the member) stating that the Company intends to sell the shares and the Shareholder or the person so entitled to the share has failed to pay the debts specified above or comply with or fail to perform the above engagements for 14 (fourteen) days after such notice.

40.

The proceeds of such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts or liabilities of such member (including debts, liabilities and engagements not yet due for payment or performance) and the provisions of paragraph 36(b) will mutatis mutandis, apply.

41.

Upon a sale after forfeiture or after enforcing a lien by or in the exercise of the powers hereinbefore given, the Directors may appoint a person to sign the instrument of transfer of the shares so sold and cause the purchaser's name to be registered in the Register in respect of the shares sold and after his name has been registered in the Register in respect of such shares the validity of the sale shall not be impeached and the remedy of any person aggrieved by the sale shall be by way of a suit for damages only against the Company exclusively.

Transfer and Transmission of Shares

42.

Every transfer of shares registered in the Register of Shareholders in the name of a Registered Shareholder, including a transfer by or to the nominees company, will be made in writing provided that the instrument of share transfer will be signed under the hand only of the transferor and by the transferee, personally or by proxy, as well as by witnesses to their signature, and the transferor will be deemed to remain as shareholder until the name of the transferee is registered in the Register of Shareholders in relation to the transferred share. Subject to the provisions of the Companies Law, the share transfer will not be registered unless an instrument of transfer has been delivered to the Office of the Company, as detailed below:

The instrument of share transfer will be drawn and completed in the following manner or in similar manner to the extent possible, or in the common or accepted form that will be approved by the chairman of the Board:

"I, __________________________ of ______________ (“the Transferor”) in consideration of the sum of __________ paid to me by __________________________ of _________________ (hereinafter: "the Transferee") do hereby transfer to the Transferee the share (or shares) numbered __________ in the undertaking called the __________ company Ltd., to hold unto the Transferee, his executors, administrators and assigns, subject to the several conditions on which I held the same at the time of the execution thereof; and I, the Transferee, do hereby agree to take the said share subject to the conditions aforesaid.”

As witness our hands this _____ day of __________.


	Transferor		Transferee


	Witness to the Transferor’s signature		Witness to the Transferee’s signature

43.

The Company may close the Company's books and the Register of Members for such period as the Directors see fit, provided it is not for more than 30 days in any one year. The Company will give notice to the Shareholders of the closure of the Shareholders Register pursuant to that stated in these Articles, with respect to the delivery of notices to the Shareholders.

44.

(a)

Each transfer of shares will be lodged for registration at the Office together with the share certificates in respect of the shares being transferred (if so issued) together with such other evidence as will be required by the Directors. Share transfers registered will be retained by the Company but instruments of transfer which the Directors refuse to register will be returned, upon demand, to the party lodging the same, together with the share certificate (if lodged), after giving notice to the transferor of their refusal, not later than 30 (thirty) days after the date on which the instrument of transfer was received.

(b)

The Company may demand payment of a fee for registering the transfer in such sum or at such rate as will be determined by the Board of the Company.

45.

Only the personal representatives and administrator or executors of the estate of a deceased shareholder, and in the absence thereof, his heirs, shall be recognized as the holder thereof.

46.

Only the surviving holder of a Share held by two or more persons shall be recognized as the holder thereof, or as the holder of an interest in such Share, save that nothing stated above shall serve to release the estate of a deceased joint holder of a Share from any obligation with respect to the security that was jointly held by him. The interest of any one of joint holders of a Registered Share may be transferred by any of them.

47.

Any person becoming entitled to a share following the death of a member, may, be entitled, upon production of evidence as to the probate of a will or the appointment of a personal representative or succession order, and testifying to his right to appear in such capacity may be registered as member in respect of such shares, or may, taking into account the Regulations of these Articles, transfer such shares.

48.

The Company may recognize the receiver or liquidator of a member being a corporate body and which is being dissolved or wound up or its trustee if bankrupt or a receiver of a bankrupt member as the holders of title to the shares registered in such member's name.

49.

The receiver or liquidator of a company in liquidation or the trustee in bankruptcy or any official receiver of a bankrupt member may, upon production of appropriate proof as the Directors deem sufficient, and testifying to his right to appear in such capacity according to this Article or which testify to his title, may, with the Directors' consent, (and the Directors may refuse to grant such consent without reason) be registered as member in respect of such shares, or may, taking into account the Regulations herein contained, transfer such shares.

50.

All of the foregoing in regard to the transfer of Shares will apply to a transfer of other securities of the Company, mutatis mutandis.

Redeemable securities

51.

The Company may issue or allot securities that are redeemable, subject to the provisions of these Articles in regard to the issue of securities.

52.

Redeemable securities issued by the Company may be redeemed and no restriction by virtue of the Second Chapter of Part Seven of the Companies Law, shall apply to the redemption.

53.

Redeemable Securities issued by the Company may have attached thereto the features of Shares, including rights to vote and the right to participate in profits.

Alteration of capital

54.

The Company may, from time to time, by resolution of the general meeting adopted by simple majority, increase its registered share capital into such classes of shares as it will determine.

55.

Unless otherwise stated in the resolution approving such increase of the share capital, the provisions contained herein shall apply to the new shares.

56.

The Company in general meeting may, by resolution adopted by simple majority:

(a)

Consolidate and divide all or any of its share capital into shares of larger paragraph value than its existing shares, and if there existed shares of its capital without par value – into capital consisting of a smaller number of shares provided that this will not operate to modify the Shareholders’ holding rates of the issued capital.

In order to effectuate the above resolution, the Board of Directors may, at its discretion, settle any difficulty arising in connection therewith, and inter alia, issue certificates of fractional shares or certificates in the name of a number of Shareholders that will comprise the fractional shares that are due to them.

Without derogating from such power of the Board, in the event of there being as a result of the consolidation, Shareholders remaining whose consolidation of shares leaves fractions, the Board of Directors may, with the sanction of the Company in general meeting adopted by simple majority:

(1)

sell all of the fractions and to that end appoint a trustee in whose name will be issued share certificates comprising the fractions, that will be sold and the proceeds received less commissions and expenses, divided amongst those entitled; or

(2)

allot to each Shareholder who, as a result of such consolidation is left with fractional shares, fully paid-up shares of the class existing prior to the consolidation in such number as will, when consolidated with the fraction, be sufficient for a single complete consolidated Share and such allotment will be deemed to have taken effect immediately prior to such consolidation or distribution; or

(3)

determine that Shareholders will not be entitled to receive a consolidated share in respect of a fraction of a consolidated share resulting from the consolidation of one half or less of the number of the shares whose consolidation creates a single consolidated share, but will be entitled to receive a consolidated share in respect of a consolidated fractional share that results from the consolidation of more than one half of the number of the shares whose consolidation creates a single consolidated share;

In the event of action according to sub-paragraphs (2) or (3) above obligating the issue of additional shares then payment thereof will be effected in the manner in which bonus shares are paid. Such consolidation and distribution will not be deemed to be a modification of the rights of the shares to which the consolidation and distribution relates;

(b)

effect a re-distribution of the existing shares or part thereof of its share capital, in whole or in part, into shares having a smaller par value than that of the existing shares and if shares of no par value existed – into issued capital consisting of a larger number of shares provided that this will not operate to modify the Shareholders’ holding rates of the issued capital;

(c)

cancel registered share capital that on the date of the making of the resolution, had not yet been alloted, provided that no commitment exists of the Company, including a conditional commitment, to allot the shares.

(d)

reduce the issued share capital of the Company in a manner whereby such shares will be cancelled and all consideration paid in respect of the par value thereof (to the extent relevant) will be recorded in the Company’s books as a capital reserve which will, for all purposes, be regarded as premium that has been paid on the shares that will remain in the Company’s issued share capital;

(e)

consolidate its share capital or part thereof into a single class of shares, and the Company shall likewise be entitled to resolve to compensate all or any of the Shareholders of the Company in respect of the consolidation of the share capital, by way of allotting bonus shares to those Shareholders;

General Meetings

57.

The Company will hold an annual meeting each year not later than 15 (fifteen) months after the last general meeting. A general meeting other than an annual meeting shall be a special meeting.

58.

The agenda at the general meeting will include the following matters:

(a)

consideration of the Company’s periodic report, consisting of, inter alia, the Company’s audited financial statements and the Directors’ Review of the state of the Company’s affairs, as submitted to the general meeting;

(b)

the appointment of Directors;

(c)

the appointment of auditors and receiving a report regarding the auditor’s remuneration;

(d)

such business as the Board shall have decided to submit to the general meeting for resolution.

59.

The Board may, whenever it deems fit, convene a special meeting by resolution, and special meetings will be convened upon such requisition of two Directors or one quarter of the Directors for the time being in office or upon a requisition of one or more Shareholders holding at least 5% (five per centum) of the issued share capital and 1% (one per centum) at the least of the voting rights in the Company or one or more Shareholders holding at least 5% (five per centum) of the voting rights in the Company.

The Board will, if a special meeting has been requisitioned, convene the meeting within 21 (twenty-one) days of the date of such requisition being submitted, for a date that will be determined in the notice of the special meeting as stated in paragraph 62(b) hereof, provided that such date will not be later than 35 (thirty-five) days of the date of the publication of the notice, subject in all respects to the provisions of the Law.

60.

In the absence by the Board to convene a special meeting as stated in paragraph 59 above, the requisitionist may, in the case of Shareholders, including also those of them who hold more than one half of the voting rights, convene the meeting themselves provided that it will not take place later than three months after the date on which such requisition has been submitted and will, to the extent possible, be convened in the same manner as are convened meetings by the Board.

61.

(a)

The agenda at a general meeting will be determined by the Board, that will include also business on account of which the convening of a special meeting according to paragraph 59 above is required as well as business mentioned in sub-paragraph (b) hereof;

(b)

One or more shareholders holding 1% (one per centum) at least of the voting rights at the general meeting may request from the Board to include business on the agenda of a general meeting that will be convened in the future provided that the business is properly to be considered at a general meeting subject to the provisions of the Companies Law;

(c)

A request mentioned in sub-paragraph (b) above will be submitted to the Company in writing at least 7 (seven) days before the notice convening the general meeting is given, and the form of the resolution proposed by the Shareholder will be attached thereto, unless otherwise prescribed by law.

62.

(a)

Notice convening a general meeting will be published in two daily newspapers at least, having wide circulation and published in Hebrew, on such date as is prescribed by the Law, and the Company will give no further notice to the Registered Shareholders in the Company’s Shareholders Register, unless required by law.

(b)

Notice convening the general meeting will specify the class of the meeting, the place and time at which the meeting will be convened, details of the business on the agenda, a summary of the proposed resolutions, the majority required for adopting resolutions, the date for determining the entitlement of all the Shareholders to vote at the general meeting as well as any further particulars as are required by the Law. A date for an adjourned meeting that has been fixed for a date that does not fall on the same day in the following week at the same time and in the same place, will be specified in the notice.

63.

The general meeting may assume the powers vested in another organ for a specific matter or for a specific period of time that will not exceed the time required in the circumstances. Powers assumed by the general meeting that are vested by the Law in the Board, will entitle the Shareholders to the rights, and render them liable to the duties and liability applying to the Board with respect to the exercise of such powers, mutatis mutandis, and in this connection, they will be subject, having regard to their holdings of the Company, to their participation at the meeting and the manner of their voting, and to the provisions of the Third, Fourth, and Fifth Chapters of the Sixth Part of the Companies Law.

64.

A defect occurring in good faith in the convening or conduct of a general meeting or other defect resulting from the failure to perform any term or provision prescribed in the Law or in these Articles, including with respect to the manner of convening or conducting the general meeting, will not disqualify any resolution adopted at the general meeting nor derogate from the considerations and discussions that took place thereat, subject to the provisions of any law.

65.

A shareholder wishing to vote at the general meeting will prove his title to the share to the Company, as required by law.

66.

(a)

The Company may determine an effective date for the purpose of entitlement to participate and vote at general meetings, provided that such date will not exceed 21 days before the date fixed for holding the general meeting, and be not less than four days before the date for which it is convened.

(b)

Notwithstanding that stated in sub-paragraph (a) above, at a general meeting on whose agenda are the items specified in section 87 (a) of the Companies Law, the Company will fix a specific date that will fall not later than 40 days not less than 28 days before the date on which the general meeting is convened, unless the law enables a specific date to be determined earlier.

67.

A minor shareholder as well as a shareholder who the court has declared to be legally incompetent may vote only by his guardian and such guardian may vote by a proxy.

68.

Subject to the provisions of any law, in the case of joint shareholders, each of them may vote at any meeting personally or by proxy, in relation to such share, as if he were the sole party entitled thereto. Where two or more joint holders of a share participate at the meeting, whether in person or by representative proxy, the vote of one of them whose name first appears in the Register of Members or in a certificate regarding his title to the share or other document as will be prescribed by the Board of Directors in this connection. A number of guardians or administrators of the estate of a deceased registered shareholder will be deemed for the purposes of this Regulation to be joint owners of such shares.

69.

A shareholder may vote personally or by proxy, as hereinafter stipulated.

70.

Any member of the Company being a corporate body may empower any person by resolution of its Directors or other managing body, as its representative at any meeting of the Company, as it deems fit to be representative at any general meeting. A person so empowered will be entitled to exercise on behalf of the corporate body he represents, the same powers as the corporate body itself could have exercised had it been an individual shareholder of the Company. The chairman of the meeting may demand from any person so empowered reasonable proof of his being an authorized representative of the body corporate as a condition for his participating at the meeting.

It is clarified that regulations 71 to 75 respecting the proxy will not apply to the authorized representative of the body corporate but only to a proxy appointed to vote on behalf of the body corporate.

71.

The instrument appointing a proxy (“proxy”) will be signed by the appointor or by his duly appointed attorney in writing or if the appointor is a corporation - the appointment will be made in writing and duly signed by the authorized signature of and under the stamp of the Company, or under the hand of the authorized representative thereof.

72.

The instrument appointing a proxy or a copy thereof to the satisfaction of the Board of Directors, or such person who has been empowered by it, shall be deposited at the Office or the place at which the meeting is due to be held at least 48 hours before the time appointed for holding the meeting at which the person named in such instrument proposes to vote, save that the chairman may waive such demand with respect to any meeting and accept the proxy or copy thereof to the satisfaction of the chairman of the meeting, at the time the meeting proceeds to business.

73.

A shareholder holding more than one share will be entitled to appoint more than one proxy, subject to the following provisions:

(a)

the instrument of appointment will specify the class and number of shares in respect of which it was granted, and in the cases required by law, reference to the question of the shareholder’s personal interest in the engagement on the agenda of the general meeting;

(b)

if the number of shares of any class specified in the instruments of appointment granted by a single shareholder exceed the number of the shares of such class held by him, all the instruments of appointment granted by such shareholder will be null and void in respect of the surplus shares, without derogating from the validity of the vote in respect of the shares that are held by him;

(c)

Where only one proxy has been appointed by a shareholder and the instrument of appointment does not specify the number and class of shares in respect of which it was granted, the instrument of appointment will be deemed to have been granted in respect of all the shares held by the shareholder on the date on which the instrument of appointment is deposited with the Company or the date of delivery thereof to the chairman of the meeting, as appropriate. Insofar as the instrument of appointment has been given in respect of a smaller number of shares than that held by the shareholder, the shareholder will be deemed to have abstained in respect of the remaining shares held by him and the instrument of appointment will be valid in respect of the number of shares therein specified.

74.

The instrument appointing a proxy for a general meeting will, to the extent the circumstances permit, be in the following form or common or usual form as approved by the chairman of the Board:

"I, _________________(I.D./corporate no.___________________) of _________________ being a member in the company known as _________________ hereby appoint. _________________ (I.D./corporate no.___________________) of _________________ or failing him. _________________ (I.D./corporate no.___________________) of _________________ to vote for me and on my behalf at the (ordinary/extra-ordinary) general meeting of the Company to be convened on the _____ day _________________ __ and at every adjournment thereof in respect of the ______shares of ______class held by the undersigned signature. As witness my hand this ____ day of _________________ .”

75.

A vote pursuant to the provisions of an instrument appointing a proxy will be valid notwithstanding the death of the appointor, or the revocation of the power of attorney or the transfer of the share in respect of which voting took place as above, unless notice in writing of such death, revocation or transfer was received at the Office of the Company or by the chairman of the meeting prior to the voting.

Proceedings and resolutions adopted at general meetings

76.

No business shall be transacted at any general meeting unless a quorum is present within half an hour of the meeting proceeding to business. Save where otherwise stipulated in these Articles, or in the Companies Law, there shall be a quorum when one member at least is present personally or by proxy holding at least two (2) shareholders holding jointly at least one quarter (1/4) of the voting rights in the Company.

77.

If within half an hour from the time appointed for the holding of a meeting no quorum is present, it will be adjourned to the same day in the next week at the same time and at the same place or to such other day and/or time and/or place as determined in notice to the members or to such other date as stated and at the adjourned meeting only the business for which the meeting was originally called will be transacted and if there is no quorum present at the adjourned meeting within half an hour of the time appointed for such meeting, the member/s present will be deemed a quorum.

If the general meeting has been convened upon a requisition of shareholders, the adjourned meeting will only take place if there are present one or more members holding at the least 5% (five per centum) of the issued share capital and 1% (one per centum) at the least of the voting rights in the Company or one or more shareholders holding at least 5% (five per centum) of the voting rights of the Company.

78.

The chairman of the Board will serve as chairman of the meeting. In the absence of the chairman of the Board at the meeting, the meeting will appoint a chairman for every general meeting and the appointment of the chairman will be made at the beginning of the discussions at the meeting that will, subject to the existence of a quorum, be opened by the secretary of the Company or by a shareholder authorized for such purpose by the secretary.

79.

The chairman of the general meeting may, with the consent of the meeting at which a quorum is present, and shall if so directed by the meeting, adjourn the meeting, the discussion or adoption of the resolution on the subject itemized on the agenda, from time to time and from place to place. No business shall be transacted at any adjourned meeting other than the business still to be transacted at the meeting at which the adjournment was decided upon.

80.

Subject to the provisions of any law, a resolution at the general meeting will be passed by a vote of a ballot, in a manner whereby each share conferring a right to vote will confer one vote. In the event of an equality of votes, the resolution will be deemed to have been lost.

81.

Resolutions at a general meeting will be passed by simple majority unless another majority is prescribed by the Law or these regulations.

82.

In addition to those resolutions that the Company in general meeting is authorized to adopt and which are detailed in these Articles and/or the Companies Law, resolutions of the Company on the following matters will be passed at the general meeting by simple majority (subject to the relevant provisions of the law):

(a)

alteration of the Company’s articles or memorandum of association;

(b)

the exercise of powers by the Board of Directors in the event of the meeting determining that the Board of Directors is constrained from exercising its powers and that the exercise of any of those powers is essential for properly managing the Company as stated in section 52(a) of the Companies Law;

(c)

the appointment and termination of the service of the Company’s auditor;

(d)

appointment and dismissal of Directors for the Company;

(e)

approval of acts and transactions requiring the approval of the general meeting;

(f)

increasing and cancelling the registered share capital;

(g)

a merger (unless a transaction is in question that acquires approval according to section 275(a) of the Companies Law).

83.

A declaration by the chairman that a resolution has been carried unanimously or by a particular majority or has been lost and an entry to that effect in the minute book of the Company, shall be prima facie evidence thereof.

84.

The shareholders of the Company may on any item which is on the agenda of the meeting, vote at a general meeting (including a class meeting) by means of a proxy, provided the Board has not, subject to any law, negated in its decision to convene the general meeting, the option of voting by means of a proxy on such item.

The Board of Directors

85.

The number of members of the Board of Directors in the Company will be determined from time to time by the Company in general meeting by simple majority of the shareholders or by the Board of Directors of the Company, by simple majority of the members of the Board, provided that it will not be less than four, not exceed twelve, members, including the non-executive Directors. Only an individual and not a body corporate, may be appointed as director of the Company.

86.

(a)

The Directors will be elected by decision by simple majority of the shareholders adopted at the annual meeting. Any director that has been appointed will serve until the next annual meeting. Notwithstanding the foregoing, if no Directors are appointed at the annual meeting, the Directors who were appointed at the previous annual general meeting, will continue to serve;

(b)

The service of a director will commence on the date of his appointment by such meeting, but the meeting may determine a later date than that of the meeting for his appointment;

(c)

The general meeting may at any time dismiss a director by simple majority of the shareholders and may resolve at that time to appoint in his stead another person (not being a body corporate) as director of the Company. A director who, on the agenda, has been dismissed will be afforded a reasonable opportunity to voice his position to the general meeting.

87.

(a)

A director may at any time appoint a person (not being a body corporate) to act as his alternate on the Board (Alternate Director). A person will not serve as alternate director if he is not qualified to be appointed as director nor a director who currently serves as such or as an alternate director unless permitted by law. An alternate director may be appointed as member of a Board committee if he serves as director provided the candidate for appointment as alternate director for a member of a committee does not serve on such Board committee and, if he is an alternate director for an outside director, the candidate will be an outside director, save that no alternate director will be appointed for an outside director except according to this sub-paragraph (a) only unless otherwise provided by the Law.

(b)

As long as the appointment of the Alternative Director is in force, he shall be entitled to receive notices to any meeting of the Board (without negating the right of the Appointor Director to receive notices) and attend and vote at any meeting of the Board from which the Appointor Director is absent.

(c)

The Alternate Director will have, subject to the provisions of his instrument of appointment, all the powers vested in the Director for whom he is alternate, and shall be treated as a Director.

(d)

A Director who has appointed an alternate will be entitled at any time to revoke the appointment and the service of an alternate will cease if the director who appointed him (herein referred to as: “the Appointor Director”) has notified the Company in writing of such revocation of the appointment or of his resignation or if the service of the Appointor Director as such has been otherwise terminated.

(e)

Every appointment and revocation of the appointment of an Alternate Director will be made by written notice to the Company.

88.

A director whose term of office has ceased, will be eligible for re-election.

89.

The office of a director shall be ipso facto vacated in any of the following cases:

(a)

if he has resigned or has been dismissed from office as stated in sections 229- 231 of the Companies Law;

(b)

if he has been convicted of an offence as stated in section 232 of the Companies Law;

(c)

on the date on which notice is given of the imposition of a means of enforcement as if stated in section 232A of the Companies Law;

(d)

if a court has decided to instruct the termination of his office as stated in section 233 of the Companies Law;

(e)

if he has been declared bankrupt;

(f)

on his death;

(g)

if he is of unsound mind;

(h)

on the date on which notice is given according to section 227A or 245A of the Companies Law.

90.

If the office of Director is vacated, the continuing Directors may act in respect of all matters provided that their number is not less than four Directors (including the outside Directors). If their number is less than such minimum, they may only act in order to convene a general meeting for purpose of appointing additional Directors.

91.

The Directors may appoint immediately or for a future date, an additional Director or Directors who will hold office until the next annual meeting, provided the aggregate number of the members of the Board will not exceed twelve (12).

92.

The Directors will be entitled to remuneration and compensation in respect of their service subject to receiving the approvals required by law. A Director is entitled to receive his reasonable travelling expenses and remaining expenses related to participating in meetings of the Board and performing his duties as member of the Board.

93.

At least two outside Directors will serve in the Company, at least one of whom will have accounting and financial expertise and the remainder will have professional qualifications within the meaning of section 240 of the Law, and the provisions prescribed in the Companies Law in this connection will apply to their service, including the payments to which they are entitled for their service.

Powers and duties of the Directors

94.

The Board of Directors will steer the policy of the Company and supervise the acts and performance of the managing director’s acts and duties, including in this context any power of the Company that has not by the Law or these Articles, been conferred on any other organ.

95.

The Directors may delegate any of its powers to the managing director and any committee of the Board, subject to the restrictions by law.

96.

(a)

The Directors may assume powers that are conferred on the managing director for a particular matter or for a certain period of time, that shall not exceed the period of time that is required in the circumstances, all at the discretion of the Directors, by resolution passed by majority vote of the Directors.

(b)

Without derogating from the foregoing, the Directors may instruct the managing director how to act on a particular matter and failure by the managing director to do so will entitle the Board of Directors to exercise the necessary power for implementing the instruction in his stead;

(c)

If the managing director is constrained from exercising his powers, the Board of Directors may exercise the same in his stead.

Meetings of the Board

97.

The Directors will convene meetings according to the needs of the Company and at least once every 3 (three) months.

98.

The chairman of the Board may convene the Board at any time, and one director may demand the convening of the Board on such matter as will be specified.

99.

(a)

Notice convening a meeting of the Board may be given orally, by telephone call, in writing (including by fax or e-mail) or by cable, provided the notice will be given at least 24 (twenty-four) hours before the date appointed for the meeting, unless all the members of the Board or their alternates (if any) have agreed in urgent cases, to a shorter notice or to convene without notice.

(b)

A director leaving Israel (“Absent Director”) and wishing to receive during the period of his absence notice, will leave with the secretary of the Company sufficient details to enable him to be notified of the meeting of the Board during the period of his absence (an absent director who has left details with the secretary of the Company detailed above together with the Directors who are found within Israel will be called: “Directors entitled to receive Notice”).

(c)

An Absent Director who has not left his details as detailed above in this Regulation, is not entitled for the duration of his absence outside of Israel to receive notice unless he has requested the transfer of the notice to an alternate representative director who has been appointed according to these Articles.

(d)

A note by the secretary of the Company will be deemed to be conclusive evidence of the giving of notice to the Absent Director who is entitled to receive notice.

100.

The notice of a Directors’ meeting will set out the date and place of the meeting and provide reasonable detail of all the matters that are on the agenda.

The agenda of the Directors’ meetings will be fixed by the chairman of the Board and will include the subjects that the chairman of the Board has fixed as well as any matter that the director or the managing director has requested the chairman of the Board to include in the agenda a reasonable time in advance of convening the meeting of the Board.

101.

The quorum for commencing business at a meeting of the Board will be a majority of the members thereof entitled to receive notice and who are not by law constrained from participating and voting at the meeting of the Board. The quorum will be examined when the meeting proceeds to business.

Notwithstanding the foregoing, the quorum with respect to a resolution of the Board concerning the termination of the office of the internal auditor concerning the termination of the service of the internal auditor, will not in any case be less than a majority of the members of the Board.

102.

The general meeting of the Company will appoint a chairman of the Board. The chairman of the Board will preside over each meeting of Directors. If the chairman is absent from or unwilling to preside over the meeting, the Directors present at the meeting will choose one of their number to act as chairman of such meeting and sign the minutes of the meeting.

103.

Resolutions of the Board will be adopted by majority vote of the Board members present and participating in the vote, each director having a single vote. In the event of an equality of votes on the Board, the chairman of the Board will not have any additional vote.

104.

Each meeting of Directors at which a quorum s present, will be authorized to exercise all powers, authorities and discretions for the time being vested in the Directors or generally exercised by them according to the terms of these regulations.

105.

The Board may hold meetings by using any means of communication provided that all the Directors participating can hear one another simultaneously.

106.

The Directors of the Company may pass resolutions without actually convening, provided that all the Directors entitled to receive notices of and attend discussions have given their consent. When such a meeting takes place, minutes of the resolutions will be drawn, including the resolution not to convene, and signed by the chairman of the Board or a notation made by the chairman and the signatures of the Directors appended to the resolution.

For this purpose “signature of a Directors” may be together with the consent or objection or notation of the abstention of that director. In lieu of the signature of a Director, the chairman of the Board or the secretary of the Company may append a notation under his hand setting out the manner of the director’s vote.

106A. A resolution without a meeting actually being convened, signed by the chairman of the Board of Directors provided that all the Directors entitled to receive notice and entitled to participate in the discussion and vote on the business that has been submitted for resolution have agreed thereto (provided their number will not be less than 2) or a resolution in writing signed by all the members of the Board entitled to receive notice and entitled to participate in the discussion and vote on the business that has been submitted for resolution (provided their number will not be less than 2) will, subject to the provisions of the Law, be valid and effectual as a resolution duly passed at a meeting of the Board that has been convened and held in accordance with the terms of these Articles.

107.

Subject to the provisions of the law, all acts done by or by resolution of the Board of Directors or by a meeting of a committee of the Directors, or by a person (not being a body corporate) acting as a member of the Board of Directors, shall be effectual notwithstanding it be afterwards discovered that there was some defect in the appointment of any director or person acting as such member of the Board of Directors or that all or any of them were disqualified, as if every such person had been duly appointed and as if they had the necessary qualifications to be a member of the Board or such committee.

Committees of the Board

108.

The Directors may from time to time set up committees of the Board. No person not being a member of the Board will serve on a committee to whom powers have been delegated by the Board. Persons not being members of the Board may serve on a committee of the Board whose function it will be to advise or make recommendations to the Board. Subject to the provisions of the Companies Law and the Regulations herein contained, the Directors may entrust their powers to such committees or any of them; one each committee there will be two Directors at the least.

109.

Each committee established under Regulation 108 above must, when exercising its powers, fulfil all the directions that will be laid down by the Directors. The meetings and acts of any such will be conducted according to the Regulations comprised in these Articles regulating meetings and acts of the Directors to the extent they are consistent and save to the extent otherwise directed by the Directors.

110.

A committee of the Directors will report to the Board of Directors on a regular basis its resolutions or recommendations as determined by the Board. Resolutions or recommendations of a Board committee requiring the Board approval, will be submitted to the Directors for information, a reasonable time before the discussion on the Board.

111.

The Board may cancel a resolution of a committee that has been appointed by it but no such cancellation shall affect the validity of a resolution of a committee in accordance with which the Company has acted vis-à-vis another person who had no knowledge of the cancellation.

All acts done in good faith at meetings of Directors or by a committee of the Directors, or by a person acting as a director, shall be effectual notwithstanding it be afterwards discovered that there was some defect in the appointment of any Director or person so acting or that all or any of them were disqualified, as if every such person had been duly appointed and was qualified to be a director.

The managing director

112.

The managing director will be appointed and dismissed by the Board of Directors, which may appoint more than one managing director.

113.

The managing director will be responsible for the ongoing management of the Company’s affairs within the framework of the policy determined by the Board, and, subject to its directives, will have all the administrative and executive powers that have not, by the Companies Law or these Articles, been conferred on any other organ of the Company, and he will be subject to the supervision of the Board of Directors.

The managing director may, with the approval of the Board, delegate to a party who is subordinate to him, any of his powers. Such approval of the Board may be general and given in advance.

114.

(a)

The managing director will promptly notify the chairman of the Board of any irregular matter that is material to the Company, and will submit reports to the Board on such matters and at such dates and in such volume as will be determined by the Board of Directors. If the Company has no chairman of the Board or he is constrained from fulfilling his duties, the managing director will, as stated give notice to all the members of the Board;

(b)

The chairman of the Board may of his own initiative or according to a resolution of the Board, demand a report in relation to the Company’s business from the managing director.

(c)

The chairman of the Board will promptly call a meeting of the Board for the purpose of discussing or passing a resolution on any notice or report which has necessitated the taking of action by the Board.

Officeholders

115.

The managing director may from time to time appoint for the Company officeholders (other than Directors and a general manager) to such permanent, temporary or special functions as the managing Director will deem fit from time to time, and will further be entitled to terminate the service of one or more of such persons from time to time and at any time, at his absolute discretion.

116.

The managing director may, subject to the provisions of the Companies Law, determine the powers and duties of the officeholders so appointed by him, and the terms of their service. The terms of service of the officeholders will be set in accordance with that stated in the Companies Law.

Internal auditor

117.

The Board of Directors may appoint an internal auditor, according to a proposal of the Audit Committee.

118.

The internal auditor will, inter alia, examine the propriety of the acts of the Company from the standpoint of upholding the Law and proper business practice.

119.

The organizational supervisor of the internal auditor will be the chairman of the Board or if otherwise decided by the Board of the Company, as so decided by the Board.

120.

The internal auditor will submit to the Board for approval a proposal for an annual or periodic working program and the Board will approve the same with such changes as it considers appropriate.

Auditors

121.

One or more auditors will be appointed at every annual meeting and hold office until the end of the next annual meeting. Notwithstanding the foregoing, the general meeting may, by resolution adopted by a simple majority, appoint an auditor who will hold office for a longer period that will not extend beyond the end of the third annual meeting following that at which he was appointed.

122.

The general meeting may terminate the service of the auditor subject and pursuant to the provisions contained in the Companies Law.

123.

The auditor’s remuneration for the audit activity will be set by the Board, and the terms of the auditor’s employment will be reported by the Board at every general meeting. The Audit Committee or committee that has been appointed by the Company to review the financial statements according to the provisions of Companies Law, will test the volume of the auditor’s work and his remuneration and submit its recommendations to the Board of Directors.

124.

The auditor’s remuneration for additional services to the Company not being audit-related will be set by the Board, which will report at every annual meeting the terms of the auditor’s engagement for such additional services, including the payments and undertakings of the Company towards him; for the purpose of this regulation “auditor” includes a partner, close associate of an auditor and includes a corporation within his control.

Validity of acts and approval of other than irregular transactions

125.

Subject as provided by law, all actions taken by the Directors or by a committee of the directors or by any person acting as Director or as a member of a committee of directors or by the managing director as appropriate, will be valid notwithstanding that it is subsequently discovered that any defect existed in the appointment of the Board, the committee of the Board, the Director being a member of the committee or the managing director, as appropriate, or that any of the holders of such positions was disqualified from acting as such.

126.

An officeholder who has a personal interest in an action of the Company will disclose to the Company a reasonable time before the date for discussing the approval of the action, the nature of his personal interest therein, including any material fact or document.

127.

A transaction which is not an irregular transaction of a company with an officeholder thereof or with its controlling stakeholder, or transaction which is not an irregular transaction of the Company with another person in which an officeholder of the Company or its controlling stakeholder has a personal interest, other than a transaction pertaining to the terms of service and employment of the officeholders or of the controlling stakeholders of the Company and their relations, will be approved by the Audit Committee (subject to the provisions of law). The Audit Committee approval may be made by the giving of a general approval for a certain class of transactions, or by a specific transaction approval.

128.

Irregular transactions with an officeholder thereof or with the controlling stakeholder of the Company or with another person in which the officeholder or the controlling stakeholder has a personal interest in approving as well as transactions pertaining to the terms of service of the officeholders and the terms of service of the controlling stakeholders and their relations, will be approved in the manner prescribed by the law.

Distribution

129.

A resolution of the Company regarding distribution will be passed by the Board of the Company, subject to the limitations according to the law.

Dividends and bonus shares

130.

Subject to any special or limited rights conferred on any shares, dividend or bonus shares will be distributed in proportion to the number of shares that are held by Shareholders.

131.

The Company may determine a record date for purposes of the right to receive dividend, provided that such date will fall after that of the resolution regarding the distribution of dividend.

132.

The Board may detain any dividend, bonus, right or amount payable in respect of shares over which the Company has a lien or charge and apply any such sum or realize any bonus and any right and apply the proceeds of the realization in discharge of the debts of such shareholder in respect of which the Company has a lien or charge.

133.

No transfer of shares will confer upon the transferee the right to any dividend or any other distribution that has been declared thereon after such transfer and before registration of the transfer. Notwithstanding the foregoing, in the case of a share transfer requiring Board approval, the approval date will be substituted for the registration date of the transfer.

134.

The person entitled to dividend, the payment of which has not been claimed within the period of 7 (seven) years from the date of the resolution regarding the distribution will be deemed to have waived the same and the dividend will revert to the Company’s ownership.

135.

In the absence of stipulations to the contrary, dividend may be paid by check or payment order that will be sent by mail according to the registered address of the party entitled thereto, or, in the case of joint registered owners, to such member whose name first appears in the shareholders register in relation to the joint ownership. Any such check will be drawn to the order of the person to whom it is sent and payment thereof will serve as a release pertaining to all the payments that have been made in connection with such share.

136.

The Board of Directors may deduct from any dividend or other distribution payable in connection with shares held by a shareholder, whether he is sole or joint holder thereof, any amounts of money that are due from him and which ought to have been paid to the Company alone or jointly with others, on account of calls and the like.

137.

The Board may, at its discretion set aside to special funds, any sum out of the profits of the Company or from a revaluation of its assets or its proportionate share in the revaluation of the assets of companies that are affiliated to it, and determine the designation of such funds.

Merger

138.

Approval of a merger requires a majority vote of the uhareholders, subject to the provisions of the Companies Law.

Minutes

139.

The Company will keep a register of minutes of general meetings, class meetings, meetings of the Board and meetings of committees of the Board and keep the same at its registered office or elsewhere in Israel as notified by the Company to the Registrar, for a period of 7 (seven) years from the date of the meeting or the Board meeting, as appropriate.

140.

All minutes will include the following:

(a)

the date and place at which the particular meeting took place;

(b)

the names of those present, and in the case of attornies or alternates, the names of the attornies or the appointors and, at a meeting of Shareholders, the number of shares by virtue of which the vote was held, and the class thereof;

(c)

a concise summary of the business, the course of the discussions and resolutions that were adopted;

(d)

instructions that have been given by the Board to committees of the Board or to the managing director;

(e)

documents, reports, approvals, opinions and the like that have been presented, discussed or attached.

141.

Such minutes of a general meeting when signed by the chairman of the meeting will serve as prima facie evidence of the contents thereof. Minutes of the meeting of the Board or of a committee of the Board that have been approved and signed by the Director who presided over the meeting will serve as prima facie evidence of the contents thereof.

142.

The Company will keep a Register of Shareholders and register therein the following details:

(a)

With respect to Registered Shares –

(1)

the name, identity number and address of each shareholder, all as delivered to the Company;

(2)

the number of shares and class of the shares owned by each Shareholder, indicating the nominal value thereof, if existing, and if any amount remains as yet unpaid on account of the price fixed for a share - the amount as yet unpaid;

(3)

the date of allotment of the shares or dates of the transfer thereof to the Shareholders, as appropriate;

(4)

in the case of the shares bearing serial numbers, the Company will make a notation alongside the name of each Shareholder of the numbers of the shares that are registered in his name;

(b)

With respect to bearer shares –

(1)

A notation of the fact of the allotment of bearer shares, the date of the allotment and the number of shares allotted;

(2)

The numbering of the shares to bearer and of the share warrants;

The name of the holder of a share warrant at whose request the warrant has been cancelled, will be registered in the principal Register of Shareholders, indicating the number of shares that are registered in his name.

(c)

With respect to dormant shares - in addition also, the number thereof and the date on which they became dormant, as known to the Company.

(d)

With respect to shares that confer no voting rights according to section 309(b) of the Law or section 333(b) of the Law - also the number thereof and the date on which they became shares that confer no voting rights, all as known to the Company.

(e)

Such other particulars as are according to the Companies Law or these Regulations, required or permitted to be registered in the Register of Shareholders.

143.

The Company may maintain an additional Register of Shareholders outside of Israel.

144.

The Register of Shareholders will be prima facie evidence of the accuracy of the entries therein recorded. In the event of any deviation between the entries in the Register of Shareholders and a share certificate, the evidential value of the Register of Shareholders will take preference over that of the share certificate.

Notices

145.

Notice regarding the convening of a general meeting will be given as stated in Regulation 62.

146.

(a)

Notices which by law are to be given to the Company to Shareholders Registered in the Register of Shareholders will, subject to Regulation 62 above, be delivered personally to the shareholder or sent to him according to the last address given by him to the Company. Notices sent by mail will be deemed to have been delivered - if sent to an address in Israel, within 72 (seventy-two) hours of the date of despatch, and, if sent to an address abroad - within 10 (ten) days of the date of despatch.

(b)

The Company may deliver notices to the shareholders regardless of whether they hold registered shares or bearer shares, by publishing a notice in two generally circulating daily newspaper in Hebrew as stated in Regulation 62 above, and the date of the publication in the newspaper will be deemed to be the date on which the notice was received by the Shareholder.

The provisions of sub-regulation (a) will not apply where the Company has elected to give notice as stated in this sub-regulation (b), except where an express duty by law applies to publish a notice by a different method.

(c)

Nothing contained in sub-regulations (a) and (b) above shall impose any duty on the Company to give notice to any party who has not furnished an address to the Company in Israel.

147.

In each of the following cases, a Shareholder will be deemed not to have furnished an address to the Company:

(a)

Where the Company has sent him according to the latest address that was furnished by him, a letter by registered mail requesting him to confirm that such address is still current or notify the Company of a new address, and the Company has received no reply within 30 (thirty) days of the date of the despatch of the notice.

(b)

Where the Company has sent him according to the latest address that was furnished by him, a letter by registered mail and the Postal Authority - incidental to returning the letter or in the absence of so doing - has notified the Company that the person concerned is not known at such address or for any other like reason.

148.

Each notice to be given to members relating to joint shares will be given to the person first named in the register of members with request to such share.

149.

Any document or notice delivered by the Company according to the provisions of these Articles will be deemed to have been properly delivered notwithstanding the death, bankruptcy or liquidation of such shareholder (whether or not the Company was aware thereof) as long as no other person has been registered in the Shareholder’s stead, and such despatch and delivery will be deemed for all purposes to be sufficient with respect to any person having an interest in such shares.

Winding-up of the Company

150.

In the event of the winding-up of the Company, whether voluntarily or otherwise, the following provisions will, unless otherwise expressly provided in these Articles or in the terms of issue of any share, apply:

(a)

The liquidator will first apply all the Company’s assets in payment of its debts (the Company’s assets after payment of its debts to be hereinafter called - “the Surplus Assets”).

(b)

Subject to any special rights attaching to the shares, the liquidator will distribute the Surplus Assets among the shareholders in proportion, pro rata to the number of shares held by all of the Shareholders.

(c)

With the sanction of a resolution of the Company passed at a general meeting by a majority of the Shareholders, the liquidator may distribute the Surplus Assets of the Company or any part thereof among the Shareholders in specie and further convey any Surplus Assets to a trustee by way of a deposit to the credit of the Shareholders, as the liquidator deems fit.

Exemption from liability

151.

The Company may exempt in advance any of its officeholders from all or part of his liability by reason of damage following a breach of the duty of care towards it, save for a breach of the duty of care on a distribution within the meaning of that term contained in the Companies Law.

Insurance of liability

152.

The Company may enter into a contract to insure the liability of any of its officeholders by reason of liability that will be imposed upon him in consequence of an act effected by virtue of his position as such, in whole or in part, in any of the following:

(a)

breach of the duty of care towards the Company or towards any other person;

(b)

the breach of a fiduciary duty towards it, provided the officeholder acted in good faith and had reasonable grounds to assume that the act would not harm the interests of the Company;

(c)

financial liability that will be imposed upon him for the benefit of any other person;

(d)

any other act that is insurable as permitted by the Companies Law.

153.

Without prejudice to paragraph 152 above, the Company may enter into a contract to insure the liability of its officeholder that involves payments or expenses that will be borne by the officeholder, as appropriate, as follows:

(a)

expenses incurred in connection with a “proceeding” that has been conducted in his case, including reasonable litigation expenses, including legal fees;

With respect to this paragraph - “proceeding” is a proceeding according to the Chapters H-3, H-4 and I-1 of the Securities Law and a a proceeding according to Article D of the Fourth Chapter of Part Nine of the Companies Law;

(b)

Payment to an aggrieved party as stated in section 542BB(a)(1)(a) of the Securities Law according to Chapter H-4 of the Securities Law.

Indemnity

154.

The Company may indemnify any of its officeholders retroactively by reason of liability or expense as detailed in sub-paragraphs (a) to (f) hereof, that has been imposed upon him in consequence of any act that he effected by virtue of his position in the Company:

(a)

has financial liability imposed upon him in favor of any other person by a judgment, including a judgment given in a compromise or arbitrator's award that has been approved by the court;

(b)

reasonable litigation expenses, including legal fees, that have been laid out by an officeholder in consequence of any investigation or proceeding that has been conducted against him by an authority authorized to carry on an investigation or proceeding, and has been concluded without the filing of a charge against him and without any financial liability having been imposed upon him as an alternative to a criminal proceeding, or which has ended without the bringing of any charge against him but in which a financial liability has been imposed as an alternative to a criminal proceeding or an offence that does not require proof of criminal intent or in connection with a financial sanction;

In this paragraph - conclusion of a proceeding without the making of any charge on any matter in which a criminal investigation has been instituted - means the closure of the case according to section 62 of the Criminal Procedure (Consolidated Version) Law, 5742-1982 (in this sub-paragraph - the Criminal Procedure Law), or a stay of proceedings by the Attorney-General, according to section 231 of the Criminal Procedure Law;

“Financial liability as an alternative to a criminal proceeding” - means financial liability that has been imposed by statute as an alternative to a criminal proceeding, including an administrative fine according to the Administrative Offences Law, 5746-1985, penalty for an offence that has been prescribed as a penal offence according to the provisions of the Criminal Procedure Law, financial sanction or fine.

(c)

Reasonable litigation expenses, including legal fees, that have been laid out by the officeholder or for which he has been made liable by a Court in a proceeding that has been brought against him by or in the name of the Company or by another party, or in a criminal charge from which he was acquitted or criminal charge in which he was convicted of an offence not requiring proof of criminal intent.

(d)

expenses incurred in connection with a “proceeding” as defined in paragraph 153(a) above, that has been conducted in his case, including reasonable litigation expenses, including legal fees;

(e)

Payment to an aggrieved party as stated in section 542BB(a)(1)(a) of the Securities Law according to Chapter H-4 of the Securities Law.

(f)

Liability or other expense that is indemnifiable according to the Companies Law.

155.

The Company may undertake in advance towards an officeholder to indemnify him in respect in respect of a liability or expense detailed in sub-paragraphs 154(b) to 154(f)) above, and may further give an undertaking in advance to indemnify an officeholder thereof as stated in Regulation 154(a) above, provided that the undertaking will be limited to the events which, in the opinion of the Board of Directors, are foreseeable in light of the Company’s activity in practice at the time of giving the undertaking for indemnity, and to such amount or criteria as the Board has determined to be reasonable in the circumstances, and the undertaking for indemnity shall specify the events which, in the opinion of the Board, are foreseeable in light of the Company’s activity in practice at the time of giving the liability and the amount and criteria that the Board has determined to be reasonable in the circumstances.

156.

In any event, the aggregate indemnity amount that will be payable by the Company (in addition to the sums that will be received from an insurance company, if any, within the framework of a directors’ and officeholders’ liability insurance that has been acquired by the Company, to the extent it has acquired the same) to all the officeholders of the Company cumulatively, according to the indemnity letters that will be issued to them by the Company, will not exceed 25% of the Company’s equity capital according to its latest consolidated financial statements, as existing as of the date of the indemnity.

Liability of the Company

157.

(a)

The signature of any person who will be appointed from time to time by the Board generally or for a specific event personally or together with other persons, accompanied by the stamp or printed name of the Company, will bind the Company.

(b)

The Board of Directors may determine separate signature rights with respect to different businesses of the Company, and with respect to the amount of the sums for which the persons are empowered to sign.

Alteration of the Articles

158.

The Company may alter these Articles by resolution adopted by simple majority at the general meeting.

EXHIBIT 4.1

Confidential

Execution Copy

THE SYMBOL "****" DENOTES PLACES WHERE PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

development Services

agreEment

This Development Services Agreement (the "Agreement"), is made and entered into, as of ________________, 2014, by and between Kitov Pharmaceuticals Holdings Ltd., an Israeli company with offices at Lev Hagiva, 11 Bet Hadfus Street, Jerusalem 95483, Israel (hereinafter “Kitov”); and Dexcel Ltd., a company incorporated under the laws of Israel, with offices at 1 Dexcel Street Or Akiva, 3060000, Israel ("Dexcel").

(Each of Kitov and Dexcel shall be referred to herein as a "Party" and together as the "Parties")

WHEREAS; Dexcel is a specialty pharmaceutical company; and

WHEREAS; Kitov is interested in retaining Dexcel's services for the development of the Product, as elaborated in this Agreement, and Dexcel is interested in providing such services to Kitov; and

WHEREAS; As a consideration for the provisions of the Services (as defined herein below) by Dexcel to Kitov, Kitov shall pay Dexcel the Consideration, and subject to the terms and conditions set forth in this Agreement, grant Dexcel certain rights as elaborated in this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree to the following terms and conditions, which set forth the rights, duties, and obligations of the Parties.

Definitions.

1.1.

“API”- means active pharmaceutical ingredient of Celecoxib and Amoloidpine Besylate.

1.2.

“API Cost”- shall have the meaning defined in Section ‎5.1.

1.3.

“Commercial Agreement” – shall have the meaning defined in Section ‎4.2.

1.4.

“Confidential Information” means, any information disclosed by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) in connection with this Agreement, whether orally or in writing or in any other form including, without limitation, computer programs, code, algorithms, names and expertise of employees and consultants, know-how, trade secrets, formulae, processes, ideas, inventions (whether patentable or not), schematics and other technical, improvements, business, financial and product development plans, forecasts, strategies and information or data relating to the Disclosing Party's business, products and technology.

Confidential

Execution Copy

1.5.

"Deliverables" – mean the production file as developed by Dexcel as part of the Services which will allow Kitov to manufacture the Product independently or through a third party, all as detailed and in accordance with Annex A.

1.6.

“Dexcel IP” - shall have the meaning defined in Section‎8.

1.7.

“Dexcel's Development Updates” - shall have the meaning defined in Section ‎2.5.

1.8.

“Effective Date”- shall mean the date of the last Party to sign this Agreement.

1.9.

“Exchange Rate"- shall mean the ratio at which one (1) U.S. Dollar can be exchanged for one (1) New Israeli Shekel on the payment date, as determined by the reference rate of the Bank of Israel.

1.10.

“FDA” – the US Food and Drug Administration.

1.11.

“Fee” – shall have the meaning defined in 3.1.

1.12.

“Force Majeure” shall mean an event beyond a Party’s reasonable control which prevents such Party from performing its obligations hereunder, such events may include, but not be limited to, Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, any extraordinary military operation which requires a large military reserve mobilization, nationalization, governmental activities relating to emergency situations, change in applicable laws, shortages in availability of raw materials, blockage, embargo, strikes or lockouts.

1.13.

"Full Bio” shall mean a study that is designed to show that the Product is bioequivalent to the Reference Listed Drugs ("RLD").

1.14.

"Information” - all data inventions, processes, protocols, and formulae (electronic files, notebooks, reports, etc.) resulting from the Services provided hereunder.

1.15.

“Intellectual Property Rights” means all intellectual property rights, including patents, copyrights, trademarks, applications, service marks, trade names, applications for any of the foregoing, trade secrets, mask works, formulae, industrial design rights, rights of priority, know how, concepts, processes, data rights, design flows, methodologies, and any and all other legal rights protecting proprietary intangible property, whether registerable or not, and whether reduced to practice or not.

1.16.

"Issuance of Shares" shall have the meaning defined in Section ‎(ii).

1.17.

“Good Manufacturing Practices” or “cGMP” means the principles and guidelines of good manufacturing practice for medicinal products for human use as defined in 21 CFR 210, 21 CFR 211, and European Directive 2003/94/EC.

1.18.

“Kitov Data” – means, Kitov Foreground IP, including Patent families embodied in Patents applications no. 13/026,741, 12/990,724, WO2009/154944 and WO2011/100659, and Kitov's Confidential Information.

Confidential

Execution Copy

1.19.

“Kitov Foreground IP”- shall have the meaning defined in Section ‎8.

1.20.

"Lien"- shall have the meaning defined in Section ‎(ii).

1.21.

“Materials”- shall have the meaning defined in Section ‎7.

1.22.

“Milestone Event"- achieving a stage as detailed in Annex C.

1.23.

“NDA” – a New Drug Application to the FDA.

1.24.

“Negotiation Period”– shall have the meaning defined in Section ‎4.

1.25.

"Payment Conversion Notice" – shall have the meaning defined in Section ‎3.3.

1.26.

“Pilot Bio” – shall mean studies to check the bioequivalence of the Prototype, as detailed in Section 5-8 of Annex A.

1.27.

“Publication” – A press release, filing of legally required notices and reports or public statement concerning this Agreement and/or any activity in relation thereto.

1.28.

"Product" means the selected Prototype.

1.29.

“Prototype” means a combination solid oral dosage form of Celecoxib and Amlodipine Besylate as developed under this Agreement in a form of a [****].

1.30.

"RFP" – means Request For Proposal for the development and production of a combination solid oral dosage form of celecoxib and amlodipine besylate issued by Kitov dated October 29^th, 2013.

1.31.

“Services”- shall have the meaning defined in Section ‎2.1.

1.32.

"Shares Payment Non-Performance"- shall have the meaning defined in Section ‎3.3.

1.33.

“Shares” - shall have the meaning defined in Section ‎(ii).

1.34.

“SOW” – shall have the meaning defined in Section ‎2.1.1.

1.35.

“Term”- shall have the meaning defined in Section ‎14.1.

1.36.

“Timetable”- shall have the meaning defined in Section ‎2.1.2.

1.37.

"Value"- shall have the meaning defined in section 3.1‎(ii).

The Services.

2.1.

Dexcel shall provide formulation development services for a combination [****] drug product which shall include: performing compatibility testing of APIs with excipients, screening to find at least two Prototypes, identifying analytical methods for Product analysis, performing Product preliminary stability testing, performing analytical methods validations, manufacturing pivotal batches and performing stability studies on pivotal batches. The activities under each phase of the Services shall be provided according to:

2.1.1.

the details as set forth in Statement of Work attached as Annex A to this Agreement (the "SOW") and serves as integral part thereof.

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2.1.2.

the timetable attached as Annex C to this Agreement (the "Timetable") and serves as integral part thereof.

(Collectively the "Services").

Following the Completion of the Services under the SOW, simultaneously with the completion of Milestone 6 (as set forth in Annex C) and the full payment of the Consideration to Dexcel, Dexcel shall provide Company with the Deliverables.

2.2.

Dexcel shall provide Kitov with proposals for the performance of Pilot Bio and Full Bio services to be performed by sub-contractors selected by Dexcel (the “Pilot Bio Proposals” and the “Full Bio Proposals”). Kitov shall have the right at its sole discretion to accept or reject the Pilot Bio Proposals and the Full Bio Proposals and to select other contractors to perform the Pilot Bio and Full Bio services or to decide not to perform such services at all. Prior to making such determinations, Kitov shall consult with Dexcel, however any decision shall be made at Kitov's sole discretion, and without any liability to Dexcel. For the avoidance of doubt, any delay in Kitov's decisions whether to perform the Pilot Bio or the Full Bio with Dexcel or with other third party shall respectively delay Dexcel's timeline commitments related thereto. Dexcel recommends performing a Pilot Bio before commencement of the performance of the Full Bio.

2.3.

All data generated from the provision of the Services, including the scientific report, which are specifically required and contemplated under the Service protocol, shall be provided to Kitov upon full payment of the Consideration in accordance with Section ‎3.

2.4.

Other than as expressly provided to the contrary in this Agreement, nothing contained in this Agreement shall be construed as a warranty on the part of Dexcel that any results or inventions will be achieved by the Services or that the results of the Services, if any, are or will be of commercial or scientific value to Kitov.

2.5.

At the end of each development milestone (as detailed in the SOW), Dexcel shall provide Kitov a written notice to inform Kitov that Dexcel concluded the development under such milestone ("Dexcel's Development Update"). Within 7 business days following receipt by Kitov of such Dexcel's Development Update, Kitov shall provide a written statement to Dexcel, which either confirms Dexcel's Development Update (" Notice of Completion of Milestone"), or rejects Dexcel's Development Update ("Notice of Rejection"), in which case the Notice of Rejection shall elaborate in sufficient detail the grounds for the rejection. Following such Notice of Rejection, subject to the provisions of section ‎3.4 herein, and provided that the Notice of Rejection is reasonable and in accordance with customary standard or practice in the industry, Dexcel shall perform all such actions required to cure such rejections, and resubmit Dexcel's Development Update. The foregoing process shall be repeated until Kitov provides a Notice of Completion of Milestone. For the avoidance of doubt, in the event that Kitov has failed to provide Dexcel with any written notice within 7 business days from the date Kitov had received Dexcel's Development Update, Dexcel Development Update (including the demand for payment of the relevant milestone payment) shall be deemed confirmed by Kitov.

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2.6.

To the extent carried out by Dexcel or a CRO on Dexcel's behalf, a successful Full Bio shall be determined in accordance with the following criteria: Pivotal BE Study shall be deemed to be successful if in both analytes (Celecoxib and Amlodipine) for the following parameters AUC0-t, AUCinf and Cmax, the 90% confidence intervals of the geometric mean Test/Reference ratios will fall within the limits of 80.00-125.00%.

Consideration

3.1.

The total aggregate consideration due to Dexcel subject to and in accordance with the provisions hereof in consideration of the Services is detailed as follows:

(i)

US$ 2,000,000, payable in cash, upon occurrence of the Milestone Events as set out in this Section 3 below; (the "Cash Payment") and

(ii)

US$ 1,500,000 payable in Shares to be issued to Dexcel by Kitov, upon occurrence of the Milestone Events as set out in this Section 3 below (the "Issuance of Shares"), subject to the terms and conditions of this Section 3.

(The Cash Payment and the Issuance of Shares collectively the "Fee").

In this Agreement:

"Shares" shall mean Ordinary Shares of Kitov, with no nominal value, validly issued and registered for trade in the Tel Aviv Stock Exchange ("TASE"), fully paid, free and clear of (i) any Liens; and (ii) any restrictions with respect to the use, transfer, assignment, resale or any similar action, excluding only restrictions that are relevant and imposed on Dexcel by Israeli mandatory securities law and regulation in the event the Shares are issued by a private placement.

"Lien" shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance or any third party/ies right of any sort.

"Value" shall mean, with respect to the Shares to be Issued to Dexcel on the Effective Date, NIS 0.85 per share, and with respect to any other Issuance of Shares, the average price per share of the Shares, based on their recorded price at the end of the trade on TASE, during a period of trading 45 days prior to the date of acceptance (or deemed acceptance) by Kitov of Notice of Dexcel's Development Update as set forth in section ‎2.5 above and on the NIS US$ exchange rate on such date.

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The Fee shall be paid to Dexcel in accordance with the following Table A:

	Due Date	Cash Amount Due	Shares to be Issued to Dexcel on Due Date	Payments to Kitov according to Section 4.1 (Right of First Negotiation)
1.	Effective Date	US$ 500,000	Shares in such quantity that the Value of which on the date of issuance to Dexcel is equal to US$ 500,000.
2.	Acceptance (or deemed acceptance) by Kitov of Notice of Dexcel's Development Update with respect to Milestone 2 of Annex C	US$ 500,000	Shares in such quantity that the Value of which on the date of issuance to Dexcel is equal to US$ 500,000.	US$ 250,000
3.	Acceptance (or deemed acceptance) by Kitov of Notice of Dexcel's Development Update with respect to Milestone 5 of Annex C	US$ 500,000	Shares in such quantity that the Value of which on the date of issuance to Dexcel is equal to US$ 500,000.	US$ 250,000
4.	Acceptance (or deemed acceptance) by Kitov of Notice of Dexcel's Development Update with respect to Milestone 6 of Annex C- however, the payment due herein shall be at the Completion of the stability study for pivotal batches of 1 month (in accelerated conditions).	US$ 500,000

Table A

3.2.

Kitov shall be solely and exclusively responsible to timely:

(a)

obtain and maintain any and all corporate, regulatory, third party or other approvals, and to

(b)

undertake and perform any and all corporate and other actions, required under applicable law, regulation or Kitov articles of association, by-laws, any other binding obligation of Kitov or otherwise,

to the extent required in order to timely issue the Shares to Dexcel in accordance with the terms of this Section 3.

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In the event Kitov is not able to obtain or cause to be obtained any of the above, Kitov shall pay Dexcel a cash payment instead of the applicable Issuance of Shares, in the amount of the applicable US$ value.

In addition, the Parties hereby agree and understand, that inasmuch as an approval of Kitov's shareholders is required for any Issuance of Shares hereunder, pursuant to Sections 270(5) and/or 274 of the Israeli Companies Law – 1999 (or any other Sections replacing such Sections or intended to come in their stead), the approval of Kitov's shareholders shall be a condition precedent to such Issuance of Shares, and in the event such approval shall not be obtained, Kitov shall pay Dexcel a cash payment instead of the applicable Issuance of Shares, in the amount of the applicable US$ value.

3.3.

Payment Terms.

3.3.1.

Each Party shall issue an invoice to the other Party with respect of each payment due to such Party hereunder (including, for the avoidance of doubt, with respect to Issuance of Shares).

3.3.2.

The Cash Payment. The Cash Payment shall be made on a current + 30 days (30 days as of the end of the calendar month following the month in which the invoice was issued) based on the issuance of valid tax invoice by Dexcel with respect to each cash amount due.

3.3.3.

The Issuance Shares. (i) The issuance of the Shares shall be subject to the approval of the Tel Aviv Stock Exchange for the issuance of the Shares. (ii) The issuance of the Shares is pending the execution, delivery, and performance of any additional document by Dexcel as required by any applicable law and/or corporate governance policy, bylaws or articles of association (ii) the issuance of the Shares shall be considered timely, if issued up to 30 days as of the Due Date of issuance.

3.3.4.

In the event that any of the Shares are not timely issued to Dexcel, and in accordance with the other terms of this Section 3, and/or not in a manner that immediately after the issuance Dexcel has full and good title to the respective Shares free and clear of any Lien ("Shares Payment Non-Performance") and only in case such Shares Payment Non Performance is not fully cured within 30 days as of the Due Date , Dexcel may notify Kitov in writing, that the respective portion of the Fee payable in Shares is due, and if not issued within 30 days as of the receipt of such notice by Kitov, then the respective portion of the Fee shall no longer be payable in Shares but due and payable in cash ("Payment Conversion Notice").Upon the lapse of 30 days as of the receipt by Kitov of the Payment Conversion Notice, to the extent the Shares Payment Non Performance was not cured as set forth herein, the respective portion of the Issuance of Shares shall become immediately due and payable in cash. Upon Kitov's full payment of the sums in lieu of the Shares as detailed in the Payment Conversion Notice, Kitov shall be released from its obligation to issue the respective portion of the Shares that has not been issued to Dexcel, for which the Payment Conversion notice was issued. For illustration and clarification purposes, in case a certain Due Date is May 1st, 2015, and pursuant to this Section 3, within 30 days of such date Kitov is obligated to issue Dexcel Shares at a Value of US$ 500,000, and Kitov has only issued Dexcel shares in a quantity that the Value of which on the date of their issuance is equal to US$ 300,000, as of June 1st, 2015 Dexcel may send Kitov a Payment Conversion Notice with respect to the remaining US$ 200,000 worth of Shares, and upon the lapse of 30 days as of receipt of which by Kitov, Kitov shall be obligated to immediately pay Dexcel a cash amount of US$ 200,000, instead of the issuance of such Shares, unless the applicable portion of the Shares has been issued before the lapse of such 30 days period; such number of Shares shall be determined at the Value on the date of actual issuance thereof.

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3.4.

In the event that Dexcel shall need to repeat any development stage not due to Dexcel’s misconduct or omission, Kitov shall pay the costs associated with such repetition upon Dexcel written demand. In such case the Timetable shall be adjusted and deadlines shall be prolonged in accordance with the duration of the repeated stage of development.

3.4.1.

Without derogating from the any provisions of this Agreement, and provided that Kitov has not received from Dexcel additional services other than the Services, the Fee and the payment obligation as stipulated in Section ‎5‎5 herein, shall constitute the sole and complete compensation due to Dexcel in consideration of the Services.

3.4.2.

With respect to payments under Section 4.1 hereunder, Dexcel shall make the necessary payments to Kitov within thirty (30) days of the end of the month in which it received the relevant invoice ("Shotef" + 30).

3.4.3.

All cash payments made by and between the Parties under this Agreement shall be in New Israeli Shekels based on the Exchange Rate as of the date of the payment.

3.4.4.

Any consideration set forth is exclusive of VAT or any other applicable sales tax, which shall be added to the extent required by law to any consideration set forth herein, Unless Dexcel provides Kitov with an official approval of the ITA with respect to exemption from tax withholding at source, or provide a certain rate of tax withholding at source, with respect to the payments made hereunder, Kitov shall withhold at source from any payment due hereunder the maximum rate of tax applicable, from any amount payable to Dexcel.

Right of First Negotiation and Product Manufacture

4.1.

In consideration of a First Negotiation Right (as defined below) regarding the global rights relating to marketing of the Product, and in consideration of the right to enter into good faith negotiations with Kitov with respect to the manufacture of the Product upon completion of Milestone 4 (as set forth in Annex C), Dexcel shall pay to Kitov an amount of USD 500,000 in instalments in accordance with the milestone payments set forth in Table A hereinabove. The actual Payment of the foregoing sums shall be made by way of offset by Kitov against sums payable by Kitov to Dexcel on such occasions.

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4.2.

In the event Kitov intends to begin negotiations with any third-party with the objective of entering into a commercial marketing or licensing agreement with respect of the Product ("Commercial Agreement") Kitov shall notify Dexcel of its intent to do so. Dexcel shall then have the right, within 21 days of such notification by Kitov, to notify Kitov whether Dexcel desires to negotiate with Kitov with regard to reaching mutually agreeable and commercially reasonable terms and conditions for such transaction (the "First Negotiation Right"). If Dexcel notifies Kitov in writing within such 21day period, that it so desires, then Kitov shall negotiate solely and exclusively with Dexcel in good faith and attempt to reach mutual agreement upon such terms and conditions for such Commercial Agreement within sixty (60) calendar days thereafter (the “Negotiation Period”).

4.3.

If Dexcel does not notify Kitov within the said 21 day period of its interest in entering into such a Commercial Agreement, (for the avoidance of doubt, if Dexcel does not provide any notification regarding the subject matter, this shall be regarded as a notice of non interest) or if upon expiration of the Negotiation Period the Parties are unable to agree in good faith upon the terms and conditions thereof, then Kitov shall be free to enter into a Commercial Agreement with any party on any terms that Kitov determines in its sole discretion, and Kitov shall have no obligation to offer any such terms to Dexcel.

Payment of API and Development Cost

5.1.

Dexcel undertakes, to procure and obtain all API, ancillary chemical or other supplies and products and any other substances or materials required with sufficient quantities for Dexcel's use in conducting the Services under this Agreement (the “API Supplies”), provided however, that the cost of the APIs as well as other materials or means required for Dexcel to perform the Services (the “API Cost”) shall be borne by Kitov. The payment of such API cost shall be made on a current + 30 days (30 days as of the end of the calendar month following the month in which the invoice was issued) based on the issuance of valid tax invoice by Dexcel, to be issued by Dexcel upon ordering such API from API suppliers. At Kitov’s sole discretion, it may, after consulting with Dexcel, elect to procure the API Supplies at its own cost and arrange for their shipment to Dexcel. Should Dexcel procure the API Supplies, the API Cost shall be paid by Kitov to Dexcel, upon Dexcel written demand, in addition to the Consideration. As of the Effective Date, Dexcel's estimation of the cost of the API is USD$ 200,000 (two hundred thousand) per pivotal batch. For the avoidance of any doubt, in the event that Kitov elects to procure the API Supplies at Kitov's own cost and arrangement, Kitov shall be solely liable to the quality and timeline relating to the supply of the API.

5.2.

To the extent carried out by Dexcel or a CRO on behalf of Dexcel, pursuant to Section 2.2. herein, prior to the commencement of the Pilot Bio and the Full Bio, Kitov shall pay the cost associated with the Pilot Bio and the Full Bio, based on a formal quote that will be presented to Kitov +12.5% and agreed upon in writing by Kitov. For the avoidance of doubt, the figures as detailed in Annex B, are only estimated costs. For the avoidance of doubt, Kitov shall only be bound by any such costs to the extent they are presented in a formal quote and approved by signature of an authorized representative of Kitov.

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Confidentiality

6.1.

All Confidential Information shall be protected by the Receiving Party from disclosure with the same degree of care with which the Receiving Party protects its own confidential information from disclosure, but in no event with less than a reasonable degree of care preventing unauthorized disclosure. The Receiving Party agrees (a) not to disclose Confidential Information to any Person except to those of its employees, consultants, advisors, directors, or representatives who need to know Confidential Information in connection with the conduct of its business, and (b) that neither the Receiving Party nor any of its employees, consultants, advisors, directors, or representatives will use the Confidential Information for any purpose other than in connection with the conduct of its business pursuant to this Agreement and the Receiving Party shall cause such employees, consultants, advisors, directors, and representatives to engage in non-disclosure agreements not less restrictive than the provisions of this Section 6; provided, however, that such restrictions shall not apply if such Confidential Information (i) is or hereafter becomes public other than by a breach of this Agreement, (ii) was already in the Receiving Party's possession prior to any disclosure of the Confidential Information to the Receiving Party made by the Disclosing Party (iii) has been or is hereafter obtained by the Receiving Party from a third party which was not bound by any confidentiality obligation with respect to the Confidential Information, (iv) is required to be disclosed pursuant to judicial order, but only to the extent of such order and after reasonable notice to the Disclosing Party, provided that such reasonable notice is possible, so as to allow the Disclosing Party to intervene in any proceeding leading to such order, or (v) is required to be disclosed by any government authority which regulates the business of the Receiving Party, but only to the extent of such required disclosure and after reasonable notice to the Disclosing Party provided that such reasonable notice is possible so as to allow the Disclosing Party to intervene to seek confidential treatment.

6.2.

This Section ‎0 shall survive the termination or expiration of this Agreement for a period of seven (7) years after the last transfer of Confidential Information hereunder.

Materials

Any and all materials, samples, or products (the "Materials") provided by Kitov to Dexcel, to the extent provided, shall remain the sole and exclusive property of Kitov. Dexcel shall not use the Materials for any purpose other than as expressly contemplated by this Agreement. Dexcel will store and handle the Materials according to Kitov instructions and either return to Kitov or destroy the Materials as shall be instructed by Kitov, in the latter case, Dexcel shall provide certificate of destruction signed by an authorized representative of Dexcel to that extent.

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Intellectual Property Rights

8.1.

Any Intellectual Property Rights or Confidential Information belonging to either Kitov or Dexcel prior to the execution of this Agreement will remain the sole property of either Kitov or Dexcel, respectively ("Kitov Foreground IP" and "Dexcel Foreground IP", respectively).

8.2.

Kitov hereby grants to Dexcel a fully paid, limited, non exclusive, license to use Kitov Data inasmuch as required for the provision of the Services by Dexcel.

8.3.

Subject to the provisions of sections 8.1 and 8.2 above and without derogating therefrom, any and all rights, title and interest in any Intellectual Property Rights resulting from any development made by Dexcel which is related to the Product and embodied in the Deliverables or conceived in connection with the services provided hereunder by Dexcel to Kitov, which is only applicable for the manufacture, research, development, making of, use, sale, production, commercialisation and distribution of the Product, shall be jointly and equally (50%/50%) owned by Dexcel and Kitov (the "Joint IP").

8.4.

All rights, title and interest in all Intellectual Property Rights discovered or developed by Dexcel during the course of the provision of the Services or as a result thereof, which is not Joint IP (i.e., which applicability is general and not only applicable to the Product), Kitov Foreground IP or the Deliverables, shall be solely owned by Dexcel (the “Dexcel IP”).

8.5.

Dexcel hereby grants Kitov a non-exclusive, perpetual, non revocable and world-wide license to any and all Dexcel IP and any and all Joint IP that is required to the making of, sale, production, commercialization, manufacture, distribution, marketing research and development, of the Product (the "License to Dexcel IP"). For the avoidance of doubt, the scope of the License to Dexcel IP shall not include any use of Dexcel IP to manufacture, distribution, marketing or further development of any other product other than the Product, and/or the combination of the Product with additional APIs.

8.6.

Kitov hereby grants Dexcel a fully paid, non-exclusive, perpetual, non revocable and world-wide license to any and all Joint IP but only to the extent required to allow Dexcel to research, develop, make, have made, register, import, manufacture, use, sell, offer for sale, produce, commercialise and distribute any product other than the Product.

Data Archives

Dexcel will maintain records of the Information. This Information will be archived in the Dexcel files for 24 months following the completion of the Services, at which time copy of the data will be transferred to Kitov at Kitov’s expense or disposed of according to Kitov written instructions. All documents reviewed by Dexcel's quality assurance which are required for regulatory filings will be maintained by Dexcel without limitation, for not less than 4 years. Kitov may request Dexcel to provide Kitov with the Information or any part thereof at any time, and Dexcel shall provide such requested Information within a reasonable time.

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10.

Addendums; Change Orders

During the course of the Services under the terms of the Agreement, Kitov may require additional services that pertains to the Services but is outside the scope of the SOW. Such additional services will be described and quoted in a separate proposed addendum that references this Agreement. Without derogating from the provisions of Section ‎5 hereinabove, no changes, deletions or additions to the SOW will be considered valid and bind either of the Parties hereto, without mutual written agreement between Kitov and Dexcel.

11.

Warranties and Undertakings

11.1.

Dexcel makes the following representations, warranties and undertakings to Kitov, with respect to the Services:

11.1.1.

Dexcel is free to provide Kitov, with the Services upon the terms contained in this Agreement and the ancillary documents thereof and there are no contracts and/or restrictive covenants preventing full performance of Dexcel's duties and obligations under this Agreement.

11.1.2.

Dexcel itself or, in the event the Pilot Bio and/or the full Bio is performed by Dexcel’s sub-contractors, Dexcel's subcontractors (that shall be bound by confidentiality obligations substantially similar to those as stipulated in this Agreement) has the requisite facilities, personnel, qualifications, knowledge, and experience to perform the obligations under this Agreement, and Dexcel undertakes to perform the Services under this Agreement in the highest degree of professionalism, and in the highest quality according to industry standards.

11.1.3.

Dexcel shall provide the Services using adequately skilled personnel having the requisite qualifications, knowledge, and experience to perform Dexcel's obligations under this Agreement.

11.1.4.

Dexcel shall provide the Services in compliance with all cGMP requirements, where needed.

11.2.

Dexcel makes the following representations, warranties and undertakings to Kitov, with respect to the Shares:

11.2.1.

Dexcel is aware that the Shares which shall be allocated to them in accordance with the provisions of this Agreement may be subject to the restrictions of a resale in accordance with the provisions of the Securities Law, 5728 - 1968 and the regulations by virtue thereof.

11.2.2.

Except as set forth in this Agreement, there are no agreements, whether in writing or orally, by and between Dexcel and a holder of shares in Kitov or others, pertaining to the purchase or sale of securities of Kitov or pertaining to the voting rights therein.

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11.2.3.

Dexcel undertakes to bear all applicable taxes, including in connection with the issuance of the Shares to Dexcel.

11.3.

Kitov makes the following representations, warranties and undertakings to Dexcel:

11.3.1.

It is a corporation duly organized and validly existing under the laws of the State of Israel with the full power to conduct its affairs as currently conducted and contemplated hereunder. All necessary actions have been taken to enable it to execute and deliver this Agreement and perform its obligations hereunder.

11.3.2.

This Agreement is a valid and binding obligation of Kitov enforceable against both Parties hereto in accordance with its terms. Kitov has the unencumbered right to enter into this Agreement and to fulfill its duties hereunder.

11.3.3.

Other than as expressly set forth otherwise in this Agreement, no approval, consent, order, authorization or license by, giving notice to or taking any other action with respect to, any governmental or regulatory authority is required in connection with the execution and delivery of this Agreement by Kitov and the performance by Kitov of its obligations hereunder.

11.3.4.

With respect to the Kitov Data, Kitov warrants that, as of the Effective Date and to the best of its knowledge: (a) Kitov owns or has the right to license all relevant rights hereunder, (b) it has not received any communications, in writing and/or oral, alleging any interference, infringement, misappropriation, or violation (including any claim that Kitov must license or refrain from using any Intellectual Property Rights of any third party), and (c) it has not received any notice that any proceedings have been instituted or are pending which challenge any rights of Kitov with respect to the Kitov Data.

11.3.5.

Should Kitov have any concern that the License granted hereunder to Dexcel, may violate or breach any third parties' right, Kitov shall immediately update Dexcel in writing of such concern.

11.3.6.

Kitov is well aware that Dexcel, in the framework of providing the Services, will not perform any evaluation of the situation of the Product with respect to third parties’ Intellectual Property Rights and Dexcel makes no representation or warranty that the launching, selling and marketing the Product in any country will not infringe the Intellectual Property Rights of any third party. Kitov hereby declares that it will hold Dexcel, its Affiliates, shareholders, officers, directors, employees and agents harmless for any claims raised from third parties related directly or indirectly from Kitov’s decision on when to import, launch, sell or market the Product in any country.

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11.3.7.

Kitov shall be solely liable that the issuance of the Shares to Dexcel shall be in accordance with the Israeli law and all regulations related thereto (including, without limitations the Israeli Securities Law, 5728-1968, and the regulations related thereto, and the Israeli Stock Exchange regulations (if applicable)).

11.3.8.

The Shares shall be issued to Dexcel, free of any Lien and immediately after the issuance Dexcel will have full and good title to the respective Shares.

11.4.

The representations and warranties made herein shall be true and correct as of the date of execution of this agreement, and shall remain true and correct for the duration of the Agreement. Each Party undertakes to promptly notify the Other Party of any change to any representations and warranties provided hereunder.

12.

Publications

12.1.

Neither Party shall use the name of the other Party or names of the other Party's employees in any advertising, PR or sales promotional material or in any other Publication without the prior consent of the other Party.

12.2.

Dexcel acknowledges that Kitov is a publicly traded corporation and is subject to certain reporting obligations under any applicable laws, and hence Dexcel agrees Kitov has a right to make such Publications as required under any such applicable laws, provide however, that Kitov shall notify Dexcel and provide such Publication in advance to Dexcel, to allow Dexcel to provide comments to such publications that shall be taken into account by Kitov, to the extent that the schedule and the time enable such discovery.

13.

Independent Contractor

The Parties expressly declare and confirm that there shall be no employer-employee relationship between Kitov and Dexcel or any of Dexcel's employees, and/or anyone on Dexcel’s behalf. This Agreement does not create any partnership, joint venture, or agency relationship between the Parties.

14.

Term and Termination.

14.1.

This Agreement will take effect on the Effective Date and shall continue until completion by Dexcel of the Services (the "Term").

14.2.

Either Party may terminate this Agreement if the other Party is in breach of any provisions hereof and the breaching Party fails to remedy any such breach within thirty (30) days of the notice of such breach delivered by the non - breaching Party.

14.3.

This Agreement may be terminated, in whole or in part, by either Party providing ninety (90) days’ written notice to the other Party. In the event of such termination by Dexcel, Dexcel shall fully cooperate with Kitov to transfer all records, formulations, calculations, know-how developed for the Prototypes to a Kitov to a contractor of Kitov's choosing at no cost to Kitov, provided however that Dexcel may retain one copy of the said records for archival purposes and to meet regulatory obligations.

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14.4.

Each Party shall have the right to terminate this Agreement upon the filing or institution of bankruptcy, reorganisation, liquidation, receivership, rehabilitation or freeze order (“hakpa’at halichim”) proceedings with respect to the other Party, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however, in the case of any involuntary bankruptcy, reorganisation, liquidation, receivership, rehabilitation or freeze order (“hakpa’at halichim”) or assignment proceeding, such right to terminate shall only become effective if such other Party consents to the involuntary proceeding or such proceeding is not dismissed within ninety (90) days after the filing thereof.

14.5.

Termination Consequences

14.5.1.

Following the termination or expiration of this Agreement:

the license relating to Kitov Data, as stipulated in section ‎8, shall expire,

The Licenses as detailed in sections 8.5 and 8.6 shall survive; and

14.5.2.

The obligation of the Parties contained in Sections 6 (''Confidentiality'') ,7 (''Materials''), 8 ("Intellectual Property") subject to the provisions of section 14.5.1 above, 9 (''Data Archives''), 12 (''Publications''), 14 (''Termination''), 16 (''Indemnification and limitation of Liability''), and 18 (''Miscellaneous'') shall survive the expiration or earlier termination of this Agreement.

14.5.3.

Upon Termination of this Agreement, at the effective date of termination, all sums owed by either Party to the other shall become immediately due and payable on such date, and all amounts paid to Dexcel under this Agreement up to the date of termination shall be considered as non-refundable.

14.5.4.

Upon termination of this Agreement for any other reason, each Party, at the written request of the other Party, shall immediately return to the other Party all materials, reports, updates, documentation, written instructions, notes, memoranda, discs or records or other documentation or physical matter of whatsoever nature or description provided by the other Party, except in the event that such material is owned or licensed by such Party pursuant to the terms of this Agreement, and provided that each Party shall be allowed to retain one copy for archival purposes.

15.

Audit And Visitation Rights

Dexcel agrees to permit Kitov to visit Dexcel's facilities from time to time, during normal business hours and upon reasonable notice to Dexcel, to monitor the progress under the terms of this Agreement. A Reasonable time before a FDA visit in Dexcel's facilities, that is designated to monitor Dexcel's facilities prior to approval of the Product (the ''FDA Visit''), Dexcel shall allow Kitov to audit Dexcel's facilities to ensure their readiness for the FDA Visit.

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16.

Indemnification and limitation of Liability

16.1.

Subject to the provisions of sub-section ‎1616.4, Kitov agrees to defend, indemnify and hold Dexcel and its Affiliates harmless from and against any and all demands, claims, actions, causes of action, assessments, losses, damages, injuries, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) of Dexcel and its Affiliates, directly related to, arising out of or resulting from

16.1.1.

any breach or failure of or liability under any of the representations, warranties or covenants of Kitov contained herein,

16.1.2.

actual or asserted violations of any applicable law by Kitov or its Affiliates,

16.1.3.

any negligent or wrongful act or omission to act by Kitov or its affiliates in any manner in connection with performance hereunder.

16.2.

Subject to the provisions of sub-sections ‎16‎16.4 and 16.5, Dexcel agrees to defend, indemnify and hold Kitov and its Affiliates harmless from and against any and all demands, claims, actions, causes of action, assessments, losses, damages, injuries, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) of Kitov and its Affiliates, directly related to, arising out of or resulting from:

16.2.1.

any breach or failure of or liability under any of the representations, warranties and covenants of Dexcel contained herein,

16.2.2.

actual or asserted violations of any applicable law by Dexcel or any of its affiliates or representatives and

16.2.3.

any negligent or wrongful act or omission to act by Dexcel or its affiliates or representatives in any manner in connection with performance of the Services hereunder.

16.3.

A Party or any of its Affiliates (the “Indemnitee”) that intends to claim indemnification under this Section ‎16 with respect to any third party claim or action shall promptly notify the other Party (the “Indemnitor”) of any loss, claim, damage, or liability arising out of any third party claim or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel of its own choosing; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor only, if representation of such Indemnitee by the counsel retained by the Indemnitor, in the opinion of an independent counsel chosen by both parties, would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. An Indemnitee shall not be entitled to indemnification under this Section 16 if any settlement or compromise of a third party claim is effected by the Indemnitee without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. An Indemnitee shall not be entitled to indemnification with respect to any third party claim in an amount in excess of the amount which such third party has unequivocally, without other conditions and in writing agreed with the Indemnitor it is willing to accept in settlement or compromise of any such third party claim. An Indemnitor shall not enter into any settlement or compromise of any third party claim or consent to the entry of any judgment or other order with respect to any claim which does not contain, as a part thereof, an unconditional release of the Indemnitee for liability for all loss, cost or damage that may arise from such claim or which does contain any injunctive or other non-monetary relief that might in any way interfere with the future conduct of business by the Indemnitee. The failure by the Indemnitee to deliver notice to the Indemnitor within a reasonable time after the commencement of any such third party claim or action, if materially prejudicial to the Indemnitor’s ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section ‎16. An Indemnitee, and its employees, agents and representatives, shall cooperate fully with the Indemnitor and its legal representatives, at the Indemnitor’s expense for out-of-pocket costs, in the investigation of any action, claim or liability covered by this indemnification.

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16.4.

Neither Party shall be liable to the other Party's, indirect or consequential liabilities (including loss of profits, loss of business, depletion of goodwill and similar losses). Subject to and without derogating with the limitation of Dexcel's liability as stipulated in section 16.5, and for the avoidance of doubt, any damages actually incurred by a Party as a result of a third party claim, are not excluded or limited under this Section ‎16 and shall not be considered as indirect or consequential liabilities.

16.5.

Notwithstanding anything to the contrary in this Agreement, Dexcel's liability for damages shall in no event exceed the amounts received by Dexcel as consideration in accordance with the provisions of this agreement.

16.6.

Dexcel shall maintain comprehensive general liability insurance, including product liability and professional liability insurance, in such amounts as each customarily maintains for similar products and activities. Kitov shall maintain comprehensive general liability insurance, including clinical trial insurance. At the time of entering this agreement, each Party shall be fully insured and shall duly maintain such insurance during the term of this agreement and thereafter for so long as it customarily maintains insurance for itself for similar products and activities. Each Party shall provide the other Party with proof of such insurance upon request.

In the event that Kitov shall perform the Full Bio by itself and (without Dexcel), prior to the commencement of the performance of the Full Bio, Kitov will provide Dexcel an updated certificate of insurance proving Kitov's then existing insurance. Kitov shall update said insurance policies such that the insured amount shall be at least USD 5,000,000 per insurance event. Kitov shall add Dexcel as additional insured to such insurance (i.e. general liability and clinical trial insurance).

17.

Force Majeure

17.1.

If a Party asserts the occurrence of an event of Force Majeure as an excuse for failure to perform such Party's obligations, then the obligations of the parties hereunder shall be suspended for so long as the Force Majeure event renders performance of the Agreement impossible; provided, however, that (a) the nonperforming Party shall timely notify the other Party in writing of the likelihood or actual occurrence of an event of Force Majeure by the nonperforming Party; (b) the nonperforming Party must reasonably prove that it took all commercially reasonable steps to minimize delay or damages caused by such event; and (c) the nonperforming Party substantially fulfilled all non-excused obligations, unless the other Party has notified the nonperforming Party to the contrary.

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17.2.

In the event that such event of Force Majeure continues for a period in excess of sixty (60) days, the parties agree to undertake good faith discussions with a view to reaching some other mutually acceptable and reasonable arrangement for alleviating the effects of such Force Majeure. In the event that the parties are unable to agree on such an arrangement, the other Party shall be entitled to provide immediate written notice of termination to the nonperforming Party.

18.

Miscellaneous.

18.1.

Either Party's failure or delay in enforcing any of the provisions of this Agreement shall not, in any way, be construed as a waiver of any such provisions, or prevent either Party thereafter from enforcing each and every other provision of this Agreement which were previously not enforced;

18.2.

Notices given hereunder including any notifications and approvals pursuant to this Agreement and any ancillary documents thereto, shall be made in writing and addressed to one of the qualified contact persons, detailed in the SOW and shall be deemed to have been duly given on the date of personal delivery, on the date of postmark if mailed by certified or registered mail, or on the date sent by facsimile upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt, addressed as set forth above or such other address as either Party may designate to the other in accordance with the aforesaid procedure;

18.3.

This Agreement, including its attachments, constitutes the entire agreement of the Parties hereto with respect to the subject matters hereof, and supersedes all prior agreements and understandings between the Parties with respect thereto.

18.4.

In any contradiction between the terms and provisions of the SOW and the terms and provisions of the RFP, the terms and provisions of the SOW shall prevail.

18.5.

This Agreement shall not be amended, modified, or varied by any oral agreement or representation other than by a written instrument executed by both Parties by their duly authorized representatives.

18.6.

Neither this Agreement nor any of either Party's rights hereunder, may be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed, provided, however, that in the event Kitov is acquired by or merged into a third party, such assignment of rights shall be deemed to have been made to such third party. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall be deemed to have assumed all obligations of its assignor under this Agreement.

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18.7.

If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

18.8.

The Parties acknowledge that the injury that would be suffered by the other Party as a result of a breach of the provisions of Sections 6 and 8 of this Agreement would be irreparable and that an award of monetary damages for such a breach would be an inadequate remedy. Consequently, either Party has the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provisions of Sections 6 and 9 of this Agreement, and such Party will not be obligated to post bond or other security in seeking such relief.

18.9.

This Agreement shall be interpreted and enforced exclusively under the laws of the State of Israel, without regard to the conflict of laws provisions thereof. The Parties submit to the exclusive jurisdiction of the competent courts of Tel-Aviv in any dispute related to this Agreement without giving effect to choice of law rules. Notwithstanding the aforesaid, the Parties shall endeavor in good faith to settle amicably any dispute which may arise between them under or in connection to this Agreement.

18.10.

This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same Agreement.

Dexcel Ltd.

Kitov Pharmaceuticals Holdings, Ltd.

By:	/s/ Dan Oren	By:	/s/ Simcha Rock
Name:	Dan Oren	Name:	Simcha Rock
Title:	CEO	Title:	CFO
Date:	March 31, 2014	Date:	April 1, 2014

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Annex A

Statement of Work of solid dosage formulations [****] of Celecoxib and Amoloidpine Besylate[****]

API

APIs analytical methods development.

1.1.

Allocate suppliers of the APIs.

1.2.

Analytical methods development and validation or verification.

1.3.

APIs Release tests.

Formulation Development

Compatibility (API-API and API-Excipeint)

(corresponding to points 1&t 2 in Kitov's RFP)

1.1.

Compatibility of Celecoxib & Amoloidpine Besylate

1.2.

Compatibility of each API & excipients

Development of formulation Prototypes of Celecoxib and Amoloidpine Besylate (the ''Prototypes'') (corresponding to point 3 in Kitov's RFP).

2.1.

Screening of various formulations.

2.2.

Selection of the 2 formulation Prototypes to be developed under the Agreement (the ''Selected Prototypes'').

Prototypes' analytical methods development (including pre-validations)

Development of analytical methods for the formulation Prototypes (in accordance with the ICH guidelines).

Release and stability studies on the Selected Prototypes.

5.1.

Release tests on the Selected Prototypes.

5.2.

Stability studies on the Selected Prototypes (Testing at the following time points: 0, 1, 3, 6 months accelerated, 0, 1, 3, 6, 9, 12 months intermediate, and 0, 1, 3, 6, 9, 12 months long term with 18 and 24 months optional ).

In the event Kitov decides to perform a Pilot Bio : Pilot Bio Decision

Dexcel highly recommends performing the Pilot Bio before the performance of the Full Bio.

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1^st Pilot Bio-Studies on the Selected Prototypes.

2 pilot bio-studies (fast and fed conditions) on the highest strength[****] :

Pilot Studies	Strength	Study Design
	[****]	Single Centre, Open-Label, Randomized, Single-Dose, 3-Way Crossover, Pilot Bioequivalence Study, Comparing Two Test Formulations [**] with the Compotator Products (Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fasting Conditions
		Single Centre, Open-Label, Randomized, Single-Dose, 3-Way Crossover, Pilot Bioequivalence Study, Comparing Two Test Formulations [**] with the Compotator Products (Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fed Conditions

Reformulation (if required)

According to the results of the Pilot Bio, fine tuning of the formulations may be necessary. This will be regarded as the "Adjusted Prototype/s".

Release and stability studies on the Adjusted Prototype/s.

8.1. Release tests on the adjusted Prototype.

8.2. Stability studies on the adjusted Prototype (at least 1 month in accelerated conditions).

In the event Kitov decides to perform a Pilot Bio on the Adjusted Prototypes: - 2^nd Pilot Bio Decision

Dexcel highly recommends performing the Pilot Bio before the performance of the Full Bio.

2^nd Pilot Bio-Studies on the adjusted Prototype/s.

2 pilot bio-studies (fast and fed conditions) on the highest strength ([****]):

Pilot Studies	Strength	Study Design
	[****]	Single Centre, Open-Label, Randomized, Single-Dose, 3-Way Crossover, Pilot Bioequivalence Study, Comparing Two Test Formulations[**] with the Compotator Products (Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fasting Conditions
		Single Centre, Open-Label, Randomized, Single-Dose, 3-Way Crossover, Pilot Bioequivalence Study, Comparing Two Test Formulations [**] with the Compotator Products (Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fed Conditions

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Successful Pilot Bio → Pivotal batch manufacture & Full Bio decision.

Pivotal (registration) batch manufacture, DOE, stability testing and BE study.

10.

Design Of Experiment Studies (DOE) (corresponding to point 6 in Kitov's RFP).

Critical Material Attributes (CMAs) and Critical Process Parameters (CPPs)

will be established using either full design of experiment, or process range findings.

11.

Pivotal batches manufacture (corresponding to point 4 in Kitov's RFP).

11.1. GMP manufacture of three (3) pivotal scale (at least 100,000 units) for each of the [****] strengths [****] equal to a total of [****] batches. API from two vendors for each drug substance will be used in registration stability lot production.

11.2. Packaging of each batch, with two packaging configurations that will be selected by Kitov and that have shown adequate stability results on pilot scale batches (sections 4& 7 hereinabove) additional packages will require additional fees.

12.

Full validation of the analytical methods for the selected prototype ("Product")
(corresponding to point 5 in Kitov's RFP).

13.

Release and stability studies for pivotal batches.

(corresponding to point 4 in Kitov's RFP)

Full release of all [****] batches.

Stability studies according to the following:

Samples will be stored at 40°C/75% RH , 30°C/65% RH and 25°C/60% RH.

Testing at the following time points: 0, 1, 3, 6 months accelerated, 1, 3, 6, 9, 12 months intermediate, and 1, 3, 6, 9, 12, 18, 24, and 36 months long-term.

Comparative RLD stability testing

ICH- photostability and heat stress stability (Comparable to heat induced forced degradation except in final packaging. For example, 50ºC for two weeks and 70ºC for one week to demonstrate temperature excursions during shipping/handling are unlikely to have an adverse effect on product quality).

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14.

Full Bio study on Pivotal batches

Dexcel highly recommends on having a PIND meeting with the FDA before the Full Bio study in order to understand what are the agency’s requirements from the BE studies.

The requirements should:

No. of Full Bio studies required: 2 studies (Fasting and Fed on [****] dose) using 24 - 60 healthy volunteers

Pivotal Studies	[****]	Single Centre, Open-Label, Randomized, Single-Dose, 2-Way Crossover, Pivotal Bioequivalence Study, Comparing One Test Formulations [**] with the Compotator Products (Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fasting Conditions.
		Single Centre, Open-Label, Randomized, Single-Dose, 2-Way Crossover, Pivotal Bioequivalence Study, Comparing One Test Formulations [**] with the Compotator Products(Celebrex [] and Norvasc [**]) Given in Combination in Healthy Volunteers Under Fed Conditions

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Annex B

General Cost estimation regarding the Pilot and Full Bio

Pilot Bio studies

The total estimated cost for the 4 Pilot Bio studies (2 in the 1^st pilot bio + 2 for the 2^nd pilot bio) on the higher dosage [****]: $1,004,000 (cost of each pilot study: $251,000).

Full Bio studies on pivotal batches

No. of Full Bio studies required: 2 (Fasting and Fed studies on the highest [****] dose).

Estimated cost for the Full Bio studies: $1,450,000 (cost of each full bio study: $725,000)

For the avoidance of any doubt, and according to Section ‎5.2 of the Agreement, the above-mentioned figures are only estimation of costs associated to the Pilot Bio studies and the Full Bio. A formal quote will be presented to Kitov prior to each study. Dexcel shall charge Kitov such quoted cost+12.5%.

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TIMETABLE

Milestone No.	Milestone	Time Frame	Comments
	Kick Off
1	[****]	[****]months from Kick Off
2	[****]	[****]months from Completion of Milestone 1	[****]
3	[****]	[****]months from Completion of Milestone 2
4	[****]	[****]months from Completion of Milestone 3	[****]
5	[****]	[****]months from Completion of Milestone 4
6	[****]	[****]months from Completion of Milestone 5	[****]

*According to Section 3.4 of the Agreement, in the event that Dexcel shall need to repeat any development stage, not due to Dexcel’s misconduct or omission, the Timetable shall be adjusted and deadlines shall be prolonged in accordance with the duration of the repeated stage of Development.

EXHIBIT 4.2

Dated 04 February 2014

Kitov Pharmaceutical Limited

AND

Java Clinical Research Limited

Master Research Services Agreement

Strictly Confidential

THIS MASTER SERVICES AGREEMENT (this “AGREEMENT”)

BETWEEN:

(1)

Kitov Pharmaceuticals Limited (“Kitov”) a Company incorporated in Israel and whose principal place of business and resgistered address is at, 11 Bet Hadfus Street Jerusalem 95483, Israel.

(2)

JAVA CLINICAL RESEARCH LIMITED, a company incorporated in Ireland, registered number 311398, with registered office address 2 Grand Canal Square, Dublin 2, Fitzwilliam Business Centre, 26/27 Upper Pembroke Street, Dublin 2 ("JAVA");

(each a "Party" and together the "Parties").

RECITALS

(A)

The Sponsor is concerned with the diagnosis, treatment and prevention of disease and clinical research for the improvement of healthcare. JAVA is in the business of providing research services; and

(B)

The Sponsor and JAVA desire to enter into this Agreement to provide the terms and conditions upon which the Sponsor may engage JAVA from time-to-time to provide research services for individual projects by executing individual Work Orders (as defined below) specifying the details of the services and the related terms and conditions.

NOW, IT IS HEREBY AGREED AS FOLLOWS in consideration of the mutual covenants contained herein:

DEFINITIONS

1.1.

"Applicable Laws" shall mean all laws, rules and regulations including without limitation, Good Clinical Practice (“GCP”) that are applicable to the performance by JAVA of the Services under this Agreement.

1.2.

"Change Order" shall have the meaning given to the term in Clause 2.3.

1.3.

"Claims" shall mean all and any claims (whether successful or otherwise), loss, liability, damages and expenses, including reasonable attorneys' fees and expenses and legal costs.

1.4.

"Confidential Information" shall mean all confidential and proprietary information, including without limitation, inventions, specifications, designs, know-how, trade secrets, inventions (including patent applications covering such inventions), data, information, and any improvements, modifications, derivations, or compilations thereto that is owned, licensed by or controlled by the disclosing Party; provided however, that Confidential Information shall not include any information which is:

1.4.1.

already known to the receiving Party at the time of disclosure, as evidenced by such Party's written records, provided such information was not obtained directly or indirectly by the receiving Party from the disclosing Party pursuant to a confidentiality agreement;

1.4.2.

publicly known prior to or after disclosure, through no default of the receiving Party;

1.4.3.

disclosed in good faith to the receiving party by a third party, lawfully and contractually entitled to make such disclosure; or

1.4.4.

is independently discovered without the aid or application of the Confidential Information as shall be evidenced by the written records of the receiving Party.

1.5.

"Effective Date" shall mean the date of this Agreement.

1.6.

“GCP” shall mean the ICH Harmonised Tripartite Guidelines for Good Clinical Practice, and any subsequent versions thereof.

1.7.

"Intellectual Property Rights" shall mean all patents, patent applications, copyrights, copyright applications, trademarks, trade secrets, know-how and other intellectual property rights.

1.8.

"Materials" shall have the meaning given to the term in Clause 3.1.

1.9.

"Project" shall have the meaning given to the term in Clause 2.1.1.

1.10.

"Services" shall have the meaning given to the term in Clause 2.2.2.

1.11.

"Term" shall have the meaning given to the term in Clause 12.1.

1.12.

"Work Orders" shall have the meaning given to the term in Clause 2.2.1.

SCOPE OF THE AGREEMENT, WORK ORDERS AND CHANGE ORDERS

2.1.

Scope of Agreement and Performance of the Services

2.1.1.

This Master Agreement allows the Parties to contract for multiple projects and other services requested by the Sponsor and agreed by JAVA (each a "Project") through the issuance of multiple Work Orders in accordance with the terms of this Agreement.

2.2.

Work Orders

2.2.1.

The specific details of each Project under this Agreement shall be separately negotiated and agreed by the Parties and specified in writing in substantially the form attached hereto in Appendix 1 (each a "Work Order").

2.2.2.

Each Work Order will include details of the services to be provided by JAVA (“Services”), scope of work, timelines, budget and payment schedule.

2.2.3.

Each Work Order, upon execution, shall be incorporated into this Agreement and shall be subject to all of the terms and conditions of this Agreement, in addition to the specific details set forth in the Work Order.

2.2.4.

To the extent any terms or provisions of a Work Order conflict with the terms and provisions of this Agreement, the terms and provisions of this Agreement shall prevail, except to the extent that the applicable Work Order expressly and specifically states an intent to supersede the Agreement on a specific matter and such Work Order is signed by both Parties.

2.3.

Change Orders

2.3.1

Any material change in the details of a Work Order, or the assumptions upon which the Work Order is based, shall require written amendment to the Work Order in substantially the form attached hereto in Appendix 2 (a "Change Order").

2.3.2

Each Change Order shall detail the requested changes to the applicable task, responsibility, duty, budget, timeline or other matter.

2.3.3

The Change Order will become effective upon the execution of the Change Order by both Parties.

2.3.4

Both Parties agree to act in good faith and promptly when considering a Change Order requested by the other Party.

2.4

Services

2.4.1

JAVA shall perform the Services in good faith, with due care and skill, in accordance with the terms of this Agreement, the reasonable instructions of the Sponsor, and with all Applicable Laws.

2.4.2

The Sponsor agrees to cooperate with JAVA and provide JAVA with such information and assistance as JAVA may reasonably require in order to enable or facilitate JAVA duly and punctually to comply with its obligations under this Agreement and each Work Order.

2.4.3

Except as expressly stated in this Agreement, all warranties, conditions and terms, whether express or implied by statute, common law or otherwise (including but not limited to fitness for purpose and suitability) are hereby excluded to the extent permitted by law.

MATERIALS

3.1

The Sponsor shall provide JAVA with materials required for the purpose of performing the Projects (the "Materials").

3.2

JAVA undertakes that it shall not:

3.2.1

use the Materials other than for the purpose of performing the Projects;

3.2.2

make the Materials available to any third party;

3.2.3

allow access to the Materials by any of its employees or students except those who are directly involved in performing the Projects;

3.2.4

make any commercial use of the Materials or any composition made using the Materials; or

3.2.5

analyse or otherwise attempt to determine the composition of the Materials.

3.3

The Sponsor warrants that all Materials shall be fit for purpose as envisaged by this Agreement and that all such Materials may be lawfully used in conducting the Services.

3.4

Upon termination of the Agreement, any unused Materials shall, at the Sponsor's option, either be destroyed by JAVA or returned to the Sponsor, at the Sponsor’s expense.

PAYMENT OF FEES AND EXPENSES

4.1.

The fees to be charged by JAVA for each Project performed hereunder (the "Service Fees") shall be set out in the relevant Work Order.

4.2.

In consideration of the supply of Services for each Project, the Sponsor shall pay JAVA the Services Fees and reasonable and necessary vouched expenses incurred in the performance of the Services as set out in the Work Order on the following basis:

4.2.1.

the Service Fees and the total cost of each Project and an estimate of the total expenses to be incurred in relation thereto (the "Total Project Cost") shall be set out in the relevant Work Order; and

4.2.2.

in no event shall the Sponsor be required to pay any amount exceeding the Total Project Cost unless otherwise agreed in writing by both Parties by Change Order(s) (as specified in Clause 2.3 above).

4.2.3.

Invoices for fees and expenses shall be issued on a monthly basis and Sponsor shall pay each invoice within 30 days of receipt.

4.3.

All sums referred to in each Work Order shall be exclusive of Value Added Tax (VAT). The Sponsor shall pay all VAT at the rate and in the manner prescribed by law from time to time.

PERSONNEL

5.1.

JAVA shall be responsible for ensuring that all personnel which it assigns to each Project are fully qualified by education, training and experience to perform their respective obligations under this Agreement and the relevant Work Order ("JAVA Personnel").

5.2.

JAVA shall remain fully liable for the performance by all JAVA Personnel of JAVA’s obligations hereunder.

5.3.

The Sponsor shall be responsible for ensuring that all personnel which it assigns to each Project (“Sponsor Personnel") are fully qualified by education, training and experience to perform their respective obligations under this Agreement and the relevant Work Order.

5.4.

The Sponsor shall remain fully liable for the performance by all Sponsor Personnel of the Sponsor’s obligations hereunder.

CONFIDENTIAL INFORMATION/ANNOUNCEMENTS

6.1.

During the Term and for a period of 7 (seven) years thereafter, each Party undertakes to maintain as confidential all Confidential Information disclosed by the other Party to it (the “Confidential Information") before or after the date of this Agreement.

6.2.

Each Party shall not without the other Party’s prior written consent:

6.2.1.

use the Confidential Information for any purpose other than the proper performance of the Services; or

6.2.2.

disclose the Confidential Information to any other person, save those employees, representatives and agents as may be strictly necessary in order to perform the Services, and provided that JAVA first ensures that such person is under a duty of confidentiality to JAVA to protect the Sponsor’s Confidential Information on no less onerous terms than as set out in this Clause 6.

6.3.

Notwithstanding the provisions of this Clause 6, Confidential Information may be disclosed to the extent required by law or as ordered by a court or other regulatory body having competent jurisdiction, provided that if a Party becomes legally required to disclose any Confidential Information hereunder, the receiving Party shall give the disclosing Party prompt notice of such requirement to enable the disclosing Party to seek a protective order or other appropriate remedy concerning any such disclosure. The receiving Party shall fully co-operate with the disclosing Party in connection with the disclosing Party’s efforts to obtain any such order or other remedy. If any such order or other remedy does not fully preclude disclosure, the receiving Party shall make such disclosure only to the extent that such disclosure is legally required. JAVA acknowledges that Sponsor is a publicly traded corporation and is subject to certain reporting obligations under any applicable laws, and hence JAVA agrees Sponsor has a right to make such publications as required under any such applicable laws.

6.4.

JAVA agrees to maintain, as strictly confidential the subject matter of this Agreement and the fact that the Parties have entered into this Agreement.

6.5.

Upon termination or expiration of this Agreement, JAVA shall promptly return, or at the Sponsor's request, destroy all of the Sponsor's Confidential Information.

6.6.

Each Party shall be entitled to provide a copy of this Agreement (and any related documents) to a potential third-party acquirer, investor, or other commercialisation partner, provided that the relevant third party has entered into a confidentiality agreement with the disclosing Party on terms equivalent hereto.

6.7.

In relation to all personal data (as defined in the Data Protection Acts 1988 and 2003 as amended), the Parties shall at all times comply with the Data Protection Acts 1988 and 2003 as amended, and the Parties shall only undertake processing of personal data reasonably required in connection with the Services and in compliance with law.

6.8.

JAVA acknowledges that information provided by it to the Sponsor may be the subject of a request under the Freedom of Information Act, 1997 (“FOI”), as amended. If a request is made under FOI, the Sponsor shall give JAVA prompt notice of such request to enable JAVA to seek a protective order or other appropriate remedy concerning any such disclosure. The Sponsor shall fully co-operate with JAVA in connection with JAVA's efforts to obtain any such order or other remedy. If any such order or other remedy does not fully preclude disclosure, the Sponsor shall make such disclosure only to the extent that such disclosure is legally required.

PROJECT RESULTS, INTELLECTUAL PROPERTY RIGHTS AND REPORTS

7.1.

JAVA agrees that:

7.1.1.

all data, materials and reports, and all rights therein (the "Project Results"); and

7.1.2.

all Intellectual Property Rights (the "Project IP");

conceived, created, developed and or otherwise invented as a result of performing the Services shall be owned exclusively by the Sponsor.

7.2.

JAVA shall assign to the Sponsor all right, title and interest in and to all Project Results and Project IP and further agrees to execute all such documents, make such applications, give such assistance and do such acts and things as may be necessary or desirable to vest in and register or obtain letters patent in the name of the Sponsor and otherwise to protect and maintain such Project Results and Project IP.

7.3.

JAVA shall promptly disclose all Project Results and Project IP to the Sponsor and provide copies of all documents relating to same to the Sponsor at its request at any time during or after the Term.

7.4.

JAVA has informed the Sponsor that JAVA possesses certain processes, know-how, trade secrets and other intellectual assets relating to applicable processing, laboratory analyses, analytical methods, procedures and techniques, computer technical expertise and software which have been developed by JAVA prior to the Effective Date and which the Sponsor understands are applied and utilised by JAVA on an ongoing basis in providing services to clients (collectively "JAVA Property"). JAVA and the Sponsor agree that the JAVA Property or any improvements relating to the JAVA Property developed by JAVA pursuant to this Agreement shall be owned exclusively by JAVA.

7.5.

Subject to Clause 11, JAVA shall not, without the prior written consent of the Sponsor, disclose or publish any Project Results or Project IP, or use any Project Results or Project IP for any purpose other than to perform its obligations hereunder.

7.6.

Reports and Record Retention

7.6.1.

JAVA will provide reports in writing on the Services performed (each a "Report") on a regular basis.

7.6.2.

If for any reason any Report is not to the satisfaction of the Sponsor acting reasonably, JAVA shall re-produce such Report to the satisfaction of the Sponsor.

7.6.3.

JAVA shall maintain all books, records, data, reports, pictures and other documents (both in electronic and paper form) relating to the Services (the "Records") for the maximum period required by law (the "Retention Period"). The Parties agree that all Records shall constitute Sponsor Confidential Information and the provisions of Clause 6 (Confidentiality) shall apply to all such Records. Upon expiry of the Retention Period, JAVA shall provide all original Records (both in electronic and paper form), and all copies thereof, to the Sponsor.

SOPS/REGULATORY INSPECTIONS

8.1.

Upon the written request of the Sponsor, JAVA shall provide the Sponsor with a list of all of JAVA's standard operating procedures ("SOPs") relevant to the Services to be performed by JAVA hereunder.

8.2.

At any time during the Term, JAVA shall allow the Sponsor to review all such SOPs, including any updates thereof, on JAVA's premises.

8.3.

If any regulatory agency requests to inspect any books, records, or facilities of JAVA, relating to the Services, JAVA shall immediately notify the Sponsor (within 1 business day) and shall promptly notify the Sponsor of the outcome of any such inspection within 5 business days of such outcome becoming known to Service Provider.

REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1.

JAVA represents and warrants to the Sponsor that the performance by JAVA of its obligations hereunder are not inconsistent with and will not breach any third-party obligations.

9.2.

JAVA covenants that it shall have agreements in place with all servants and agents, that impose confidentiality obligations on such servants and agents, vest in JAVA any rights such servants and agents might otherwise have in any Project Results or Project IP, permit JAVA to assign all such rights to the Sponsor, and otherwise enable JAVA to comply with the terms of this Agreement and any Work Order hereunder, including without limitation any timeline set out therein.

10.

INDEMNIFICATION/LIABILITY

10.1.

The Sponsor shall indemnify and hold harmless JAVA and its employees, agents, officers and directors from and against any Claims incurred or sustained by JAVA arising out of the Services performed under this Agreement, except to the extent such Claims arise out of, or are connected with any:

10.1.1.

breach of any representation, covenant, warranty or obligation by JAVA under this Agreement; or

10.1.2.

negligent act or omission or wilful misconduct on the part of JAVA or any of its agents or employees in the performance of this Agreement.

10.2.

JAVA shall indemnify and hold harmless the Sponsor and their respective employees, agents, officers and directors from and against any Claims incurred or sustained by the Sponsor arising out of or in connection with any:

10.2.1.

breach of any representation, covenant, warranty or obligation by JAVA under this Agreement; or

10.2.2.

negligent act or omission or wilful misconduct on the part of JAVA or any of its respective employees, agents, officers and directors in the performance of this Agreement.

10.3.

The Party seeking an indemnity shall:

10.3.1.

fully and promptly notify the other Party of any claim or proceedings, or threatened claim or proceedings;

10.3.2.

permit the indemnifying Party to take full control of such claim or proceedings, with counsel of the indemnifying Party's choice, provided that the indemnifying Party shall reasonably and regularly consult with the Party seeking to be indemnified in relation to the progress and status of such claim or proceedings;

10.3.3.

co-operate in the investigation and defence of such claim or proceedings; and

10.3.4.

take all reasonable steps to mitigate any loss or liability in respect of any such claim or proceedings.

Neither the indemnifying Party nor the Party seeking to be indemnified shall acknowledge the validity of, compromise or otherwise settle any Claim without the prior written consent of the other, which shall not be unreasonably withheld.

The Parties agree that the aggregate liability of either party to the other party under or in connection with this Agreement shall in no event exceed the total Service Fees paid by the Sponsor to JAVA under this Agreement, provided however, that this limitation to each other shall not apply to the indemenities set forth in 10.1 and 10.2 hereunder .

10.4.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE SPONSOR AND JAVA SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.

10.5.

Nothing in this Agreement shall limit the liability of either Party for fraud, or limit the liability of either Party to any third party under applicable laws where any act or omission of either Party results in death or personal injury.

10.6.

Insurance

JAVA shall furnish certificates of insurance evidencing the required insurance policies to the Sponsor as soon as practicable after the Effective Date and within 30 days after renewal of such policies.

11.

PUBLICATION

11.1.

It is acknowledged and agreed by JAVA that:

11.1.1.

publication of the Project Results and/or Project IP in whole or in part shall be within the sole and absolute discretion of the Sponsor;

11.1.2.

JAVA shall not publish or refer to any Project Results and/or Project IP, in whole or in part, without the prior written consent of the Sponsor; and

11.1.3.

JAVA will not use the Sponsor’s name in connection with any publication or promotion without the Sponsor’s prior written consent.

11.2.

In the event that such consent is given, prior to publication or communication of any Project Results and/or Project IP by JAVA, JAVA shall provide to the Sponsor, for its review and comment, a copy of the relevant abstract, presentation, or paper 30 days before such abstract, presentation, or paper is submitted for publication.

11.3.

No release of such abstract, presentation, or paper shall be permitted without the prior written consent of the Sponsor.

11.4.

The provisions of this Clause 11 also apply to any amendments that are subsequently requested by referees or journal editors.

12.

TERM and TERMINATION

12.1.

This Agreement shall commence on the Effective Date and shall continue until terminated by either Party in accordance with this Clause 12 (the "Term").

12.2.

This Agreement or any Work Order may be terminated without cause by either Party at any time during the term of the Agreement on sixty (60) days prior written notice to the other Party. The written termination shall identify whether this Agreement or a specific Work Order or Work Orders are being terminated.

12.3.

In addition to the rights of termination provided for elsewhere in this Agreement, each Party shall be entitled forthwith to terminate this Agreement by written notice to the other Party if:

12.3.1.

either Party commits any material breach of any provisions of this Agreement, and in the case of a breach capable of remedy, fails to cure the same within 30 days after receipt of a written notice giving full particulars of the breach and requiring it to be cured; or

12.3.2.

either Party goes into liquidation (except for the purposes of amalgamation or reconstruction and in such manner that the company resulting therefrom effectively agrees to be bound by or assume the obligations imposed on such party under this Agreement); or

12.3.3.

an encumbrancer takes possession or a receiver is appointed over any of the property or assets of either Party; or

12.3.4.

a Party becomes unable to pay its debts as and when they fall due or is deemed to be unable to pay its debts as they fall due; or

12.3.5.

any proceedings are filed or commenced by any Party under bankruptcy, insolvency or debtor relief laws.

12.4.

Upon receipt of a termination notice from the Sponsor, JAVA shall cease performing any work not necessary for the orderly close out of the affected Projects or for the fulfilment of regulatory requirements.

12.5.

In the event of termination of this Agreement or any Work Order, each Party will co-operate in good faith with the other Party to wind-down and terminate or transition, at Sponsors discretion, to another service provider, any Services then in progress that are affected by such termination and will perform such additional acts as are reasonably necessary in order to effect such wind-down or transition of the Services. JAVA will provide to SPONSOR within forty-five (45) days following any Work Order termination date, an accounting for all Services performed together with reasonable supporting documentation. SPONSOR will promptly review such accounting and will notify JAVA in writing of its approval or will notify CRO of any disputed amounts. SPONSOR will pay CRO within 30 days after receipt of the approved accounting or upon mutual agreement of the final amount due for: (1) all unpaid and undisputed amounts for Services rendered and expenditures made by JAVA in accordance with this Agreement and the applicable Work Order prior to the Termination Date; and (2) expenses resulting from reasonable non-cancellable obligations that JAVA properly incurred for the Services in accordance with a Work Order prior to receipt of notice of termination and which JAVA used commercially reasonable efforts to cancel after receipt of notice of termination.

12.6.

Upon the termination of this Agreement or any Work Order, JAVA shall deliver to the Sponsor all Confidential Information and Materials provided by the Sponsor to JAVA for the conduct of Services under the terminated Work Orders, and JAVA shall also deliver to the Sponsor all Project IP, Project Results and any other data, information and documentation produced as the result of Services performed by JAVA under the terminated Work Orders.

13.

MISCELLANEOUS

13.1.

This Agreement shall be governed by and construed in accordance with Irish laws and, subject to Clauses 13.2 and 13.3, the Parties submit to the exclusive jurisdiction of the Irish courts.

13.2.

Resolution of Disputes: The Parties shall attempt in good faith to resolve promptly any dispute arising out of or relating to this Agreement by negotiation. If the matter cannot be resolved in the normal course of business either Party may give the other Party written notice of any such dispute not resolved, after which the dispute shall be referred to more senior executives of both Parties, who shall likewise attempt to resolve the dispute.

13.3.

If the Parties cannot resolve the dispute or difference by referral to a senior representative of each Party, then within 15 days from the date of such meeting of the senior representatives, the matter shall be referred to a mediator to be agreed upon by Parties or, failing such agreement, shall be appointed on the application of either one of the Parties to the President of the Law Society of England and Wales. The Parties shall use reasonable efforts to resolve any dispute by mediation for a period of 60 days.

13.4.

No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the Party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.

13.5.

Neither Party to this Agreement shall be liable for delay or failure in the performance of any of its obligations hereunder to the extent such delay or failure results from causes beyond its reasonable control, including, without limitation, acts of God, fires, strikes, acts of war, or intervention of a government authority ("Force Majeure"), but any such delay or failure shall be remedied by such Party as soon as practicable.

13.6.

JAVA shall not subcontract with a third party to perform the Services without the prior written consent of the Sponsor.

13.7.

JAVA shall not be entitled to assign this Agreement to a third party, without the prior written consent of the Sponsor, which shall not be unreasonably withheld.

13.8.

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

13.9.

Nothing contained in this Agreement is intended or is to be construed to constitute JAVA and the Sponsor as partners or members of a joint venture. None of the Parties hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement or undertaking with any third party.

13.10.

No amendment, modification or addition hereto shall be effective or binding on any Party unless set forth in writing and executed by a duly authorised representative of each of the Parties.

13.11.

Any notice to be given under this Agreement shall be sent in writing in writing by recognized courier or registered mail to each of the Parties stated in this Agreement, in the Sponsor’s case to to Mr. Simcha Rock, Kitov Pharmaceuticals, Bet Hadfus 11 Jerusalem, or to such other address(es) as may from time to time be notified by any of the Parties, in the Sponsor’s case by the office of Corporate and Legal Affairs, to the others hereunder.

13.12.

Any notice sent by overnight courier or registered mail shall be deemed to have been delivered upon receipt by the addressee.

13.13.

If any provision in this Agreement is agreed by the Parties to be, or is deemed to be, or becomes invalid, illegal, void or unenforceable under any law that is applicable hereto:-

13.13.1.

such provision will be deemed to be deleted, and the Parties shall promptly meet and negotiate in good faith a valid and enforceable replacement for the severed provision which replacement shall be designed to achieve as nearly as possible the same commercial objective as the original; and

13.13.2.

the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.

13.14.

This Agreement sets forth all of the agreements and understandings between the Parties with respect to the subject matter hereof, and supersedes and terminates all prior agreements and understandings between the Parties with respect to the subject matter hereof.

13.15.

At the request of any of the Parties, the other Party shall (and shall use reasonable efforts to procure that any other necessary third parties shall) execute and do all such documents, acts and things as may reasonably be required subsequent to the signing of this Agreement for assuring to or vesting in the requesting Party the full benefit of the terms hereof.

13.16.

The provisions of Clauses 1, 6, 7, 9, 10, 11, 12, and 13 shall survive the termination of this Agreement or any Work Order.

13.17.

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement.

SIGNED by

/s/ Simcha Rock

Chief Financial Officer

for and on behalf of

KITOV PHARMACEUTICALS LTD (“Kitov”)

DATE: February 9, 2014

SIGNED by

/s/ Ruth Nullen

(Managing Director)

for and on behalf of

JAVA CLINICAL RESEARCH LIMITED

DATE: February 6, 2014

APPENDIX 1

WORK ORDER NO 1

This WORK ORDER dated as of the date of last signature below

BETWEEN

(1)

Kitov Pharmaceuticals Limited (“Kitov”) Company incorporated in Israel whose registered address and principal place of business is at, 11 Bet Hadfus Street, Jerusalem, Israel.

("Sponsor"); and

(2)

JAVA CLINICAL RESEARCH LIMITED, a company incorporated in Ireland, registered number 311398, with registered office address 2 Grand Canal Square, Dublin 2, whose principal place of business is at Fitzwilliam Business Centre, 26/27 Upper Pembroke Street, Dublin 2 ("JAVA")

WHEREAS

The Sponsor and JAVA are bound by the terms of the Master Services Agreement dated 04 February 2014 between the Sponsor and JAVA (the "Master Services Agreement").

The Sponsor and JAVA wish to set out the specific details of services to be provided by JAVA in respect of A Prospective Randomized Placebo Controlled Study to Evaluate the Effect of Celecoxib on the Efficacy and Safety of Amlodipine in Subjects with Hypertension Requiring Antihypertensive Therapy

(the "Project").

THE PARTIES NOW HEREBY AGREE AS FOLLOWS:

JAVA shall provide the services as outlined in Schedule 2 hereto (the "Services") in accordance with the timelines set out in Schedule 3 hereto and the terms and conditions of the Master Services Agreement together with the additional provisions as set out in the following Schedules:

Schedule 1 Scope of Services

Schedule 2 Timelines

Schedule 3 Budget and Payment Schedule

Schedule 4 Personnel / Contacts for Notices and Payments

Schedule 5 Protocol

This Work Order has an effective date as of the last date of signature and will remain valid until completion of Services described herein and when the Sponsor has paid the final invoice in accordance with the terms of the Master Services Agreement, unless otherwise terminated in accordance with the provisions of Clause 12 of the Master Services Agreement.

SIGNED BY

KITOV PHARMACEUTICALS LIMITED

Signature: /s/ Simcha Rock

By: Simcha Rock

(Print Name)

Title: Chief Financial Officer

Date: February 9, 2014

JAVA CLINICAL RESEARCH LIMITED

Signature: /s/ Ruth Nullen

By: Ruth Nullen

(Print Name)

Title: Managing Directoe

Date: February 6, 2014

SCHEDULE 1: SCOPE OF SERVICES

Study Title: A Prospective Randomized Placebo Controlled Study to Evaluate the Effect of Celecoxib on the Efficacy and Safety of Amlodipine in Subjects with Hypertension Requiring Antihypertensive Therapy

PROTOCOL NO.: K-302-03-01

Proposed Allocation of Sponsor - Java- Duties and Functions

04 February 2014

Regulatory and Ethics

II.

Investigator Relations

III.

IMP Supplies

IV.

Study Documentation

Relationship between Sponsor& Java

VI.

Relationship with other subcontractors

VII.

Monitor Activities of Clinical Sites

VIII.

Medical and coherence review of the CRF following retrieval from the site

IX.

Serious Adverse Events follow up and reporting

Data entry, Data Management & Coding

XI.

Statistical Analysis

XII.

Clinical Study Report

XIII.

XIV Medical Monitoring

XIV.

Quality Assurance

table of responsibilities: E = Execute; A = Assist; R = Review

* = Subcontracted by Java to a third party Vendor

# = Subcontracted by SPONSOR to a third party Vendor

	Sponsor	JAVA
I Regulatory & Ethics
1. Provision of all supporting IMP documentation for CTA submission to IMB and MHRA.	E	R
2. Completion of EudraCT Form, compilation of supporting documents (on receipt from relevant parties) into required electronic format for submission of Clinical Trial Application to IMB and MHRA, plus submission of responses to any queries raised during review period		E
3. Submission of CTA to National Ethics Committees in Republic and Northern Ireland plus submission of responses to any queries raised during review period		E
4. Providing Sponsor with the final answer given by IMB. MHRA and Ethics Committees		E
II Investigator Relations
A. Selection
1. Definition of investigator selection criteria	E
2. Proposal of potential investigators and national coordinator		E
3. Organization of site assessment visits to evaluate the interest and suitability of the centers to participate in the study.		E
4. Approval of selected investigators	A	E
5. Organization of pre-trial visits with all investigators to evaluate the capability of the centers to recruit patients within the time frame, advise them of the study requirement and procedures in preparation for Site Initiation		E

	Sponsor	JAVA
B Investigator fees
1. Proposal of investigator fees and payment schedule for each involved country	A	E
2. Proposal and negotiation of the fees to the investigators		E
3. Approval of final investigator fees	E
4. Management of payment of investigator fees and issue of invoices to Sponsor		E
C. Agreement with investigators/institutions
1. Issue of Confidentiality Agreements to be signed by investigators		E
2. Identification of all the agreements to be obtained before study start	A	E
3. Drawing up of all agreements	A	E
4. Submission of the agreements to the investigators/institutions for approval and signature		E
5. Signature of the agreements	E	A
6. Collection of specific FDA documentation requirements such as 1572 forms as requested by Sponsor	R	E
III IMP Supplies

A. Randomization/allocation of treatments
1. Programming, development of a randomisation list	E#
2. Issue of decoding envelopes to be sent to investigators for decoding in case of medical emergency	E#
3. Allocation of treatments through a Central Randomisation system	E#
4. Shipment of initial treatment blocks of IMP to site	E#
5. Approval of additional reorders form sitesite	R	E
6. Shipment of additional reorders to site	E#

	Sponsor	JAVA
B. Management of trial drug supplies
1. Manufacturing of drug supplies (or subcontracting)	E#
2. Management of subcontracting for packaging, labeling and shipment to sites	E#
3. Validation of labeling regarding administrative and regulatory procedure in each involved country		E
4. Submission of import license when applicable	E#
5. Management of all customs issues	E#
6. Forwarding of required regulatory documentation to Sponsor for allowing the shipment of clinical supplies to each site		E
C. Retrieval and disposal of study drug
1. Manage retrieval of study drug from each site	E#	E
2. Manage destruction of study drug.	E#
3. Perform a reconciliation of all drugs supplied and returned to Sponsor	E#	E
IV Study documentation
A. Drawing up study documents
1. Final protocol	E
2. Patient Information Leaflet and Informed Consent Form development	R	E
3. Approval of Patient Information Leaflet and Informed Consent Form	E
4. eCRF development	R	E*
5. Approval of eCRF	E
6. Printing of CRFs, if applicable	N/A	N/A
7. Monitoring Guidelines and their update	R	E
8. Approval of Monitoring Guidelines	E
9. Laboratory Operating Manual development		E*
10. Approval of Laboratory Operating Manual	E
11. ABPM Manuals development and approval	E#	R

	Sponsor	JAVA
B. Filing and archiving of study document
1. Preparation of the Investigator’s Trial Files		E
2. Filing of all original administrative study documents according to mutually agreed SOP (Trial Master File)		E
3. Provide Sponsor on an ongoing basis with:
- CRO personnel CVs and Allocation of duties and functions form		E
- Regulatory filing of declaration and any correspondence or contact with Regulatory Authorities		E
- Approval letters or acknowledgement letters of Regulatory Authorities		E
- Approval letters and any correspondence with Ethics committees		E
- Protocol signature page signed by Sponsor and the investigators		E
- Trial and Financial Agreements with Sponsor signed by the investigators		E
- CVs from site personnel and Trial Site Signature forms		E
-1572 form and any other FDA documents required by the Sponsor		E
4. Ensure that patients' names and addresses are masked prior to returning documents to Sponsor but assure that the documents are still identifiable with protocol number, patient's initials and number		E
5. Assure the maintenance and archiving at the trial sites of the Investigators’ Trial Files and CRFs		E
6. Provide all original documents of the Trial Master File upon request of Sponsor, after database closure		E
V Relationship between Sponsor and Java
A. CRO clinical team
1. Assignment of a clinical team dedicated to the study		E
2. Regular contacts (teleconference), , between Java and Sponsor representatives; initially weekly then frequency will depend on the ongoing issues to be discussed	A	E

	Sponsor	JAVA
B. Reporting
1. Preparation and forwarding every week to Sponsor of a study report concerning the status of patients per site : number of patients included, dropped out, randomised, treatment ongoing, completed, recruitment rate (% included/to be included)		E
2. Preparation and forwarding every two months to Sponsor of a report concerning the activities in terms of patient visits to allow payments of fees		E
3. Monthly report of monitoring activities: type and date of visit, report date, problems, actions taken		E
4. CRF tracking per centre: CRF visits monitored, laboratory results monitored, deviations to protocol, quality of the data, number of SAEs will be included in each monitoring report.		E
VI Relationship with the Central Laboratory Negotiation and signature of agreement with central laboratory		E*
A. Proposal of a central laboratory for
1. Biochemistry & Haematology Profile
2. Urine Drug Screen
3. Urinalysis & Pregnancy		E*
4. Alcohol Detection

B. Preparation of
1. Investigator Laboratory Manual
2. Multi Part Laboratory Reports		E*
Tailor made request forms & patient labelling

C. Collection of specimens				E*
1. Logistics and transportation in accordance with ADR regulations under temperature controlled conditions (ambient, +4°C or -20°C).
2. Analysis of specimens as required during normal working hours.

	Sponsor	JAVA
D. Reporting Procedures
1. Authorized report on the results from each patient specimen.
2. Expert medical pathologist support where result interpretation and clinical advice is required.		E*
3. Post Analysis Storage of Sampl

E. Disposing of samples
1. OpenLabs Web Browser enabling Secure
Access to Patient Results over the Internet
2. Full Extraction of results for all sample post analysis as per client request.		E*
3. Resolution of queries in a timely manner,queries relating to sample requests
1.
VII – Monitor activities on clinical sites
A. Pre-Initiation and Site Initiation Visits
1. Performing site assessment visits		E
2. Performing pre-study visits		E
3. Performing all the site initiation visits as soon as possible after obtaining all required regulatory documents		E
4. Assure that all critical points of the study including scientific, administrative and logistic matters are well understood by all members of the study team prior to enrollment of the first patient at a site		E
5. Check that all study documents and/or material such as eCRF manual, investigator study file, investigator operating manual have been forwarded to the investigator prior to the Site Initiation Visit or handed over during the visit		E
6. Retrieval of any outstanding essential study documents to be signed by the investigator at the latest (if not, study drugs cannot be released and the investigator is not allowed to include patients)		E

	Sponsor	JAVA
7. Management of all regulatory and logistical matters with the study pharmacist, if applicable		E
B. Patient selection and recruitment
1. Monitor patient recruitment at the sites in order to ensure the target number of patients, as defined in the protocol and in accordance with the the planned study timelines, is met		E
2. Decision to increase the number of sites, if needed	E
C. Monitoring
1. Allocation of internal experienced CRAs to monitor the study		E
2. Performing all monitoring activities related to the study, including investigators’ site monitoring according to Monitoring Guidelines and agreed SOPs. The rate of monitoring visits will be defined in the Monitoring Plan.		E
3. Monitoring of pharmacy where applicable		E
4. Detection and report to Sponsor potential problems as well as possible proposed actions to be discussed with the Sponsor		E
5. Verification of source documents for 100% of randomised patients for the key-criteria (inclusion/exclusion criteria, primary endpoint assessments, AEs (serious and non-serious), drug dispensing record and informed consent forms, reason for premature termination)		E
6. The monitor will ensure site personnel address all corrections/ discrepancies on the eCRF pages during, or following each monitoring visit. The monitor will also ensure site addresses data queries when generated by CROSNT, as per CROSNT’s query handling procedure		E
7. Review of biological results filing and their masking		E
8. Check of maintenance and update of the investigatorss trial files at routine monitoring visits		E

	Sponsor	JAVA
9. Completion of a visit report form and forwarding to Sponsor within 10 working days after each visit (site assessment, pre-study, site initiation, monitoring, close-out)		E
10. Co-monitoring visits with the CRO at investigator’s site according to a mutually agreed rhythm described in the Monitoring Plan	E
D. Drug accountability
1. Check of 100% study drug accountability and storage conditions		E
2. Check that the product is dispensed in conformity with the centralized allocation procedure		E
3. Check that Drug Dispensing and Accountability Forms are complete and accurate		E
E. Study closure
1. Perform close-out visit to the sites on Sponsor’s instruction		E
2. Check that essential documents are archived properly on site		E
3. Collect all unused study materials		E
VIII Medical and coherence review of the eCRF following retrieval from the site
1. Medical review in order to ensure validity and consistency of the information contained within the CRFs, specifically: past medical history, inclusion/exclusion criteria, concomitant illnesses, forbidden treatments, clinical examination and vital signs, follow-up of adverse events, follow-up of serious adverse events (hospital report...), ancillary examinations.	E
IX Serious Adverse Events follow up and reporting
1. Provide investigator sites with SAE forms	R	E*
2. Monitoring and collection of Serious Adverse Events follow-up and additional documentation such as discharge reports		E
3. Eudravigilance registration		E*
4. Responsible Person for Eudravigilance		E*
5. Safety Database		E*

	Sponsor	JAVA
6. Review of all Serious Adverse Events forms on an ongoing basis		E*
7. Shipment of SUSARs reports and annual safety reports to Competent Authorities		E*
8. Shipment of Development Safety Update Reports to Competent Authorities	E
9. Shipment of SUSARs reports and annual safety reports to Ethics Committees (reports provided by Sponsor)		E
X Data-Entry, Data management and Coding
A. eCRF completion
1. The monitor will check that all monitored data eCRF are entered in the eCRF database. The monitor will ensure that the Principal Investigator signs the eCRF signatory page at the end of the study once all data queries have been addressed		E
B. Data management
1. CRF Design	R	E*
2. Data Management Plan	R	E*
3. Programming and Validation of Database	R	E*
4. Programming and Validation of Consistency Checks	R	E*
5. Data Load set-up		E*
6. User acceptance testing	R	E*
7. CRF/DCF Tracking and Archiving		E*
8. Lab imports		E*
9. Data Entry		E*
10. Data Cleaning		E*
11. SAE Reconciliation		E*
12. Production of Listing for Medical Review	R	E*
13. Coding		E*
14. Metrics/Tracking Report		E*
15. Documentation Archiving		E*
16. Database Lock		E*
17. Database Transfer		E*
XI Statistical analysis
1. Responsibility for statistical analysis other than ABPM	R	E*

	Sponsor	JAVA
2. Responsibility for statistical analysis of ABPM	E
XII Clinical study report
Clinical Study Report (excluding ABPM)	R	E*
XIII Medical Monitoring
Primary contact for all medical queries	E
XIV Quality Assurance
1 Issue of audit plans for the trial.	E
2 Conduct on site QA audits	E
3 Implement corrective actions and follow up with sites		E

SCHEDULE 2-: TIMELINES

The Work Order is based on the following proposed timelines and is is dependent that all supporting documentation for CTA submissions to The IMB and MHRA are available week commencing 24^th February.

Project Preparation	January- April 2014
EC & CTA Approvals	May 2014
First Site Initiation Visit	May 2014
First Patient First Visit	June 2014
Last Patient Last Visit	October 2014
Data Base Lock	TBC ( based on results of interim analysis)

SCHEDULE 3: BUDGET AND PAYMENT SCHEDULE

Study Reference K-03-01

Projected Timelines:
Project Preparation	14 weeks
Study Recruitment and Conduct Period	22 weeks
Close out period	12 weeks

Indication:	Hypertension

Key Assumptions:
Number of patients to be screened	300
Number of patients to be randomised	150
Sites	10 sites Republic/Northern Ireland
Number of monitoring visits	Estimated pool of 60 monitoring site visits
Total CRF pages per patient	TBC

	RATE			EST. REQ.	ESTIMATED CHARGE
ACTIVITY	€		UNIT	Range	Range €		Comments
Project Preparation
PM project training		110.00	hour	16		1,760.00	To include protocol, CRF and SOP training
CRA project training		85.00	hour	16		1,360.00	To include protocol, CRF and SOP training
PM project preparation time		1,760.00	week	14		24,640.00	Includes site contacts/feasibility assessments to ensure all required systems are in place for study initiation, assistance with eCRF development to include advice on required CRF data fields, communication with Kitov Ltd on project related progress/issue
CRA project preparation time		1,360.00	week	14		19,040.00	Includes site contacts/feasibility, communication with Kitov Ltd, collating all study related materials required for initiation, addressing site queries and issues, preparation/customisation of Investigator Study Files and Forms, collection of essential d
CTA project preparation time		400.00	week	14		5,600.00

Preparation total						52,400.00
Regulatory and Ethics
Review and submission of CTA to IMB (including submission of responses to any queries raised during review period)		3,840.00	submission	1		3,840.00
Review and submission of CTA to MHRA (including submission of responses to any queries raised during review period)		3,840.00	submission	1		3,840.00
Submission to National Ethics Committee in Repbulic of Ireland (including submission of responses to any queries raised during review period)		2,040.00	submission	1		2,040.00
Submission to National Ethics Committee in Northern Ireland (including submission of responses to any queries		2,720.00	submission	1		2,720.00
Management of Site Specific Approvals for all sites		340.00	site	10		3,400.00

Regulatory total						15,840.00
Clinical Operations							Assuming 4 Dublin Centres: 6 Regional Centres - estimated Monitoring Visit Pool of 60 site visits
Site Qualification Visits		680.00	site	10		6,800.00
Travel time		400.00	site	6		2,400.00	Site Visit preparation time for pre study visits and monitoring
Pre-Study Visits		850.00	site	10		8,500.00	visits - 2 hours. Site Visit preparation time for SIV and
Travel time		400.00	site	6		2,400.00	close out visit - 4 hours. Site Qualification and Pre study visit duration - 4 hours.
Site Initiation Visits		1,360.00	site	10		13,600.00	SIV, monitoring and close out visit duration -
Travel time		400.00	site	6		2,400.00
Study Monitoring Visits		1,190.00	site	60		71,400.00
Travel time		400.00	site	6		2,400.00
Study Close-Out Visits		1,360.00	site	10		13,600.00
CRA Site Management		1,020.00	week	34		34,680.00	Communication/liaison with Project Manager and site personnel on study related issues, progress etc; eCRF review (only as preparation for the monitoring visit); participation in project teleconferences, when required.
Project Management		2,200.00	week	34		74,800.00	Internal management of CRAs including advice on recruitment strategies, site related issues, contingency measurement implementation etc; Communication with Kitov Ltd on project progress/study related issues; Management of Third Party Vendors; Management o
CTA study conduct		400.00	week	34		13,600.00	Assistance with compilation of return of essential dcoument for TMF, CRA travel arrangements, collation of all pass through costs and study related invoices.
Clinical Operations						246,580.00
Other Services
Clinical Laboratory Services (Estimate)
Sample Analysis						37,020.00
Central Laboratory Fee						2,700.00
Web Browser Access						FOC
Results Extraction						300.00
Sample Collection Logistics Estimate						5,000.00
Clinical Laboratory Services Subtotal						45,020.00

Data Management and Statistics
Biometrics Management						11,172.00
Data Management						42,873.50
eCRF management and hosting						64,189.25
Statistics						37,225.75
Data Management and Statistics Subtotal						155,460.50
Pharmacovigilance
Safety Database Maintenance						4,000.00
PhV Specifications						2,910.00
SAE Initial/Follow-up Report Processing						3,600.00
Expedite SUSARs reporting						108.00
Line Listing production						2,440.00
Responsible Person - Eudravigilance						6712.5
Pharmacovigilance Subtotal						19,770.50

Medical Writing
Clinical Study Report						14,252.00

Other Services Subtotal						234,503.00
8% Overhead						18,760.24
SUBTOTALS						253,263.24

GRAND TOTAL PROFESSIONAL FEES						568,083.24

Other study conduct costs
IMB CTA						1,443.00
MHRA CTA						3,982.00
Ethics Committe Fees						2,350.00
CRA Travel						23,400.00	Dublin sites 4 sites x 10 visits x €30 per visit = €1200
							Regional sites: 6 sites x 2 visits x €250 = €3000 (SQV/PS)
							Regional sites: 6 sites x 8 visits x €400 = €19,200
Courier Costs - as per receipted expenses						5,000.00	Estimate
Stationary, Printing, Photocopying for TMF, Investigator Site Files and Ethics Applications						10,000.00
Management of PI fees						9,885.00
Estimate other pass through costs						56,060.00

Proposed payment schedule
15% upfront fee at exchange of contracts						85,212.49
15% first Competent Authority approval (IMB or MHRA)						85,212.49
10% following 30 subjects randomised						56,808.32
10% following 60 subjects randomised						56,808.32
10% following 90 subjects randomised						56,808.32
10% following 120 subjects randomised						56,808.32
10% following 150 subjects randomised						56,808.32
10% DB lock						56,808.32
10% final study report						56,808.32
						568,083.24
Pass through fees
20 % upfront fee at exchange of contracts						11,212.00

Monthly based on actual expenses incurred.

SCHEDULE 4 -: PERSONNEL/CONTACTS FOR NOTICES

Sponsor Personnel

Country

Name

Role

Phone

Email address

Israel

Simcha Rock

CFO

+972

625

4142

simcha@kitovpharma.com

Java Personnel

Country		Name		Role		Phone		Email address
Ireland		Ruth Nallen		Managing Director		+353 1 6373903		rnallen@javacr.com

SCHEDULE 5 -: PROTOCOL

EXHIBIT 4.3

SHARE TRANSFER AGREEMENT

THIS SHARE TRANSFER AGREEMENT (this "Agreement") is made as of the 2^nd day of April 2013 (the “Execution Date”), by and among Mainrom Line Logistics Ltd., a public company traded on the Tel Aviv Stock Exchange (“Mainrom”), Kitov Pharmaceuticals Ltd., a private company incorporated under the laws of the State of Israel (the "Kitov"), and all the shareholders of Kitov, as detailed in Schedule A attached hereto (collectively referred to as the “Shareholders”), the controlling shareholder of Mainrom, Sheer Roichman (“Roichman”) and Haiku Capital Ltd. (Israeli Co # 51-3783209) (“Haiku”).

WITNESSETH:

WHEREAS, Roichman, the controlling shareholder of Haiku, is the holder of 71.25% of Mainrom’s issued and outstanding shares;

WHEREAS, Mainrom has no business activity and no liabilities, other than a liability to Roichman in the amount of up to NIS 300,000 representing a loan given to Mainrom by Roichman (including any interest accrued thereon), and other liabilities as detailed in Schedule ‎5.1.5; and

WHEREAS, the Shareholders desire to assign and transfer 10,000,000 ordinary shares, NIS 0.01 nominal value each, of Kitov (the “Transferred Shares”), which represent 100% of the issued and outstanding share capital of Kitov on a fully diluted basis, to Mainrom (the Transfer of the Transferred Shares shall be performed in two parts as more fully set forth in Section ‎1.1 below).

WHEREAS, in consideration for the transfer of the Transferred Shares, Mainrom shall issue to the Shareholders ordinary voting shares of Mainrom as follows: at the Closing Mainrom shall issue 17,569,220 ordinary shares of Mainrom representing 66.182% of Mainrom's issued share capital on a fully diluted basis immediately following such issuance, taking into account all options granted under section ‎1.5 below (the "Closing Options") (the “Closing Issued Shares”); and in addition, subject to Kitov's achievement of the Milestone (defined below), Mainrom shall issue to the Shareholders additional 17,927,776 ordinary shares of Mainrom (the “Additional Shares”) which, together with the Closing Issued Shares and taking into account the Closing Options, but disregarding any future issuance of securities and rights convertible into securities of Mainrom, represent 79.490% of Mainrom's issued share capital on a fully diluted basis, all as more fully set forth in Section‎1 below (together the “Issued Shares”)(the “Share Exchange”); and

WHEREAS, Kitov, the Shareholders, Roichman and Mainrom desire to effect and perform the Share Exchange pursuant to the terms and conditions more fully set forth in this Agreement; and

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

Transfer of the Transferred Shares and Issuance of the Issued Shares

1.1

At the Closing, Mainrom shall issue the Shareholders the Closing Issued Shares, and the Shareholders shall transfer the Transferred Shares as follows: (a) 80% (or a lower percentage if required, as shall be determined by Mainrom, in order to finalize the transaction) of the Transferred Shares held by each of the Shareholders (the "Closing Transferred Shares") shall be transferred to Mainrom; and (b) 20% (or a higher percentage corresponding to the increase as set forth in (a) above) of the Transferred Shares held by each of the Shareholders (the "Additional Holdings") shall be transferred to a trustee which shall be mutually agreed following signing and if no such agreement is reached, as shall be determined by Mainrom (the “Additional Holdings Trustee”) which shall hold such Additional Holdings in trust for the sole benefit of Mainrom, pursuant to a trust agreement containing the language provided for in Schedule ‎1.1, and transfer the Additional Holdings to Mainrom upon the earlier of: (i) the issuance of the Additional Shares to the Shareholders; or (ii) at the lapse of a 28 months period commencing as of the date of the Closing (the "Trustee Transferred Shares").

1.2

For avoidance of doubt, it is hereby clarified that each reference to Mainrom’s shares, under each definition (including Closing Issued Shares, Issued Shares and Additional Shares) shall refer to Mainrom's Ordinary voting Shares.

1.3

Subject to Kitov's completion of a milestone set forth in Schedule ‎1.3 attached hereto (the "Milestone") within 28 months from the date of the Closing, Mainrom shall, within 14 days as of the completion of the Milestone, issue the Shareholders the Additional Shares.

1.4

The number of Transferred Shares to be transferred by each Shareholder to Mainrom and the number of Issued Shares to be issued by Mainrom to each Shareholder shall be as detailed in Schedule ‎1.4 attached hereto.

The Issued Shares shall have all the rights and privileges attached to the shares of Mainrom as set forth in Mainrom’s Articles of Association.

1.5

Following the Closing, Mainrom shall (1) grant options to purchase 1,194,616 ordinary shares of Mainrom under the terms and conditions set forth in Schedule ‎1.5B, to Lior Tamar Investments Ltd., or to any third party (which shall receive a part of options under this section (1) all as shall be designated by Lior Tamar Investments prior to April 22^th 2013 and (2) grant Simcha Rock, subject to the adoption by the company of a stock option plan under the provision of section 102 of the Israeli Income Tax Ordinance, an option to purchase 177,467 ordinary shares of Mainrom, and, upon achievement of the Milestone and subject thereto, an option to purchase additional 181,089 ordinary shares of Mainrom, all under the terms and conditions set forth in Schedule ‎1.5A.

Closing and Delivery

2.1

The closing of the Share Exchange under this Agreement (the “Closing”) shall take place within five (5) days of the completion of the Closing Conditions (as defined below) at the offices of Shibolet & Co. Advocates and Notaries in Tel Aviv, or at such other time or place as the Shareholders and Mainrom may mutually agree (such date is hereinafter referred to as the “Closing Date”). In the event that the Closing Conditions are met, the Share Exchange shall be deemed, for any and all purposes, to be effective as of the date of the Closing. In the event that all the Closing Conditions are not met or waived by the applicable party on or prior to May 31 2013, this Agreement shall terminate and shall be of no force and effect and none of the parties shall have any claims or demands against the other parties with respect hereto, except in the event of a party that has not acted in good faith in order to achieve such Closing Conditions which were not met.

2.2

At the Closing, the transactions set out in Sections ‎2.3, ‎2.4, ‎2.5 and ‎3 below shall occur, which transactions shall be deemed to take place simultaneously and automatically and no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered:

2.3

The Shareholders shall deliver to Mainrom the following documents:

2.3.1

Original share transfer deeds duly signed and executed by each Shareholder transferring, the respective number of Transferred Shares held by them to Mainrom.

2.3.2

True and correct copies of a resolution of Kitov's board of directors approving the transfer of the Transferred Shares to Mainrom, against issuance of the Issued Shares to the Shareholders.

2.3.3

Any and all approvals and/or waivers and/or consents and/or permits or the like required for the consummation of this Agreement executed by the Shareholders.

2.3.4

A waiver, in the form attached hereto as Schedule ‎2.3.4, under which JPW PCH LLC's right to purchase assets from Kitov is terminated.

2.4

Mainrom shall deliver to the representative of the Shareholders the following documents:

2.4.1

Shareholders Register reflecting the issuance of the Closing Issued Shares issued to the Nominee Company (Hevra Le'rishumim). The shares will be issued to the Nominee Company for the benefit of a Trustee as shall be indicated by the Shareholders and if not indicated (with a valid bank account) prior to the Closing, as shall be determined by Mainrom.

2.4.2

A resolution of the board of directors of Mainrom issuing the Issued Shares to the Shareholders.

2.4.3

A resolution of the meeting of the Shareholders of Mainrom approving the transaction hereunder.

2.5

At the Closing, the Shareholders shall transfer to Mainrom the Closing Transferred Shares and shall transfer to the Trustee the Trustee Transferred Shares and Mainrom shall issue each of the Shareholder the Closing Issued Shares in accordance with the allocation among the Shareholders as detailed in Schedule ‎1.4 attached hereto.

Board Composition.

All of Mainrom's currently residing directors, excluding Issac Israel and the external directors, shall terminate their engagement as directors in Mainrom's board of directors (the "Board"). At the Closing (or prior thereto) three (3) directors as detailed in Schedule ‎3A, shall be appointed either by the Board or by the General Meeting of the Shareholders of Mainrom (the "General Meeting"). Attached hereto as Schedule ‎3B is a form of the declarations to be executed by such directors prior to the Execution Date.

The Shareholders, together and separately, hereby undertake and warrant to Roichman that until the completion of fund raising by Mainrom (either by way of a private placement or a public offering) in the aggregate amount of at least NIS 15,000,000, they shall vote, at every General Meeting at which the appointment of director(s) suggested by Roichman is on the Agenda of such General Meeting, for the appointment of a director to the Board, the identify of whom shall be delivered in advance of such vote in writing by Roichman to the Shareholders (the "Director Appointment Obligation"). Furthermore, the Shareholders, together and separately, hereby undertake that any sale and/or transfer of Mainrom's securities held by such Shareholders after the Closing, other than a sale during trade on the Tel Aviv Stock Exchange or the sale of all but not less than all of Mainrom’s outstanding share capital to a third party, shall be subject to the obligation of the purchaser of such securities towards Roichman to abide by the Director Appointment Obligation hereinabove.

Transfer of the Transferred Shares.

Mainrom shall receive the Transferred Shares on the basis of the representations and/or warranties to Mainrom with respect to the Transferred Shares and/or Kitov which are set out in Section ‎7 below.

Representations and Warranties of Mainrom and Haiku.

5.1

Mainrom hereby represent and warrant to the Shareholders and acknowledge that the Shareholders are entering into this Agreement in reliance thereon, as follows:

5.1.1

(i) this Agreement, when executed and delivered by Mainrom will constitute valid, binding and enforceable obligations of Mainrom, and (ii) the Issued Shares transferred by Mainrom are free and clear of any liens, claims, encumbrances or third party rights of any kind, including without limitation any rights of first refusal, co sale rights preemptive rights and/or other participation rights and are, duly registered in the name of Mainrom in Mainrom’s share register.

5.1.2

Mainrom's share capital on a pre-Closing, fully diluted basis, as filed with TASE, is attached to this Agreement as Schedule ‎5.1.2 (“Mainrom's Capital”). Except as set forth in Mainrom'e Capital, there are no outstanding nor promised options, warrants, securities convertible into, exchangeable or exercisable for or evidencing the right to subscribe for equity securities of Mainrom, rights (including conversion, anti-dilution, exchange or preemptive rights, rights of first refusal, share appreciation, profit sharing, phantom share rights, or any similar rights), proxy, voting, transfer restriction or shareholder agreements, or agreements of any kind, or claims, undertakings or promises of any nature whatsoever, orally or in writing, for the purchase, receipt or acquisition from Mainrom or from any other party, of any of its securities. All issued and outstanding securities of Mainrom were issued in accordance with all applicable laws and regulations.

5.1.3

Mainrom's public filings are and as of the Closing Shall be: (a) true and correct and accurately represent Mainrom's business, its capital, assets and obligations; (b) be drafted (if applicable) according to IFRS and the Israeli Securities Law, 1968 and the regulations promulgated thereunder and any applicable instruction and rules of the Israeli Securities Authority; (c) do not include any misleading fact and do not as of the Closing, omit any material and/or extraordinary transaction and/or action and/or event.

5.1.4

On October 23rd, 2012 the Tel Aviv district court approvad the settlement by and among Mainrom and its creditors under Section 350 of the Company's Law - 1999 (the "Settlement"). All publically available documents of Mainrom published by it as of the Settlement and up to the Closing Date, are true and accurate in all material respects.

5.1.5

The current financial obligations and other liabilities of Mainrom towards third parties and/or towards Roichman are as set out in Schedule ‎5.1.5 attached hereto ("Mainrom's Financial Obligations"). Mainrom's Financial Obligations towards Roichman arise from actual funds directly advanced by Roichman to Mainrom and, for clarification purposes, do not include in kind payments by Roichman. Following the Settlement, Mainrom has not conducted any activities other than as strictly required to meet its reporting obligations to the TASE and, other than as disclosed hereunder,

5.2

Haiku hereby represents and warrants to the Shareholders and acknowledges that the Shareholders are entering into this Agreement in reliance thereon, as follows: (i) this Agreement, when executed and delivered by Haiku will constitute valid, binding and enforceable obligations of Haiku; and (ii) Haiku is wholly owned by Roichman.

Representations and Warranties of Roichman.

Roichman hereby represents and warrants to the Shareholders and acknowledges that the Shareholders are entering into this Agreement in reliance thereon, as follows: (i) Roichman has full power and authority to enter into this Agreement and this Agreement, when executed and delivered by Roichman will constitute valid, binding and enforceable obligations of Roichman in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally; and (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; (ii) no other action, consent, approval or authorization is necessary for the due authorization of the execution, delivery and performance of this Agreement and the obligations of Roichman hereunder; and (iii) Roichman holds 5,418,886 ordinary shares, with no nominal value, of Mainrom, constituting on a fully diluted basis taking into account all convertible securities or rights thereto 71.25% of Mainrom's issued and outstanding share capital (the "Roichman Holdings"). The Roichman Holdings are free and clear of any liens, claims, encumbrances, debt or third party rights of any kind, including without limitation any other participation rights and are, duly registered in Roichman's name. To Roichman's best knowledge as the controlling shareholder of Mainrom, following the Settlement, Mainrom has not conducted any activities other than as reported in its filings and as required to meet its reporting obligations to the TASE and.

Representations and Warranties of Kitov and the Shareholders.

Kitov and each Shareholder, together and separately, hereby represent, warrant and undertake, separately to Mainrom, Roichman and Haiku and acknowledge that each of the above is entering into this Agreement in reliance thereon, as follows, as of the date of execution hereof and as of the Closing:

7.1

(i) this Agreement, when executed and delivered by Kitov and each Shareholder will constitute valid, binding and enforceable obligations of Kitov and such Shareholder; (ii) the execution, delivery and performance of the obligations of Kitov and each Shareholder hereunder have been duly authorized by all necessary corporate action; (iii) the Transferred Shares transferred by each Shareholders are free and clear of any liens, claims, encumbrances or third party rights of any kind, including without limitation any rights of first refusal, co sale rights preemptive rights and/or other participation rights and are, duly registered in the name of the Shareholders in Kitov's share register; and (iv) The current financial obligations and other liabilities of Kitov towards third parties and/or towards the Shareholders of Kitov are as set out in Schedule ‎7.1‎0 attached hereto (the "Kitov Financial Obligations"). The Kitov Financial Obligations arise from actual funds directly advanced by the Shareholders to the Company and, for clarification purposes, do not include in kind payments by the Shareholders. Any other agreement and provision notwithstanding, no amount shall be repaid to the Shareholders until the full repayment of all amounts due to Haiku and Roichman as set forth in Section ‎11 below, other than as set forth in Schedule 7.1 attached hereto, there are no obligations and other liabilities of Kitov towards its Shareholders.

7.2

Immediately prior to the Execution Date and the Closing Date the authorized share capital of Kitov is as set forth in Schedule A Except as set forth in Schedule ‎7.2, the Company has not and shall not issue and there are no and there shall not, prior to the Closing Date, be any outstanding shares, options, warrants, preemptive rights or other rights or securities, of any nature whatsoever, convertible into or exchangeable for shares of Kitov, or any other rights, agreements, undertakings, promises or commitments to sell or acquire securities from Kitov. All issued and outstanding share capital of Kitov was duly authorized, and is validly issued and outstanding and is fully paid for and non-assessable, and was issued in compliance with all applicable laws concerning the issuance of securities.

7.3

Kitov and the Shareholders hereby undertake that no later than April 10^th, 2013 (the "Delivery Date"), they shall deliver to Mainrom the following: (i) the draft of the Kitov description (Mit'ar) (the "Mit'ar"); (ii) Kitov's Financial Statements as of December 31^st, 2012 attached to the Mit'ar (the "Financial Statements"); and (iii) Kitov's Valuation (the "Valuation" and together with Mit'ar and Financial Statements the "Disclosure Documents").

7.4

Kitov further undertakes, represents and warrants that as of the Delivery Date the Disclosure Documents shall: (a) be true and correct and accurately represent Kitov's business, its capital, assets and obligations; (b) be drafted (if applicable) according to IFRS and the Israeli Securities Law, 1968 and the regulations promulgated thereunder and any applicable instruction and rules of the Israeli Securities Authority; (c) do not include any misleading fact and do not as of the Closing, omit any material and/or extraordinary transaction and/or action and/or event; and (d) represent that as of December 31^st, 2012 and until the Execution Date and the Closing, Kitov's business was and shall have been conducted in the ordinary course of business.

7.5

Should Kitov fail to deliver the Disclosure Documents until the lapse of the Delivery Date, Mainrom shall be entitled, at its sole discretion, and in addition to and without derogating from any other legal remedy, to terminate this Agreement and neither Kitov nor any of the Shareholders nor anyone on their behalf, shall have any claims and/or contents of any kind or type against Mainrom, its shareholders, directors, officers, advisors, employees and/or successors with respect to such termination.

Conditions to Closing by Mainrom

The obligations of Mainrom to receive the Transferred Shares and to issue the Issued Shares are subject to the fulfillment at or before the Closing of the following conditions precedent, any one or more of which may be waived in whole or in part in writing by Mainrom, which waiver shall be at the sole discretion of Mainrom (the “Mainrom Closing Conditions”):

8.1

The representations and warranties made by Kitov and the Shareholders in Section 6 of this Agreement shall have been true and correct when made and as of the Closing as if made on the date of the Closing;

8.2

Mainrom's board of directors shall have duly approved the transactions contemplated hereunder, including without limitation the issuance of the Issued Shares to the Shareholders.

8.3

The meeting of the shareholders of Mainrom shall have duly approved: (i) the transactions contemplated hereunder, including without limitation the issuance of the Issued Shares to the Shareholders; (ii) the increase of Mainrom's registered share capital and (iii) the purchase of: (i) a directors and officers (D&O) insurance Policy; and (ii) a professional indemnity insurance policy with an appropriate level of a "Run-off" cover for the benefit of its officers and directors which shall not in any way derogate from the representations regarding Mainrom's Financial Obligations.

8.4

Mainrom shall engage advisors, the identity of which shall be agreed between Mainrom and Kitov prior to the Closing, for purposes of IR/PR services for a minimal period commencing as of the Closing as shall be agreed among the parties.

8.5

The Valuation, as shall be submitted to the Tel Aviv Stock Exchange Ltd. (the "Stock Exchange") in accordance with the Stock Exchange rules and regulations, as in effect, for the purposes of determining the rate of Mainrom's public holdings with respect to the Stock Exchange's requirements (the "Requirements"), shall reflect Kitov a valuation of at least US$40,000,000.

8.6

Mainrom shall have received the approval of the Stock Exchange for the issuance of the Issued Shares and the shares underlying the Closing Options and the Conversion Option.

8.7

All covenants, agreements, and conditions contained in this Agreement to be performed or complied with by Kitov and/or the Shareholders, as applicable, prior to or at the Closing, shall have been performed or complied with by Kitov and/or the Shareholders, as applicable, prior to or at the Closing.

Conditions to Closing by the Shareholders

The obligations of the Shareholders to transfer the Transferred Shares to Mainrom are subject to the fulfillment at or before the Closing of the following conditions precedent (the “Shareholders Closing Conditions”; and together with Mainrom Closing Conditions, the “Closing Conditions”) any one or more of which may be waived in whole or in part in writing by Shareholders holding the majority of the shares of Kitov (the “Majority Shareholders”), which waiver shall be at the sole discretion of such Shareholders:

9.1

The representations and warranties made by Mainrom and Haiku in Section ‎5 of this Agreement shall have been true and correct when made and as of the Closing as if made on the date of the Closing;

9.2

9.3

Mainrom shall have no outstanding liabilities, other than the Mainrom Financial Obligations.

9.4

In connection with and for purposes of meeting the Requirements, Roichman's Holdings shall not exceed 3,800,000 ordinary shares of no nominal value of Mainrom in order for the public to hold at least 15% of the shares of Mainrom and conform with applicable TASE requirements.

9.5

A pre ruling from the Israeli Tax Authority in relation to the tax treatment of the Share Exchange event between the Shareholders and Mainrom in accordance with Section 104B(f) and 103 of the Tax Ordinance (and not the personal tax status of each Shareholder as a result thereof), shall have been received (the "Pre Ruling"). In the event that the Pre Ruling is not received by April 22nd, 2013, and unless this Shareholders Closing Condition was previously waived by the Majority Shareholders, Mainrom shall be entitled, at its sole discretion, and in addition to and without derogating from any other legal remedy of Mainrom, to terminate this Agreement and neither Kitov nor any of the Shareholders nor anyone on their behalf, shall have any claims and/or contents of any kind or type against Mainrom, its shareholders, directors, officers, advisors, employees and/or successors with respect to such termination

9.6

The approval by the Stock Exchange for the registration and trade of the Issued Shares,including without limitation shares resulting from the exercise of Mainrom's exercisable securities if any;

9.7

All covenants, agreements, and conditions contained in this Agreement to be performed or complied with by Mainrom prior to or at the Closing, shall have been performed or complied with by Mainrom prior to or at the Closing;

9.8

All of the documents to be delivered by Mainrom to the Shareholders shall have been delivered to the Shareholders.

9.9

All of Mainrom's currently residing directors, excluding Issac Israel and the external directors, have terminated their engagement as directors in Mainrom's Board and Mainrom delivered a notice regarding their resignation to the Company Registrar.

Interim Period

10.1

During the period commencing as of the Execution Date and ending upon the earlier of the Closing Date or May 31 2013 (the "Interim Period"), Mainrom shall not perform, without the prior written approval of Kitov , any action other than as (1) may be required by law or agreement which was in effect prior to the date hereof (2) or contemplated hereunder or required for the consummation of the transaction contemplated hereunder or (3) in the ordinary course of operations of Mairom as a publically traded company with no business activity.

10.2

During the Interim Period, Kitov shall not perform, without the prior written approval of Mainrom, any action other than as (1) may be required by law or agreement which was in effect prior to the date hereof (2) or contemplated hereunder or required for the consummation of the transaction contemplated hereunder or (3) in the ordinary course of business of Kitov.

10.3

The above notwithstanding, During the Interim Period, neither Kitov nor any of the Shareholders perform, without the prior written approval of Mainrom, any of the following: (a) dividend or bonus share distribution; or (b) enter into negotiations, offering or soliciting third parties to acquire control of Kitov or its business activity (c) Issue or sell or transfer any shares or securities of Kitov.

10.4

Kitov shall provide Mainrom with any and all information and documents reasonably required by Mainrom in connection with the Disclosure Documents and/or any other disclosure requirements under law or demand by the Securities Authority.

10.5

The Parties acknowledge that certain Shareholders are entering into five (5) year Gain Recognition Agreements (“GRAs”) with the Internal Revenue Service of the United States in order to avoid immediate taxation by the United States as a result of the transactions contemplated in this Agreement. Mainrom agrees that it will provide to any Shareholder entering into a GRA all information reasonably requested by the Shareholder in writing, including notice (within 21 days of written request from any Shareholder) of the occurrence of any of the following events with respect to Mainrom or Kitov during the tax period(s) specified by Shareholder: (a) any complete or partial disposition of any of the Transferred Shares or any of the Kitov securities, whether such disposition occurs directly or indirectly by transfer of the majority of Mainrom securities; (b) any disposition of substantially all of the assets of the Kitov; and (c) the entry of the Kitov into any partnership or joint venture arrangements, whether directly or indirectly.

10.6

Kitov and the Shareholders undertake that as of the Closing and immediately following the Closing the Kitov Financial Obligations shall not exceed the following: (i) NIS1,000,000 with respect to financial obligations towards third parties; and (ii) US$370,000 with respect to financial obligations towards the Shareholders.

10.7

The Mainrom Financial Obligations towards Roichman as set forth in Section ‎5.1.5 above and the Kitov Financial Obligations as set forth in Section ‎0 above shall be repaid to Roichman and the Shareholders simultaneously and pro-rata to their respective debt amounts set forth above as of the Closing. It is hereby clarified that the repayment of the above financial obligations shall be subject to and only following the payment in full of the Investments Consideration in Section ‎11.3 below.

Haiku and/or Roichman Obligations and Benefits

11.1

At the Closing, Haiku and/or Roichman (collectively the "Lender") shall advance Mainrom a loan in the total amount of NIS 500,000 (the "Loan Amount"). The Loan Amount shall be repaid to the Lender by Mainrom at such time in which Mainrom and/or Kitov shall raise as of the Closing (either by way of a private placement or a public offering) an aggregate amount of at least NIS 500,000. Without derogating from any other legal rights and/or remedies available to the Lender in connection therewith, if the Loan will not be repaid when due, Lender may, at its sole discretion, convert the Loan Amount, into Mainrom's securities, at a conversion price reflecting a thirty (30) percent discount of the Applicable PPS (as defined below) (the "Conversion Option").

For the purposes hereof, the "Applicable PPS" shall mean the average price of Mainrom's ordinary Shares in the Stock Exchange during the 30 trading days period prior to the conversion notice by Lender. The above Conversion Option shall be subject to the approval of the Stock Exchange and the approval of Mainrom's relevant organs, as legally required.

11.2

In addition to the foregoing, in the event that Mainrom offers its shares to the public and in such offer obtains preliminary obligations to purchase its securities under such public offering in an amount of at least NIS500,000, then in such event the Lender hereby irrevocably and unconditionally commits to participate in such public offering by placing orders to purchase the securities offered by Mainrom in such public offering in an amount of at least NIS750,000. Notwithstanding the foregoing, in the event that public offering includes options to purchase Mainrom's shares in consideration for a "premium", the Lender shall place orders to purchase the securities offered in such offering in an amount equal to NIS750,000 less the exercise price of the offered options which will be purchased by him in the event that all of the Lender's order is fulfilled in whole. For avoidance of doubt, in the event of such offering, the Loan Amount shall be repaid to the Lender immediately following such offer.

11.3

Without derogating from the foregoing, Haiku shall be entitled to receive, out of all funds raised by Mainrom, in a single or a series of transactions (in this Section the "Invested Amounts"), as follows: (i) 10% of all Invested Amounts up to an amount of NIS 9,000,000 in the aggregate; and (ii) 25% of all Invested Amounts exceeding NIS 9,000,000. Notwithstanding the foregoing the total cumulative amount to which Haiku shall be entitled under this Section ‎11.3shall not exceed NIS 2,500,000 (the “Investments Consideration”). VAT shall be added to all amount set forth above if applicable under any law.

11.4

In the event that Mainrom's Financial Obligations at the Execution Date exceed the amounts listed in Schedule ‎5.1.5 (the "Maximum Obligation"), i.e. that Mainrom's representation under Section ‎5.1.5 is found inaccurate, by more than NIS50,000, then Roichman shall indemnify the Shareholders, pro rata to their holdings in Mainrom at the Closing, in an amount equal to 70% of the sum of the excess of Mainrom's Financial Obligations, provided however that the indemnification amount shall not exceed NIS 1,000,000 (the "Indemnification Amount").

Roichman indemnification obligations hereunder (the "Indemnification Obligation") shall be limited as follows: (i) the Indemnification Obligation shall terminate upon the lapse of 18 month as of the Closing Date and to that extent the parties shall enter into a limitation agreement; (ii) no claim for indemnification shall be brought unless the Indemnification Amount shall exceed NIS100,000 (in which case the claim may be brought from the "first dollar"); and (iii) the Indemnification Obligation shall be limited to transfer by Roichman of its Mainrom shares. Any other provision notwithstanding the Shareholders and/or Kitov and/or Mainrom shall not be entitled to any monetary or other (except by Mainrom's shares as set forth in this sub-section (iii)) compensation from Roichman. For the purpose of this section ‎11.4, the value of Roichman's shares shall be determined according to the average of (i) the value of the shares in the transaction contemplated hereunder according to the Valuation, and (ii) the average value of the shares during a period of 30 trading adding prior to the time of indemnification.

Miscellaneous.

12.1

Duration. This agreement shall be valid and binding for a period until the earlier of (a) the Closing of the Share Exchange, or (b) three (3) months commencing as of the date hereof. Thereafter, in the event that the Share Exchange has not occurred prior thereto, this Agreement shall expire and shall be null and void.

12.2

Further Assurances. Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this agreement and the intentions of the parties as reflected thereby.

12.3

Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Israel, without regard to the conflict of laws provision thereof, and the parties hereto irrevocably submit to the exclusive jurisdiction of the courts in Tel-Aviv, Israel in respect of any dispute or matter arising out of or connected with this Agreement.

12.4

Successors and Assigns. Except as otherwise expressly stated to the contrary herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns under law, heirs, executors, and administrators of the parties hereto.

12.5

Entire Agreement; Amendment and Waiver. This Agreement and the Schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof. All prior understandings and agreements among the Parties are void and of no further effect. Any term of this Agreement may be amended, waived, or discharged (either prospectively or retroactively, and either generally or in a particular instance), by a written instrument signed by all the Parties to this Agreement.

12.6

Notices, etc. All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be telecopied or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to such party’s address as set forth in Schedule ‎12.6 attached hereto or at such other address as the party shall have furnished to each other party in writing as above provided. Any notice sent in accordance with this Section 8.6 shall be effective (i) if mailed by registered or certified mail, five (5) business days after mailing, (ii) if sent by messenger, upon delivery, and (iii) if send via facsimile, upon transmission and telephonic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and telephonic confirmation of receipt, or upon receipt of a copy sent by mail as set forth above.

12.7

Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law, or otherwise afforded to any of the parties, shall be cumulative and not alternative.

12.8

Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

12.9

Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.

12.10

Heading, Preamble, and Schedules. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. The Preamble and Schedules are an integral and inseparable part of this Agreement.

[Remainder of Page Left Intentionally Blank]

IN WITNESS WHEREOF the parties have signed this Agreement as of the date first hereinabove set forth

Kitov Pharmaceuticals Ltd.		Mainrom Line Logistics Ltd.

By:	/s/ Morris Laster	By:	/s/ Issac Israel

Name:	Morris Laster, MD	Name:	Issac Israel

Title:	President	Title:	CEO

SHAREHOLDERS:

/s/ Morris Laster		/s/ Haiku Capital Ltd.
Morris Laster		Haiku Capital Ltd.

		/s/ Sheer Roichman
JPW PCH LLC		Sheer Roichman
By:	/s/ J. Paul Waymack
Name:	J. Paul Waymack
Title:	CEO

SCHEDULE A

The registered capital of the Company is NIS 200,000, divided to 20,000,000 shares in the value of NIS 0.01 per share.

List of shareholders (Outstanding Capital):

Shareholders	Total Number of Shares in the Company	Type of Shares	Value of Each Share
Dr Morris Laster	2,000,000	Ordinary	NIS 0.01
JPW PCH LLC	8,000,000	Ordinary	NIS 0.01
Total	10,000,000		NIS 100,000

SCHEDULE ‎1.1

Language for agreement with the Additional Holdings Trustee

The parties agree that the Additional Holdings are held pursuant to this [Trust Agreement] for the sole benefit of Mainrom, and that Mainrom shall have all beneficial rights, ownership or interest in and to the Additional Holdings and to any of the income, sales proceeds, dividends, distributions, economic or other benefits resulting from the ownership of the Additional Holdings. It is the intent of the parties that Mainrom shall be deemed to “control” the Additional Holdings and under all circumstances title to the Additional Holdings shall be distributed to Mainrom at such time as provided in [the Share Transfer Agreement and this Trust Agreement]

SCHEDULE 1.3

Milestone

The milestone will be met when the pivotal clinical trial has been completed, the data have been analyzed, and the data analyses have demonstrated that the reduction in blood pressure in the group treated with the Kitov drug KIT-302 was at least half of that achieved with amlodipine monotherapy.

SCHEDULE 1.4

Allocation Table in connection with the Transferred Shares to be transferred by Shareholders to Mainrom & the Issued Shares to be issued by Mainrom to the Shareholders

SCHEDULE 1.5A

Terms and Conditions of the Options of Mainrom granted to Simcha Rock at the Closing

SCHEDULE 1.5B

Terms and Conditions of the Options of Mainrom granted to Lior Tamar Investments Ltd. at the Closing

Option Holder(s)		Lior Tamar Investments Ltd. ("Lior Tamar"), and/or any other third party as may be designated by Lior Tamar.
Number of Options		Options to purchase 1,194,616 ordinary shares of Mainrom (the "Options").
Exercise Period		Five (5) years as of the date of execution by both parties of an Option Agreement to this effect.
Exercise Price		NIS 0.10 per share.
Vesting		All Options shall be fully vested and exercisable immediately upon the date of grant of such Options.
Adjustments	Dividend Distribution:	In the event of dividend distribution during the Exercise Period, the Exercise Price shall be decreased by an amount equal to the dividend amount in NIS.
	Bonus Shares Issuance:	In the event of a bonus shares issuance during the Exercise Period, the rights of the Option Holder(s) shall be preserved in a manner that immediately after the business day preceding the "ex-dividend" date for the issuance of the bonus shares (in this section the "Determining Date"), the shares that the Option Holder(s) is entitled to pursuant to the exercise of the Options, shall be increased by an amount equal to the number of the bonus shares such Option Holder(s) would have been entitled to had it exercised its Options immediately prior to the Determining Date allowing it to participate in the issuance of the bonus shares.
	Offer of securities by way of a rights issue:	In the event of an offer of securities by way of a rights issue during the Exercise Period, the number of shares the Option Holder(s) is entitled to pursuant to the exercise of Options will be adjusted according to the benefit pursuant to the rights issue, as reflected in the ratio between the price of the share as set on the TASE on the last trading day immediately prior to the "ex" day and the price of the share on the "ex-rights" day.
Transfer		The Options, in whole or in part, may be transferred to any third party designated by the Option Holder(s), provided an appropriate transfer deed is executed by the parties thereto and delivered to the registered office of Mainrom.

SCHEDULE 2.3.4

Agreement to Terminate JPW PCH LLC's right to purchase assets from Kitov

SCHEDULE 3A

Directors to be appointed to Mainrom's board of directors at the Closing

Dr. Paul Waymack;

Dr. Morris Laster; and

Mr. Simcha Rock

SCHEDULE 3B

Directors' Declarations according to applicable law

SCHEDULE 5.1.2

Mainrom Share Capital

Shareholders	Securities Allocation		Securities Type
Sheer Roichman		5,418,886	Ordinary
Public		2,186,837	Ordinary
Mainrom Line Logistics Ltd.		270	Ordinary
Total		7,605,993

SCHEDULE 5.1.5

Mainrom's Obligations

SCHEDULE 7.1

Kitov's Total Obligations and Liabilities

SCHEDULE 12.6

List of Addresses

Name		Address
Kitov Pharmaceuticals Ltd.		11 Reuven Shari str., Jerusalem 7246, Israel
Morris Laster		11 Reuven Shari str., Jerusalem 7246, Israel
JPW PCH LLC		1615 Suter's Lane NW, Washington DC, 20007, United States
Mainrom Line Logistics Ltd.		Capital Point, 132 Menachem Begin str., Tel-Aviv 67021, Israel
Sheer Roichman		7 Ophir str., Tel-Aviv, Israel
Haiku Capital Ltd.		7 Ophir str., Tel-Aviv, Israel

EXHIBIT 4.4

[Unofficial English translation from Hebrew]

Form of Loan Agreement

Made and signed in Tel Aviv on November __, 2013

Between:

Kitov Pharmaceuticals Holdings Ltd.
Public company no. 520031238
Address: POB 48341, Tel Aviv 6148202 (hereinafter: the "Company")

As the first party;

And:

________________
________________no. ________________
Address: ________________
(hereinafter: the "Lender")

As the second party;

Whereas the Company desires to borrow money from the Lender, and the Lender agrees to provide the Company with a loan, all pursuant to, in accordance with and subject to the provisions of this Agreement;

Now, therefore, the Parties agree and stipulate as follows:

Preamble, interpretation and dates. The preamble and appendices to this Agreement form an integral part thereof. Section headings are included for convenience only and shall not be given any significance in the interpretation of this Agreement. Any date set in this Agreement or which is to be set pursuant to this Agreement, which is not a banking day in the State of Israel, shall be postponed to the first banking day following it.

The Loan

2.1

The Lender shall loan to the Company a total amount of NIS _________ (hereinafter: the "Loan Principal") within 14 business days of the date of signing this Agreement (hereinafter: the "Loan Date").

2.2

On the Loan Date, the Loan Principal shall be transferred to the Company's bank account at Bank Leumi, branch 817, account no. 54620048 (hereinafter: the "Bank Account").

2.3

The loan shall bear no interest. In connection with the Loan, the Company shall pay the Lender a credit provision commission in the amount of NIS _________ (hereinafter: the "Provision Commission," and jointly with the Loan Principal: the "Loan Amount"). For the avoidance of doubt, the Provision Commission shall be paid on the loan's repayment date.

2.4

The Loan Principal shall not be linked to any index.

Repayment / Conversion of the Loan

3.1

Within three (3) business days of the date of completing a public offering of the Company's securities pursuant to a prospectus to be published by the Company (hereinafter: the "Prospectus"), and no later than February 28, 2014, the Company shall repay the Loan Amount or, alternatively, shall convert the Loan Amount into the Company's ordinary shares, as follows:

3.1.1

In case the Lender made an order as part of the tender for the purchase of the Company's securities offered to the public under the Prospectus (hereinafter: an "Order"), the Order amount shall be repaid by the Company and shall be paid to the Lender as repayment of the Loan Amount (or part thereof). It is hereby clarified that this amount shall in no case exceed the Loan Amount;

The "Order Amount" shall mean an amount equal to the amount ordered by the Lender in the tender for the purchase of the Company's securities under the Prospectus.

3.1.2

In case (a) the Lender does not make such an Order; or (b) the order amount is lower than the Loan Amount, the Company shall be allowed to convert the Loan Amount, deducting the Order Amount (if any) into the Company's ordinary shares (hereinafter: the "Company Shares") at the share conversion price determined as follows:

3.1.2.1

In case the amount raised by the Company under the Prospectus is equal to or greater than USD 1,000,000 (at the USD – NIS exchange rate as known on the tender date pursuant to the Prospectus), the conversion price shall be the minimum price of Company Shares set by the Prospectus. For this matter, "the minimum price of Company Shares" shall mean the minimum price per unit set by the Prospectus, deducting the economic value of options included in the unit, for which no consideration is paid, with this amount divided by the number of shares included in the unit; or

3.1.2.2

In case the amount raised by the Company in the Prospectus is less than USD 1,000,000, the conversion price shall be a share price equal to 60% of the weighted average of Company Shares on the Tel Aviv Stock Exchange trading during the 10-day period preceding the closing date of the public offering under the Prospectus.

3.1.3

The Lender acknowledges that the shares resulting from the conversion of the Loan Amount as provided in Section 3.1.2 above shall be subject to restrictions on resale pursuant to the provisions of Section 15 of the Securities Law, 5728 – 1968, and the regulations and instructions enacted under it.

3.1.4

The allocation of the Company Shares as a result of the conversion of the Loan Amount is subject to the approval of the relevant Company organs and the approval of the Tel Aviv Stock Exchange Ltd. of the listing for trade of the Company Shares to be allocated to the Lender as a result of the conversion of the Loan Amount.

3.2

The Lender undertakes to transfer to the Company any evidence required by the Company in order to establish that the Order has been made, including bank printouts or a stock exchange member printout.

3.3

In addition to the foregoing, the Lender shall be allowed to demand the immediate repayment of the Loan Amount immediately upon the occurrence of a liquidation event.

The term "liquidation event" shall mean (a) the filing for liquidation by the Company or by a third party; and/or (b) the filing for a settlement with the Company's creditors; and for each of the foregoing - in case such proceeding is not stopped or canceled within 90 days of its commencement.

Commission

On the Loan Date, the Company shall pay a third party, whose identity shall be provided to the Company by the Lender, a commission in the amount of 7.5% of the Principal Amount, plus VAT, against a legally issued tax invoice.

Miscellaneous

5.1

The Lender declares and confirms that he was given the opportunity to ask questions and receive answers with respect to the Company, its status and its business.

5.2

This Agreement and any matter related or connected to the Agreement or deriving thereof, including its interpretation and/or execution and/or violation and/or effect and/or legality and/or cancelation etc. shall be subject to the laws of the State of Israel. The courts of Tel Aviv - Jaffa shall have sole and exclusive jurisdiction to litigate all matters deriving from this Agreement.

5.3

Any change of this Agreement shall bind the parties if made in writing and signed by the parties to the Agreement.

5.4

The Agreement may be signed in separate copies, which may be copies transmitted by fax, and all such copies together shall be considered one whole and original document.

5.5

The parties' addresses for the purpose of this agreement shall be as stated in this Agreement or any other address as notified by either party to its counterpart in a letter. Any notice sent by either party to its counterpart through registered mail shall be considered to have been received 72 hours after it is sent, a notice sent by a courier shall be considered to have been received upon its delivery and a notice transmitted by fax or email shall be considered to have been received on the business day following its transmission.

5.6

If the Company or the Lender waive any right they are given pursuant to this Agreement, this waiver shall not constitute a precedent with respect to any identical incident, no inference shall be made from it with respect to any other similar incident, and the Company or the Lender, as relevant, shall not be prevented from exercising at any time rights that they have waived as foregoing.

5.7

The parties shall not be allowed to assign their obligations and/or rights under this Agreement.

5.8

This Agreement shall prevail over any previous agreement, understanding or memorandum between the parties, whether in writing or verbal, and these are hereby canceled.

5.9

The Company shall not pay any commission to any third party in connection to this Agreement.

In witness whereof the parties have signed:


Lender		Kitov Pharmaceuticals the

EXHIBIT 4.5

LOAN AGREEMENT

This Loan Agreement (the “Agreement”) is made as of the 25^th day of August, 2013 (the "Effective Date") by and among Mainrom Line Logistics Ltd., of Tel Aviv, P.O. Box 48341 (the “Company”) and certain Lenders, as shall be specified in Exhibit A (the "Lenders") (each of the Company and the Lenders, a “Party”, and together, the "Parties").

WHEREAS, the Company requires an interim infusion of funds in order to conduct its business activities; and WHEREAS, the Lenders are willing to advance funds to the Company in the aggregate amount shown as the Total in Exhibit A; and WHEREAS each of the Lenders, severely, hereby undertakes to advance to the Company the amounts listed next to such Lender's name set forth in Exhibit A (the "Principal Amount"); and WHEREAS, the parties wish to set forth the terms and conditions according to which such interim infusion of funds to the Company will be facilitated;

NOW, THEREFORE, in consideration for the promises, representations, covenants and undertakings set forth herein, the parties hereto hereby agree as follows:

1. Loan. The Lenders hereby undertakes to advance to the Company a loan in an aggregate amount as shown as the Total in Exhibit A and the Company hereby borrows from the Lenders the Principal Amount, which shall be wired to Company's bank account at Bank Leumi Branch Hasmonaim (817) Account number 546200/48.

2. Interest. The Principal Amount shall not bear any interest but will be linked to the Consumer Price Index of June 2013 (as published on July 15^th, 2013) (the "CPI").

3. Repayment of the Loan. The loan shall be repaid within 3 months from the day the Principal Amount is transferred to the Company, unless the Lenders of most of the Principal Amount decide to prolong the repayment period by 3 more months, (total of 6 months from the day the Principal Money is transferred).

4. Default. Notwithstanding the aforesaid, the Principal Amount, together with the linkage differences resulting from linkage to the CPI, shall, immediately become due and payable in cash, without demand, following the occurrence of the earlier of the following events (each of which, a “Default”): (i) the execution by the Company of a general assignment for the benefit of creditors; (ii) the filing by or against the Company of any petition in bankruptcy or any petition for relief under the provisions of any law for the relief of debtors, and the continuation of such petition without dismissal for a period of ninety (90) days or more; (iii) the appointment of a receiver or trustee to take possession of a material portion of the property or assets of the Company and the continuation of such appointment without dismissal for a period of ninety (90) days or more; (iv) the commencement by the Company of any liquidation proceedings or the adoption of a winding up resolution by the Company; (v) the commencement by third parties of any liquidation proceedings, which have not been terminated within 90 (ninety) days thereafter; (vi) a court of competent jurisdiction making an order deferring the commencement and/or prosecution of proceedings against the Company

5. Miscellaneous (i) each of the Parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the Parties as reflected thereby; (ii) this Agreement shall be governed by and construed according to the laws of the State of Israel, without regard to the conflict of laws provisions thereof. The competent courts in Tel-Aviv-Jaffa, Israel shall have sole and absolute jurisdiction over all matters pertaining to this Agreement; (iii) except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties hereto. None of the rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned or transferred by either Party without the prior consent in writing of the other Party; (iv) all notices and other communications required or permitted hereunder to be given to a Party to this Agreement shall be in writing and shall be sent by facsimile or mailed by registered or certified airmail, postage prepaid, or otherwise delivered by hand or by messenger, to the addresses set forth hereinabove. Any notice shall be effective: (a) if mailed, 7 business days after mailing; (b) if sent by messenger, upon delivery; and (c) if sent via facsimile, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt; (vi) no delay or omission to exercise any right, power, or remedy accruing to any Party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, either under this Agreement or by law or otherwise afforded to any of the Parties, shall be cumulative and not alternative.

IN WITNESS WHEREOF the Parties have signed this Agreement as of the date first hereinabove set forth.

/s/ Simcha Rock
Mainrom Line logistics Ltd.
By:

Exhibit A

Name	Principle Loan Amount (NIS)	Signature
Sheer Roichman	NIS 500, 000	/s/ Sheer Roichman
Paul Waymack	NIS 200,000	/s/ Paul Waymack
Peter Hoil
William Berlin	NIS 200,000	/s/ William Berlin
Morris Lester	NIS 20,000	/s/ Morris Lester
Isaac Israel	NIS 50,000	/s/ Isaac Israel
Simcha Rock	NIS 50,000	/s/ Simcha Rock

Total

November 24^th, 2013

Confirmation Letter

All terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement as defined below.

The Undersigned, have advanced to Kitov Pharmaceuticals Holdings Ltd. (the “Company”) a loan in an amount of NIS1,020,000 (the “Principal Amount”) pursuant to the Loan Agreement signed by and among the Undersigned and the Company on August 25^th, 2013 (the “Loan Agreement”). WHEREAS that pursuant to section 3 of the Loan Agreement, the Loan was required to be repaid by the Company to the Lenders no later than November 26^th, 2013 (the “Loan Period”); and WHEREAS that according to section 3 of the Loan Agreement, the lenders who advanced to the Company the majority of the Principal Amount may decide to prolong the repayment period by three (3) more months (total of 6 months from the day that the Principal Amount was transferred to the Company by the Lenders); Now Therefore the undersigned hereby confirm to extend the Loan Period an additional three (3) months so that, the loan will be repaid by the Company to the Lenders no later than February 26^th, 2013 (the “Additional Loan Period”).

All other terms and conditions of the Loan Agreement which were not amended under this Confirmation Letter, shall apply to the Additional Loan Period. This Confirmation Letter, when executed, shall be attached to the Loan Agreement and shall constitute an integral part thereof.

This Confirmation Letter may be executed in two (2) or more counterparts, each of which will be deemed to be an original copy of this Letter, and both of which, when taken together, shall be deemed to constitute one and the same document.

IN WITNESS WHEREOF, the parties have duly executed this Confirmation Letter, effective as of the date written above.

Name		Signature

Sheer Roichman

Paul Waymack		/s/ Paul Waymack

William Berlin		/s/ William Berlin

Morris Laster		/s/ Morris Laster

Isaac Israel		/s/ Isaac Israel

Simcha Rock		/s/ Simcha Rock

February 20, 2014

Confirmation Letter

All terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement as defined below.

The Undersigned, have advanced to Kitov Pharmaceuticals Holdings Ltd. (the “Company”) a loan in an amount of NIS1,020,000 (the “Principal Amount”) pursuant to the Loan Agreement signed by and among the Undersigned and the Company on August 25^th, 2013 (the “Loan Agreement”). WHEREAS, pursuant to section 3 of the Loan Agreement, the Loan was required to be repaid by the Company to the Lenders no later than November 26^th, 2013 (the “Loan Period”); and WHEREAS, according to section 3 of the Loan Agreement, the Lenders who advanced to the Company the majority of the Principal Amount decided to prolong the repayment period by three (3) more months until February 26^th, 2013; and WHEREAS, the Lenders wish to extend the Loan Period by an additional three (3) months ; Now, Therefore, the undersigned hereby confirm to extend the repayment date of the Loan in an additional three (3) months, so that the loan will be repaid by the Company to the Lenders no later than May 25^th, 2014 (the “Second Additional Loan Period”).

All other terms and conditions of the Loan Agreement which were not amended under this Confirmation Letter, shall apply to the Second Additional Loan Period. This Confirmation Letter, when executed, shall be attached to the Loan Agreement and shall constitute an integral part thereof.

IN WITNESS WHEREOF, the parties have duly executed this Confirmation Letter, effective as of the date written above.

Name		Signature

Sheer Roichman		/s/ Sheer Roichman

Paul Waymack		/s/ Paul Waymack

William Berlin		/s/ William Berlin

Morris Laster		/s/ Morris Laster

Isaac Israel		/s/ Isaac Israel

Simcha Rock		/s/ Simcha Rock

Agreed and accepted

Kitov Pharma Holdings Ltd.

By: Simcha Rock / Isaac Israel

Signature:	/s/ Simcha Rock	/s/ Isaac Israel

Exhibit 4.6

[Unofficial English Translation from Hebrew]

February 27, 2014

To:

Mr. Isaac Israel, CEO
Kitov Pharmaceutical Holdings Ltd

Dear Sir,

Re: Kitov Pharmaceutical Holdings – Commissions

Further to our meeting dated February 19, 2014, attached herewith is the proposal of Clal Finance Underwriting Ltd. for service commissions related to the share issue of Kitov Pharmaceutical Holdings Ltd. (hereinafter: the "Company"):

The share issue shall consist of two stages:

Stage I – an issue of shares only, as a uniform offering (hereinafter: the "Share Issue") pursuant to the prospectus published by the Company on February 24, 2014 (hereinafter: the "Prospectus").

Stage II – a rights issue, for no consideration, of warrants exercisable into Company shares (hereinafter: the "Rights Issue").

As part of the Share Issue as a uniform offering, the Company shall announce its intention to execute the Rights Issue as foregoing.

Commissions

Management and distribution commission –

In case the price per share in the Share Issue is less than 70 agorot – a commission at the rate of 5% of the gross capital raised in the Share Issue (excluding actual investment by Company interested parties who purchase shares as part of the Share Issue, up to a total amount not exceeding NIS 4 million, for which such commission shall not be paid).

In case the price per share in the Share Issue is equal to or greater than 70 agorot, but less than 100 agorot – a commission at the rate of 7% of the gross capital raised in the Share Issue (excluding actual investment by Company interested parties, who purchase shares as part of the Share Issue, up to a total amount not exceeding NIS 4 million, for which such commission shall not be paid).

In case the price per share in the Share Issue is equal to or greater than 100 agorot – a commission at the rate of 8% of the gross capital raised in the Share Issue (excluding actual investment by Company interested parties, who purchase shares as part of the Share Issue, up to a total amount not exceeding NIS 4 million, for which such commission shall not be paid).

Allocation of Warrants –

Immediately after the completion of the Rights Issue, the Company shall allocate to Clal Finance Underwriting, in a private placement for no consideration, warrants of the type issued and listed for trade as part of the Rights Issue, as detailed below:

In case the price per share in the Share Issue is less than 100 agorot – the Company shall allocate to Clal Finance Underwriting such number ofwarrants equal to 5% of the number of all shares issued in the Share Issue.

In case the price per share in the Share Issue is equal to or greater than 100 agorot – the Company shall allocate to Clal Finance Underwriting such number ofwarrants equal to 7.5% of the number of all shares issued in the Share Issue.

In case that in the Rights Issue, more than one series of warrants is issued, then the Warranats issued to Clal Finance Underwriting as detailed above shall be of the series with the higher lack & Scholes value of the issued series.

The allocation of the Warrants as foregoing is subject to the approval of the Tel Aviv Stock Exchange Ltd. (hereinafter: the "Stock Exchange"). In case that for some legal reason it is impossible to allocate the Warrants within 30 days of the date of the Rights Issue (hereinafter: the "Warrant Allocation Period"), the Company shall pay Clal Finance Underwriting, on that date, an amount equal to the value of the Warrants at the weighted average price of the Warrants in the Stock Market during the last 10 trading days of the Warrant Fee Payment by the Company to Clal Finance Underwriting shall constitute a suitable alternative to the allocation of the Warrant Certificates as foregoing and upon the performance of such payment, Clal Finance Underwriting shall have no demand, claim or suit against the Company.

In case that for any reason the Rights Issue is not executed within a six-month period following the date of completion of the Share Issue (hereinafter: the "Deadline for the Rights Issue"), Clal Finance Underwriting shall be allocated, within 30 days of the Deadline for the Rights Issue, in a private placement, non-negotiable warrants exercisable into Company ordinary shares, subject to the Stock Exchange's approval of the listing for trade of the shares resulting from the exercise of the options, at an exercise price equal to 125% of the weighted average price of the Company's shares in the Stock Exchange during the ten trading days following the issue (hereinafter: the "Non-Negotiable Warrants"). The Non-Negotiable Warrants shall be exercisable from time to time, in whole or part, and shall also be transferrable to third parties. The exercise period of the Non-Negotiable Warrants, if any are issued, shall be 14 months from the date of their allocation. The Warrants shall be adjusted in cases of a rights issue, distribution of a dividend, bonus shares, etc.

VAT as legally required will be added to all of the above amounts.

The distribution of commissions between distributors, insofar as additional distributors are added to the issue, shall be determined by Clal Finance Underwriting with the Company's advance approval and coordination.

Clal Finance Underwriting shall be allowed, at its sole discretion, but with the Company's advance approval and coordination, to pay commissions to third parties that are competent to serve as distributors pursuant to the provisions of the Securities Regulations (Underwriting), 5767 – 2007, for consultation for the issue and assistance in marketing the securities in the issue (hereinafter: the "Additional Distributors"), out of the commission amounts to which it is entitled as detailed above, as long as these amounts are not paid to the end buyer of a security under the issue.

Coordination Commission

An amount of NIS 25 thousand to Bank of Jerusalem Ltd. which shall coordinate the Share Issue.

Abstaining from Arrangements

Clal Finance Underwriting undertakes to abstain from making arrangements that are not stated in the prospectus in connection with the Securities Offer under the Prospectus, their marketing or their public distribution, and undertakes to avoid granting buyers of the securities under the prospectus the right to sell the securities bought by them, beyond the specifications of the Prospectus. Clal Finance Underwriting shall ensure it receives the obligation of the Additional Distributors to this undertaking.

Please confirm your approval to the foregoing below. This letter voids any previous agreement or document signed between the parties in connection with the distribution of the Company's securities under the Prospectus.

		Sincerely,
		/s/ Yehonatan Cohen
		Yehonatan Cohen, CEO
		Clal Finance Underwriting Ltd.

We hereby approve the foregoing and undertake to comply with it.

/s/ Simcha Rock

Kitov Pharmaceutical Holdings Ltd.

EXHIBIT 4.7

[Unofficial English translation from Hebrew]

Appendix H

, 2013

To:

Mr. / Mrs.

Form of Letter of Exemption

On March 20, 2013, the Company's Audit Committee and Board of Directors decided to exempt all Company officeholders specified in Appendix A to this Letter of Exemption from their liability towards it, in whole or part, due to damage caused due to the violation of the duty of care towards the Company (hereinafter: the "Exemption Decision"), excluding damage due to the violation of the duty of care of a director in a distribution, as this term is used in the Companies Law, 5729 – 1999 (hereinafter: the "Companies Law").

Subsequently, on ________________, 2013, the Company's General Meeting approved, with the legally required majority, the Exemption Decision. We hereby inform you that since you serve and/or served and/or may serve as an Officeholder in the Company and/or in the Company's subsidiary and/or related company and/or are employed and/or were employed and/or may be employed by the Company and/or its subsidiary and/or related company, the Company hereby confirms and undertakes towards you, subject to the provisions of an law, as follows:

Subject to the provisions of Sections 259 and 263 of the Companies Law, or any legal provision that replaces them, the Company releases you in advance from any liability towards it for any damage caused to it and/or that was caused to it, whether directly or indirectly, due to the violation of your duty of care towards it in your actions made in good faith by force of your service as an officeholder and/or employee in the Company and/or in its subsidiaries and/or associate companies, as these may be from time to time, except for the violation of the duty of care in a distribution.

The Company's undertakings under this Letter of Exemption shall be interpreted broadly and in accordance with the purpose for which they are designed, insofar as permitted by law. In case of any contradiction between any provision of this Letter of Exemption and a provision of law that may not be stipulated, changed or added to, such provision of law shall prevail, but this shall not adversely affect or derogate from the effect of the other provisions of this Letter of Exemption.

The provisions of this Letter of Exemption shall not derogate from the provisions of any Letter of Indemnity you are given by the Company, if any.

"Action" or any derivative for the purposes of this Letter of Exemption -

as defined in the Companies Law, also including decisions and/or omissions and including all actions you have performed prior to the date of this Letter of Exemption in the periods of your employment and/or service as a Company officeholder and/or in the period of your service as an officeholder, employee or agent of the Company in any other corporation whose securities the Company holds directly and/or indirectly.

"Officeholder" for the purposes of this Letter of Exemption -

as this term is used in the Companies Law, including any employee to whom the Company decides to grant a Letter of Indemnity.



Mainrom Line Logistics Ltd.

Appendix A to the Letter of Exemption

Exhibit 4.8

[Unofficial English translation from Hebrew]

Appendix G

__________, 2013

Mr./Ms. __________

Form of Letter of Indemnity

On March 20, 2013 the Company’s Audit Committee and Board of Directors decided that the Company would indemnify and undertakes in advance to indemnify the officers listed in Appendix A to this Letter of Indemnity, as specified in this Letter of Indemnity (hereinafter: “the Indemnity Decision”).

Following the approval of the Indemnity Decision on __________, 2013 by the Company’s general meeting by majority required by law, we hereby notify you that since you are and/or you were and/or may be a office holder of the Company and/or in subsidiaries and/or associated companies of the Company and/or you are employed and/or was employed and/or may be employed by the Company and/or by subsidiaries and/or associated companies of the Company, the Company approves and undertakes towards you, subject to the provisions of any law, as follows:

Undertaking to Indemnify

Subject to the provisions of the law, the Company undertakes to indemnify you for any liability or expense as specified in Clause 2 below, imposed on you or incurred by you as a result of any of the following:

1.1.

Your actions and/or their derivatives in your capacity as an officer and/or employee of the Company and/or its subsidiaries and/or associated companies, as will be from time to time.

1.2.

Your actions and/or their derivatives in your capacity as an officer, employee or agent of the Company in any other corporation in which the Company is, directly or indirectly, the holder of securities (hereinafter: “Another Corporation”).

In this Letter of Indemnity:

“Officer” -	A “senior officer” – as this term is defined in Clause 37(d) to the Securities Law-1968 (hereinafter: the “Securities Law”) and/or any other law applying to the activity of the Company and its senior officers, as well as any employee and/or service provider to whom the Company decides to grant a letter of indemnity.

An “action” or its derivative -	As the meaning of this term in the Companies Law-1999 (hereinafter: the “Companies Law”) including a decision and/or default in this sense and including all the actions taken by you prior to the date of this Letter of Indemnity during the periods of your employment in the Company and/or its subsidiaries and/or associated companies and/or during the periods of your capacity as an officer in the Company and/or its subsidiaries and/or associated companies and/or in Another Corporation as defined above.

“Claim” -	Including civil action, administrative action, criminal action, derivative action, class action, applications for arrangement, creditors’ claims, claim for financial compensations and application for declaratory relief.

Causes of Indemnity

The undertaking for indemnity as mentioned in Clause 1 above will apply to any liability or expense that can be indemnified by law, and according to the Company’s Articles of Association, as specified below:

2.1

Financial obligation imposed on you according to a court decision in favor of another person, including a decision given as a compromise or arbitral decision approved by court, which is connected directly or indirectly to one or more of the events specified in the Addendum to this Letter of Indemnity (hereinafter: “the Addendum”) or any part thereof (hereinafter: the “Determinant Events”), on condition that the maximum amount of indemnity for each of the Determinant Events will not exceed the sum stipulated in the Addendum, linked to the increase in CPI from the date of approval of this Letter of Indemnity by the Company until the date of actual indemnity, for each of the Determinant Events, in relation to each Event and each Officer of the Company separately (hereinafter: the “Final Liability”).

2.2

Reasonable litigation costs, including lawyer’s fees which occurred in connection with an inquiry or proceeding conducted against you by an authority which is authorized to conduct an inquiry or proceeding, and which ended without indictment against you¹ and without imposing a financial obligation on you as an alternative to criminal proceedings, or which ended without indictment against you but with the imposition of a financial obligation as an alternative to criminal proceedings in an offense which does not require the proof of criminal intent or in connection with a financial sanction.

In this Clause –

Ending a proceeding without indictment in a matter where a criminal investigation has been initiated – means closing the case under Clause 62 to the Law of Criminal Procedure [Consolidated Version]-1982 (in this sub-clause – the Law of Criminal Procedure), or a stay of proceedings by the Attorney General under Clause 231 to the Law of Criminal Procedure;

"Financial Obligation as an alternative to Criminal Proceedings" – financial obligation imposed by the law as an alternative to criminal procedure, including an administrative fine under the Administrative Offenses Act-1985, a fine for an offense which has been determined as a finable offense under the provisions of the Law of Criminal Procedure, a financial sanction or ransom.

¹ Including in case of recourse after filing an indictment and subject to the terms of indemnity specified in Clause 5 below.

2.3

Reasonable litigation costs, including lawyer’s fees, which were incurred by you or you were obligated by court to incur, in a proceeding filed against you by the Company or Another Corporation, as the case may be, or in the name of any of them or by another person², or a criminal charge from which you were acquitted, or a criminal charge where you were convicted of an offense which does not require proof of criminal intent.

2.4

Expenses incurred by you in connection with a proceeding in your matter, including reasonable litigation costs, and including lawyer’s fees.

In this Clause 2.4, “proceeding” – a proceeding under Chapter H3 to the Securities Law (Financial Sanction by the Securities Authority), a proceeding under Chapter H4 to the Securities Law (Administrative Enforcement by the Administrative Enforcement Committee), a proceed under Chapter I1 to the Securities Law (Arrangement to Refrain from Proceedings or Discontinuation of Legal Proceedings subject to Conditions) and a proceeding under Mark D (Financial Sanction by the Securities Authority) to Chapter Four (Remedies, Financial Sanction and Registration of a Company in Violation) of Part Nine to the Companies Law.

2.5

Payment to the party offended by the violation, as mentioned in Clause 52(54)(a)(1)(a) to the Securities Law under Chapter H4 to the Securities Law (Administrative Enforcement by the Administrative Enforcement Committee).

2.6

Liability or another expense which can be indemnified according to any law.

Amount of Indemnity

3.1.

Accumulative indemnity sum

The total accumulative sum of indemnification paid by the Company to all the Officers in the Company according to all the Letters of Indemnity that were and will be issued by the Company according to the Indemnity Decision (hereinafter: “letters of indemnity”) will not exceed a sum equal to 25% of the Company’s determinant equity (hereinafter: “maximum indemnity sum”). In this matter, “the Company’s determinant equity” means the sum of the Company’s equity attributed to the Company’s shareholders according to its latest audited or reviewed consolidated financial statements, as the case may be, as of the date of indemnification.

² Including a plaintiff in a derivative action, as this term means in the Companies Law

It is hereby clarified that the payment of the indemnity sum mentioned above will not prejudice your right to receive insurance benefits, including for the Determinant Events in the Letter of Indemnity as insured in an insurance company, which the Company will receive for you from time to time, if any, as part of any liability insurance of Officers in the Company, on condition that no double compensation will be paid to you for any liability or expense which can be indemnified as mentioned in Clause 2 above, and subject to the provisions of Clause 5.6 below.

Without derogating from the provisions of Clause 5.6 below, it is explicitly emphasized that the Company’s payments will form an "additional layer" beyond the total amount of insurance benefits paid by the insurer, as much as these are paid. It is also emphasized that this undertaking to indemnify is not a contract in favor of any third party including any insurer and it cannot be assigned, and no insurer will have the right to require the Company's participation in a payment obligated by an insurer according to an insurance agreement made with him, except for the deductible indicated in such agreement.

In case the total amount of indemnification the Company is about to pay at any time, in addition to the total amount of indemnification the Company has paid until that date according to the letters of indemnity, exceeds the maximum indemnity sum, the maximum indemnity sum, or its balance as the case may be, will be divided between the Company's Officers who will be entitled to indemnity sums as mentioned above for claims they had submitted to the Company according to the letters of indemnity and which were not paid to them prior to that date (hereinafter: "the eligible Officers"), in a way that the indemnity sum actually received by each of the eligible Officers will be calculated according to the pro rata ratio between the indemnity sum which would have been owed to each of the eligible Officers and the accumulative indemnity sum owed to all the eligible Officers at that date for such claims, if not for the maximum indemnity sum limit.

Has the Company paid indemnity sums to its Officers at the maximum indemnity sum, the Company will not bear additional indemnity sums unless the payment of these additional sums is approved by Company authorized organs according to the law at the time of payment of the additional indemnity sums, and subject to an amendment in the Company's Articles of Association, if such is required by law.

It should be clarified that this Letter of Indemnity does not limit the Company or prevent it from increasing the maximum indemnity sum due to Events the subject of indemnity, whether due to decrease in the insurance sum according to liability of Officers, or because the Company cannot obtain an insurance of Officers that covers the Events the subject of indemnity under reasonable terms, or for any other reason, on condition that such decision is made through the proper channels as stipulated in the Companies Law.

3.2.

Amount of Indemnity for the Determinant Events

Subject to the provisions of Clause 3.1 above, the undertaking to indemnify for each of the Determinant Events will be limited, in relation to each Officer of the Company and to each Event separately, to the sum of liability or expense that can be indemnified as mentioned above, but not more than the maximum indemnity sum in relation to each of the Determinant Events.

Interim Payments

On the occurrence of an Event for which you are likely to be entitled for indemnity as mentioned above, the Company will, from time to time, make available for you the required amounts to cover the expenses and other types of payments involved in handling each legal proceeding against you, in connection with that Event, including investigation procedures, in a way you will not be required to pay them or finance them yourself, including making guarantees and collaterals available for you, all subject to the terms and provisions stipulated in this Letter of Indemnity. It should be emphasized that the Company will not require that you make any guarantees available to it as condition for transferring the said amounts.

If the Company pays to you or instead of you any amounts as part of this Letter of Indemnity in connection with a legal proceeding as mentioned above, and later it turns out that you are not entitled to indemnity by the Company for such amounts, the provisions of Clause 5.8 below will apply.

Terms of Indemnity

Without derogating from the aforesaid, the indemnity according to this Letter of Indemnity is subject to the following conditions:

5.1.

Notice of Indemnity

You will notify the Company in writing of any claim and/or legal proceeding and/or administrative proceeding and/or inquiry by an authority which is authorized to conduct an inquiry or proceeding, that will be initiated against you and/or of any warning in writing or any apprehension or threat that such proceedings will be initiated against you in connection with any Event for which the indemnity is likely to apply (jointly and severally, hereinafter: “the Proceeding”), and this immediately after it first becomes known to you, and in time to leave reasonable time to respond to such Proceeding, as required by any law (hereinafter: “the Notice of Indemnity”), and forward to the Company, or whoever instructed by it, every document which will be delivered to you and/or be at your disposal in connection with such Proceeding.

Failure to deliver the Notice of Indemnity as stipulated above will not exempt the Company from its undertakings according to this Letter of Indemnity, except in case where the non-delivery of the Notice of Indemnity as aforesaid will fundamentally harm the Company’s right to defend itself in its name (if it is also sued in that Proceeding) and/or in your name against the Claim and at the said extent of harm.

5.2.

Handling the Defense

Provided it does not contradict the relevant provisions of the law or the terms of the Officers’ liability insurance policy purchased by the Company, the Company may undertake the handling of your defense in that Proceeding and/or hand over the said handling to any attorney of the Company’s choice for that purpose (except for an attorney who will not be acceptable to you for reasonable grounds). The Company and/or the said attorney will act within the abovementioned handling to bring this Proceeding to completion, will provide you with current reporting of the progress of the Proceeding and will consult with you as to its conduct; the attorney appointed by the Company as mentioned above will act and be loyal to the Company and you. Whenever there is apprehension, in your opinion or in the Company’s opinion or the attorney’s opinion, of a conflict of interests between you and the Company in defending against such Proceeding, you will notify the Company or the Company will notify you, or the said attorney will notify you, as the case may be, of such conflict of interests and you will be entitled to appoint an attorney on your behalf to handle your defense, and the provisions of this Letter of Indemnity will apply to expenses you will incur in connection with the appointment of this attorney. Notwithstanding the provisions of this Clause, if the Company’s Directors & Officers insurance policy applies to the same matter, you and the Company will comply with the provisions of the policy in everything connected to disputes with the insurer as to the identity of the representing attorney, if the policy’s provisions so require, in a way that the handover of the handling to the other representing attorney will not enable the insurer to be released of its undertaking according to the policy or reduce it in any way. The Company may not bring the abovementioned Proceeding to completion by way of a compromise and/or settlement and/or agree to a compromise and/or settlement as a result of which it will be required to pay sums it will not be indemnified for according to this Letter of Indemnity, and which will also not be paid within an insurance of the Company’s Officers liability that will be purchased, if purchased, by the Company and/or its subsidiary and/or associated company and/or Another Corporation, unless you have given your prior written consent to the obtained compromise. Furthermore, the Company may not bring the dispute the subject of the abovementioned Proceeding to a decision by way of arbitration or compromise or mediation unless you have given your prior written consent to that, provided that you will not refuse to give your consent unless for reasonable grounds which will be forwarded to the Company in writing. To remove doubt, even if the dispute in the Proceeding will be brought to solution by way of arbitration or compromise or mediation or in any other way, the Company will bear all the related expenses.

Notwithstanding the aforesaid, the Company may not bring the abovementioned Proceeding to completion by way of a compromise and/or settlement and/or bring the dispute the subject of the abovementioned Proceeding to a decision by way of arbitration or compromise or mediation in cases of criminal charges against you, unless you have given your prior written consent to that. You may refuse to give your consent as mentioned in this paragraph at your sole discretion and without being required to explain such refusal.

If, within 7 days from the date of the Company receiving the Notice of Indemnity (or a shorter period of time if required for submitting your Statement of Defense or your response to the Proceeding), as mentioned above, the Company does not assume the handling of your defense against such Proceeding, or if you object to being represented by the Company’s attorneys for reasonable grounds or fear of conflict of interests, you will have the right to hand over your representation to an attorney of your choice, and the provisions of this Letter of Indemnity will apply to expenses you will incur for appointing such attorney.

5.3.

Cooperation with the Company

At the Company’s request you will sign every document appointing it and/or any attorney, as mentioned above, to handle your defense in that Proceeding in your name and represent you in everything connected to it, as aforesaid.

You will cooperate with the Company and/or with any attorney as aforesaid and comply with all the instructions of the insurers according to the Officers liability policy in which the Company and/or you will be engaged in connection with the defense in the Proceeding, provided that the Company or the insurance company will see that all your related expenses are covered, in a way that you will not be required to pay for them or finance them yourself, and this subject to the provisions of Clauses 1 and 3 above.

No waiver, delay, refraining from action or extension by the Company or by you will not be, under any circumstances, construed as waiver of your rights under this Letter of Indemnity and any law, and will not prevent the Company or you from taking all the legal and other required steps to exercise your said rights.

5.4.

Cover of Liabilities

Whether the Company acts according to the provisions of Clause 5.2 above or not, it will see that the liabilities and expenses mentioned in Clause 2 above are covered, in a way that you will not be required to pay or finance them yourself, and this without derogating from the indemnity undertaken to you according to the provisions of this Letter of Indemnity and/or the insurance policy acquired by the Company from time to time, if any, and all subject to the provisions of Clauses 1 and 3 above.

5.5.

Non-application of the Indemnity in case of a compromise or admission

The indemnity in connection with any Proceeding against you, as mentioned in this Letter of Indemnity, will not apply to any amount owed by you to the plaintiff following a compromise or arbitration, unless the Company has agreed in writing to such compromise or settlement or arbitration, as the case may be, however the Company will not refrain from giving its consent as aforesaid unless for reasonable grounds.

Furthermore, the indemnity will not apply in case you admit the criminal charges in an offense which does not require the proof of criminal intent or in a Proceeding, as defined in Clause 2.4 above, unless your admission has been approved by the Company in advance and in writing.

5.6.

Non-application of the Indemnity in case of third party indemnification or insurance

The Company will not be required to pay sums, according to this Letter of Indemnity, for any Event, as much as such sums were actually paid to you or for you or instead of you in any way within the Company’s Officers liability insurance, or within any third party’s indemnification apart from the Company. To remove doubt it should be clarified that the Maximum Indemnity Sum according to this Letter of Indemnity will apply beyond and in addition to the sum paid (if and as much as paid) within the insurance and/or indemnification or anyone apart from the Company, on condition that you will not be paid double compensation for any liability or expense that can be indemnified as mentioned in Clause 2 above, and that in case you receive indemnification from the Company’s insurer under the Directors & Officers liability policy or under any other indemnity agreement, for the matter the subject of indemnity, the indemnity given will be the difference between the amount of liability and/or expense that can be indemnified as mentioned in Clause 2 above, and the amount received under the insurance policy or the other indemnity agreement for that matter, provided that the sum of indemnity the Company has undertaken does not exceed the Maximum Indemnity Sum. Furthermore, it should be clarified that the provisions of this Clause will not apply to the applicable deductible under the terms of the Directors & Officers liability policy made by the Company.

Concerning the matter of the Company’s undertaking for indemnity for an action you have done or will do within your capacity as an Officer and/or employee of the Company’s subsidiary and/or associated company and/or Another Corporation (jointly and severally, hereinafter: “the Liable Corporation”) the following provisions will also apply:

(a)

The Company will not be required to pay according to this Letter of Indemnity sums which you will be entitled to receive and will actually receive from the Liable Corporation within an insurance policy made by the Liable Corporation and/or according to a prior undertaking to indemnify or according to an indemnity permit given by the Liable Corporation.

(b)

If your demand to receive indemnity and/or insurance coverage for an action you took in the capacity of your position in the Liable Corporation, and which can be indemnified according to this Letter of Indemnity, is rejected by the Liable Corporation or the Liable Corporation’s insurance company, as the case may be, the Company will pay you, according to this Letter of Indemnity, sums you will be entitled to receive according to this Letter of Indemnity, if you are entitled to such sums, and you will assign to the Company your rights to receive sums from the Liable Corporation and/or according to the Liable Corporation’s insurance policy, and authorize the Company to collect these sums in your name, as much as such authorization is required to fulfill the provisions of this Clause. In this matter you undertake to sign every document required by the Company in order to assign your said rights and authorize the Company to collect the said sums in your name.

(c)

For the avoidance of doubt, it is clarified that this Letter of Indemnity does not grant the Liable Corporation and/or any third party any rights against the Company, including, but without derogating from the generality of the aforesaid, the right to claim and/or demand any payment from the Company as participation in the indemnity and/or insurance coverage provided to you by the Liable Corporation for an action you took in the capacity of your position in the Liable Corporation.

5.7.

Payment of Indemnity

On your request to make any payment in connection with any Event according to this Letter of Indemnity, the Company will take all the necessary actions according to the law for its payment, and will act for the arrangement of any approval required in connection therewith, if required. If any approval is required for said payment, and such payment is not approved for any reason whatsoever, this payment or any part thereof not approved as aforesaid will be subject to a court’s approval, and the Company will act to obtain it.

5.8.

Return of already paid indemnity sums

If the Company pays you or instead of you any sums within this Letter of Indemnity in connection with a Proceeding as mentioned above, and later it turns out that you are not entitled to indemnity from the Company for such sums, these sums will be considered a loan given to you by the Company, which will bear interest at the minimum rate as stipulated by law from time to time, in order not to become a taxable benefit in the hands of the loan receiver, and you will be required to return these sums to the Company plus VAT on the interest according to the law, when you are required in writing by it to do so, and according to the composition of payments determined by the Company (provided the said sums are paid in full to the Company not later than three (3) months from the date the Company found out you were not entitled to be indemnified for the said sums).

Had the obligation, for which the sum was paid, been cancelled or reduced for any reason whatsoever – you will assign your full rights for return of the sum by the plaintiff in the Proceeding and do everything necessary for such assignment to be valid and exercisable by the Company, and once you do so, you will be exempt from returning the sum, the right for the return of which has been assigned to the Company. If you fail to do so, you will be obligated to return to the Company the sum or a part thereof, as the case may be, plus linkage differences and interest, at the rates and for the period you will be entitled for the return of the sum by the plaintiff.

5.9.

Providing collaterals to the insurer

Notwithstanding the provisions of this Letter of Indemnity above (including Clause 4 above) and since, as specified in Clause 3.1 above, the Company’s payments will form an “additional layer” beyond the insurance benefits paid to you by the insurer, if any, then in any event in which you might be entitled for indemnity, where you will be required to incur expenses and various payments involved in handling legal proceedings conducted against you and connected to the same Event, you will approach the insurer first to receive the sums required to cover the said expenses and payments. For that purpose, the Company hereby undertakes to provide the insurer with all the collaterals required by it, as much as required, in order to receive the said sums, provided that the amount of such collaterals will not exceed the Maximum Indemnity Sum, as defined above.

If, at a later stage, it turns out you are not entitled to the sums you are about to receive, if any, from the insurer, you will be required to immediately return to it the said sums, in order to release the collaterals provided to the insurer by the Company. If you fail to do so, the collaterals which have been provided by the Company to the insurer and exercised by it will be considered as a loan under the terms, mutatis mutandis, specified in Clause 5.8 above.

Indemnity Period

The Company’s undertakings according to this Letter of Indemnity will remain in your favor, in favor of your estate, heirs and other successors according to the law, indefinitely, and it will not be revoked nor modified but in your favor, and this after the termination of your employment in the Company and/or your position as an Officer in the Company and/or its subsidiaries and/or associated companies and/or in the Other Corporation as defined above, as the case may be, regardless of the date of discovery of the Event for which you are entitled for indemnity according to this Letter of Indemnity, provided that the actions for which the indemnity is given have been done during the period of your employment in the Company and/or your position as an Officer in the Company and/or its subsidiaries and/or associated companies and/or in the said Other Corporation.

This Letter of Indemnity is subject to every law and the Company’s Articles of Association. The Company’s undertakings according to this Letter of Indemnity will be interpreted widely and in the method intended for exercising them, as permitted by law, for the purpose they have been made. In case of a contradiction between any provision of this Letter of Indemnity and a provision of the law which cannot be conditioned, modified or added, the said provision of the law shall prevail, but it will not compromise or derogate from the effect of the other provisions of this Letter of Indemnity.

This Letter of Indemnity will enter into force on you signing a copy thereof where you need to sign, and handing over the signed copy to the Company.

Nothing contained in this Letter of Indemnity can derogate from the provisions of the Letter of Exemption provided to you by the Company, if at all. Furthermore, for the avoidance of doubt it is hereby clarified that the indemnity undertaking under this Letter of Indemnity does not derogate from the Company’s right to determine any additional indemnity, retroactively or in advance, and/or expand any existing indemnity, all subject to obtaining approvals as required by any law.

For the avoidance of doubt, it is hereby clarified that the undertaking contained in this Letter of Indemnity does not cancel or derogate from or waive any other indemnity the Officer is entitled to receive from any other source according to any law or according to any of the Company’s previous undertaking or agreement, provided that the Company will not be obligated to indemnify the Officer with more than the actual liability and expenses caused to that Officer for any Event, even according to the previous undertakings (if and as much as in effect) as well as according to this Letter of Indemnity, provided that the total sum of indemnity (except for sums received from the insurance policy) will not exceed the Maximum Indemnity Sum as defined above.

10.

The Addendum to this Letter of Indemnity forms an integral part thereof.

11.

The law applicable to this Letter of Indemnity is the Israeli law, and the competent court in Tel Aviv has the sole jurisdiction to hear in disputes arising from the application of this Letter of Indemnity.

In witness whereof, the Company has signed:

Date: ___________
	Kitov Pharmaceuticals Holdings Ltd.

I, the undersigned, hereby confirm the receipt of this Letter of Indemnity and give my consent to its provisions, including those of Clause 5.8 above.

	Addendum
	Determinant Events	Final Liability (in NIS million)³
1	Any claim or demand filed by a client, supplier, contractor or any other third party, which has any kind of business with the Company, its subsidiaries, associated companies or Another Corporation as defined above (in this Addendum, jointly and/or severally, hereinafter: “the Company”) including in connection with holding negotiations with them and/or any claim and/or demand which has been filed against the Officer by any person and/or corporation and/or entity and/or authority acting according to the law.	2
2	Any claim or demand filed in connection with a transaction, whether or not it is during the Company’s normal course of business, including for credit receiving, sale, lease, transfer or acquisition of assets or liabilities, including securities, and receiving and/or giving an option for sale, lease, transfer or acquisition of assets or liabilities as aforesaid (including, but without derogating from the generality of the aforesaid, goods, real estate, securities or rights, or giving or receiving a right in any of them), negotiating for engagement in a transaction, and receiving and/or giving an option for sale, lease, transfer or acquisition of assets or liabilities as mentioned above, pledge of assets and liabilities and giving or receiving collaterals including engagements in financing agreements with banks and/or other financial entities for the purpose of financing transactions or engagements in process, managing real estate of any type and for any purpose and every action related thereto, including conducting negotiation in connection with the acquisition of the real estate, its establishment, operation and sale, and every other matter connected with the aforesaid, directly or indirectly, and all whether these transactions and/or actions are completed or not, for any reason whatsoever.	2
3	Any claim or demand filed by employees, consultants, agents, freelance contractors, concessionaires, clients, distributors, marketers, suppliers and all kinds of service providers or other individuals, or an entity which is employed or provides services to the Company, in connection with compensations owed to them or damages or liabilities caused to them in connection with their employment by the Company or their engagement with the Company, including Events relating to the terms of employment of employees and with employer-employee relations, including conducting negotiations in connection with terms of employment or termination thereof, promotion of employees, handling pension arrangements, insurance and saving funds, granting securities and other benefits.	2

³ The sums specified above are linked to the increase in CPI from the date of approval of this Letter of Indemnity by the Company to the date of actual indemnity.

4	Any claim or demand in connection with non-disclosure or failure to provide any type of information at the due time according to the law, or in connection with misguided or faulty disclosure of information as aforesaid, to third parties including holders of the Company’s securities, or potential holders of securities, including in everything relating to the issuance , allocation, distribution, acquisition, holding or in affinity to the Company’s securities, or any other investment activity which involves or is affected by the Company’s securities. Without derogating from the generality of the aforesaid, this Event will also apply in connection with an offer of securities to the public according to a prospectus, private offer, exchange tender-offer or any other offer of securities. Any claim or demand in connection with non-disclosure or failure to provide any type of information at the due time according to the law, or in connection with misguided or faulty disclosure of information as aforesaid, to third parties including Income Tax, VAT, Social Security, an investment center, local authorities, the Ministry of Environmental Protection and any other governmental or institutional entity or a professional or another association.	15
5	Any claim or demand in connection with any Event which results from or is connected to an offer and/or issue of the Company’s securities to the public and/or to employees and/or a private placement and/or a purchase offer and/or an exchange tender-offer and/or in any other way, in Israel or outside of Israel (including, inter alia, but not limited to, claims based on a prospectus and/or a prospectus draft for supplement and/or a supplemental notice and/or a shelf prospectus and/or a shelf offering and/or outline report and/or a private offering report and/or a purchase offer outline and/or another report published by the Company (in this Clause, hereinafter: the “Report”), or on the disclosure or non-disclosure of details contained therein, or on the reporting or non-reporting on any matter following the offering according to the report, or on the compliance or non-compliance with provisions of the relevant Securities Laws), and including any claim or demand in connection with all the subjects that required a presentation and/or disclosure in the report including every draft thereof, which occurred prior to the report date, or thereafter during the period starting with the report date and ending at the end of the period for submitting orders and/or at the end of the acceptance period (as the case may be), which was not disclosed as required by Law in the Report or in later reports published the Company and/or a controlled entity (therefore: “Missing or Misleading Report”) provided that immediately after learning about the existence of the Missing or Misleading Report, the Officer has acted as required by law. For the purposes of this Clause, “reports” – including periodic reports, immediate reports, financial statements and any other report the Company or the Officer are required to provide by any law.	15
6	Any claim or demand submitted in connection with a cause committed or allegedly committed, or abuse in connection with a third party’s intellectual proprietary right by the Company or anyone on its behalf.	2
7	Decisions and/or actions relating to the Consumer Protection Act and/or orders and/or regulations under it.	1

8	Any act relating to the submission of offers for tenders and/or concessions and/or licenses, of any kind and type whatsoever.	1
9	Any claim or demand submitted by a lender or creditor or in connection with money lent by them, or debts of the Company to them.	10
10	Any claim or demand submitted by a third party for personal injuries, including death, or damage to a business or personal asset, including the loss of its use in the course of any action or omission attributed to the Company, or respectively to its Officers, employees, agents or other persons acting or claiming to be acting on the Company’s behalf and/or in the capacity of their position in the Company.	10
11	Any claim or demand submitted directly or indirectly in relation to an omission, in full or in part, by the Company, or by the Company’s Officers, managers or employees, in everything connected to the payment, report, or documents records, of one of the State’s authorities, a foreign authority, a municipal authority, or any other payment required by the laws of the State of Israel and any other country, including payments for income tax, sales tax, betterment tax, transfer tax, excise, VAT, stamp duty, customs, social security, salaries or delay of salaries or other delays, including any type of interest and additions due to linkage.	5
12	Any claim or demand submitted by purchasers, owners, lessors, lessees or other holders of the Company’s assets or products, or individuals engaged in these products, for damages or losses in connection with the use of said assets or products.	5
13	Any administrative, public or judicial act, orders, judgments, claims, demands, petitions, instructions, contentions, seizures, investigation procedures, or notices of non-compliance or violations from a government authority or other bodies claiming potential responsibility or liability (including due to expenses of enforcement, investigations, responses of government authorities, cleaning, removal or repair, due to damages to natural resources, damages to the ground, physical injuries or fines or donations, indemnity, recuperation payments, compensation) resulting thereof, whether in Israel or outside of Israel, which are based on or connected to: (a) Emergence of liquid runoff, emission, leak, flooding, spill, disposal, release, filtration or migration, on the ground and/or underground and/or above ground (jointly, hereinafter: "Pollution") or a risk of Pollution or exposure to any type of hazardous, toxic, explosive or radioactive material, waste or other substances, which should be regulated according to environmental laws, in every place owned, operated, rented or managed by the Company. (b) Creation circumstances of any type of violation of environmental laws, environmental licenses, permits or additional approvals required according to environmental laws.	5

14	Any administrative action, public action, judicial action, managerial action, orders, judgments, claims, demands, letters of demand, instructions, contentions, investigations, procedures (including administrative procedures, subject to the law) or notices of non-compliance or violation of an act of a governmental authority or any other entity claiming non-compliance with provisions of a law, regulation, order, decree, rule, practice, instruction, licensing or judgment, by the Company or the Company's Officers in the capacity of their position in the Company.	5
15	Any claim or demand in connection with a change in the Company's structure or it reorganization or any decision relating thereto, including but without derogating from the generality of the aforesaid, merger, split, change in the Company's equity, establishment of subsidiaries, their dissolution or sale to third parties.	5
16	Any claim or demand in connection with a decision or activity of the Company or its Officer in the capacity of their position in the Company, after conducting the appropriate examinations and consultation for this type of decision or activity, including decisions made by the Company's Board of Directors or any of its committees.	10
17	Any claim or demand in connection with an expression, saying, including expression of a position or opinion or vote, including during meetings of the Board of Directors, its committees, general meetings of corporations and/or other organs of corporations, made in good faith by the Officer in the capacity of their position in the Company.	5
18	Any claim or demand in connection with an opinion of the Company's Board of Directors to offerees in a purchase offer, concerning the profitability of a special purchase offer pursuant to Section 329 to the Companies Law-1999, or refrainment from giving such opinion, and in expressing any opinion and/or presentation as required by law.	5
19	Any claim or demand relating to the Events specified above, in connection with the position of the Officer in the Company's subsidiaries and/or associated companies and/or Another Corporation, and all whether it has been done in the capacity of their position in the Company and/or employment in one of the abovementioned companies.	5
20	All the actions relating to an insurance-related transaction or actions which have resulted in failure to make proper insurance arrangements, including engagement with reinsurers and/or agents and/or with insurers and/or insurants and/or with other customers.	5
21	Any action relating to distribution, as defined in the Companies Law, including distribution of dividends to the Company's shareholders, purchase of the Company's shares and/or convertible securities by the Company, provided that the indemnity for such action does not create violation of any law.	5
22	Any claim or demand filed in relation to the sale, purchase or holding of marketable securities for or on behalf of the Company and/or the management of portfolios and/or accounts with brokers and/or banks and/or deposits.	2

23	Any claim or demand filed in relation to investments the Company considers and/or performs with any securities, which takes place before and/or after the investment, for the purpose of engagement in a transaction, its execution, development, follow-up and supervision, and claims relating to a purchase and/or sale (by the Company and/or its subsidiaries), directly or indirectly, of assets (including shares) and rights, in Israel and outside of Israel, or investment in the securities of different corporations, or receiving rights in different corporations, including the purchase and/or sale of control cores, and all whether or not carried out during the Company's normal course of business, and including, without derogating from the generality of the aforesaid, the decisions, agreements, notes, disclosure documents, negotiations and reporting related thereto, and every other matter in connection with the aforesaid, directly or indirectly, and all whether acquisitions and/or sales as mentioned above are completed or not, for any reason whatsoever.	5
24	Any claim or demand on the part of holders of the Company's securities, including shareholders in the Company, including future holders of securities (including shares) of the Company or creditors of the Company, for violation of the Companies Law, the Securities Law or any other law providing them with a cause of action.	10
25	Any claim or demand filed in connection with the appointment or request for appointment of a receiver to the assets of the Company and/or its subsidiaries and/or associated companies or any part of their assets, and/or a request for dissolution against the Company and/or its subsidiaries and/or associated companies, and/or any procedure to obtain a compromise or arrangement with creditors of the Company and/or its subsidiaries and/or associated companies.	5
26	Actions relating to, inter alia and without derogating from the generality of the aforesaid, the purchase or sale of companies, legal entities or assets, and Events in connection with, directly or indirectly, antitrust including cartels, monopolies, splits or mergers as well as legal and other consequences which are likely to result from them.	10
27	Any claim or demand filed in connection with the management of funds, bookkeeping, loans and credit facilities, transactions in financial instruments, collaterals, guarantees, trusts, management and financial consultation agreements, etc.	5
28	Any claim or demand filed in connection with a report or notice submitted pursuant to the Companies Law-1999 and/or the Securities Law-1968, including regulations enacted under them, or according to similar laws and regulations outside of Israel, or according to rules or instructions applicable in the Stock Exchange in Israel or outside of Israel, and/or refrainment from submitting a report or notice as aforesaid.	10
29	Any claim or demand filed in connection with the preparation and/or certification of periodic reports and/or interim reports and/or immediate reports and/or business plans and/or budgets and/or forecasts and/or work plans and/or procedures and/or in-house instructions and/or in-house internal audits.	15

30	Any claim or demand relating to the Company’s internal audit and procedures of reporting and disclosure in the Company’s periodic and immediate reports, including in the Company financial statements and the report of the Board of Directors and management on the effectiveness of the internal audit on the financial reporting and disclosure, in the personal declarations of the Company’s CEO and/or the most senior Officer in Finance and/or the Company’s auditor as to the effectiveness of the internal audit and the disclosure and control processes attached to the periodic reports, and in everything relating to violation of provisions of the applicable law.	15
31	Any claim or demand filed in connection with an Event, which have affected or are likely to fundamentally affect the Company’s property, rights, liabilities or profitability.	15

For the purposes of this Addendum, the term “company” – includes any corporation controlled by it.

Appendix A to the Letter of Indemnity

EXHIBIT 4.9

[Unofficial English translation from Hebrew]

KITOV PHARMACEUTICAL HOLDINGS LTD.

Stock Option Plan

(Pursuant to the Amendment to the Income Tax Ordinance Law (No. 132), 5762 – 2002)

This Plan, as updated from time to time, will be titled the 2013 Kitov Pharmaceutical Holdings Ltd. Stock Option Allocation Plan (hereinafter: the "Plan").

Preamble

On October 31, 2013, the Company's Board of Directors, by virtue of its powers pursuant to the Company's Articles of Association, resolved that the Company shall offer its employees, office holders and consultants, at its sole discretion and from time to time, a stock option plan to purchase the Company's ordinary shares of no par value.

The shares allocated under the Plan shall be equal in rights to the Company's existing ordinary shares.

Definitions

For the purposes of the Plan and its related documents, including the Option Grant Deed, the following definitions shall apply:

2.1

"Option" – an option to purchase the Exercise Shares, under the terms stated therein and pursuant to the provisions of this Plan.

2.2

"102 Option" – an Option granted to an Employee (as this term is defined below) subject to the provisions of Section 102 of the Ordinance.

2.3

"3(i) Option" – an Option granted pursuant to the provisions of Section 3(i) of the Ordinance to a non-Employee.

2.4

"Material Event" – any of the following events: (1) the Company becoming a private company whose shares are not trade on the Stock Exchange; (2) structural change of the company, including statutory consolidation and/or consolidation by way of exchange of shares and/or in any other way, a split and/or any arrangement as a result of which the Company is not the surviving entity, or resulting in a change of control in the Company; (3) any arrangement between the Company and its creditors and/or shareholders and/or option holders; (4) sale or transfer in any other way of all or most of the Company's assets (in case of doubt, the Company's Board of Directors shall decide whether or not all or most of the Company's consolidated assets have been sold); (5) the Company's liquidation.

2.5

"Stock Exchange" – the Tel Aviv Stock Exchange Ltd;

2.6

The "Companies Law" – the Companies Law, 5759 – 1999;

2.7

The "Securities Law" – the Securities Law, 5728 – 1968.

2.8

"Related Company" – an "Employing Company" as this term is defined in Section 102(a) of the Ordinance;

2.9

"Controlling Shareholder" – as this term is defined in Section 32(9) of the Ordinance;

2.10

"Board of Directors" – the Board of Directors of Kitov Pharmaceutical Holdings Ltd;

2.11

The "Company" – Kitov Pharmaceutical Holdings Ltd;

2.12

The "Committee" – the Company's Compensation Committee, whose powers shall be as detailed in this Plan below;

2.13

"Consultant" – any person or cooperation engaged by the Company or any of its subsidiaries for the provision of services, including any employee of any such person, to which Option Grant Deeds were allocated under this Plan;

2.14

"Option Deed" - an option certificate granted to the Offeree exercisable into the Exercise Shares, pursuant to the terms stated therein and subject to the provisions of the Plan;

2.15

"Maturity Date" – the date on which the Offeree's right to exercise the Option is formed (end of the vesting period of each Option portion);

2.16

"Grant Date" – the date determined by the Company's Board of Directors as the allocation date, and without any such express decision, the date on which the Company's Board of Directors decided to allocate the options to the benefit of the offeree;

2.17

"Termination of Engagement Date" – the earlier of the date of the termination of the engagement between the Company and the Offeree and/or the date on which an advance notice of the termination of such engagement with the Offeree is given.

2.18

"Exercise Price" – the price per each share under the option;

2.19

"Option Grant Deed Exercise" – the exercise of the Option Grant Deed into the Exercise Shares, all pursuant to the Option Grant Deed and to the provisions of the Plan;

2.20

"Exercise Shares" – Company ordinary shares of no par value received from the exercise of the Option Grant Deed, in whole or in part;

2.21

"Trustee" – an accountant, attorney or trust firm determined by the Company and approved by the tax authorities as the Plan Trustee pursuant to the provisions of Section 102 of the Ordinance;

2.22

"Offeree" – any employee, service provider or Consultant of the Company or of a Related Company granted Options by virtue of the Plan;

2.23

"Termination of the Engagement for Special Causes" – the termination of the engagement with the Offeree for any of the following causes: (1) conviction of a felony entailing moral turpitude, related to the Offeree's work in the Company, or one with a material effect on the Company and/or related companies; (2) the violation of the duty of care or fiduciary duty towards the Company and/or towards related companies; (3) theft, dishonesty or forgery of any Company document; (4) use for private purposes of any of the Company's assets or any information that is the Company's property; (5) any action performed by the Offeree which may adversely affects the Company's reputation; (6) material breach of the letter of appointment, engagement agreement or employment agreement between the Offeree and the Company; (7) under circumstances justifying the rejection and/or reduction of his right to severance pay pursuant to Sections 16 and 17 of the Severance Pay Law, 5725 – 1963; (8) violation of the non-disclosure obligation of the Offeree and/or violation of the non-compete obligation of the Offeree; (9) any other circumstance defined in the engagement agreement or employment agreement as a "cause."

2.24

"Employee" – a person engaged by the Company or a related company of the Company, including an office holder or director, excluding however a Controlling Shareholder (or any person that would become a Controlling Shareholder following the grant of the Options under the Plan);

2.25

The "Ordinance"- the Income Tax Ordinance (New Version), 5721 – 1961;

2.26

The "Plan" – this Plan, as updated from time to time, shall be titled the "Option Allocation Plan for Employees, Office Holders and Consultants of Kitov Pharmaceutical Holdings Ltd." or the "Plan";

2.27

"Vesting Period" – the period of formulating the entitlement to exercise the option into a share, at the end of which the Offeree will be entitled to exercise the Option Grant Deeds into the Exercise Shares;

2.28

"Lock-Up Period" – the lock-up period required pursuant to Section 102 of the Ordinance with respect to the taxation plan selected by the Company for the Offerees under Section 102 of the Ordinance;

Purpose of the Plan

The purpose of the Plan is to encourage the Offerees' identification with the Company, through their participation in the Company and in the results of its operations. Granting the Option Grant Deeds, pursuant to the Plan, may provide an incentive to Company Office Holders and Consultants as well as to ensure the continuation of the provision of their services to the Company, thereby leading to the development and growth of the Company's businesses.

The Proposed Plan

4.1

The Company shall grant the Offerees non-tradable and non-transferrable Option Grant Deeds (excluding transfer to heirs in case of death as provided in Section 7.11 below), exercisable into the Exercise Shares. Each option will be exercisable into the Exercise Shares.

4.2

The terms of the Option Grant Deeds shall be as detailed in this Plan.

4.3

The Plan shall be managed and supervised by the Company's Board of Directors. Subject to any law, the Board of Directors shall be entitled to delegate the powers vested in it pursuant to this Plan, in whole or part, to a compensation committee appointed by it, in which case any reference to the Board of Directors in this Plan, with respect to the powers vested in it, shall be interpreted as referring to the Compensation Committee.

4.4

Subject to the provisions of any law, the Board of Directors, at its sole discretion, shall have the authority to determine with respect to any Offeree separately:

4.4.1

The number of options granted to the Offeree;

4.4.2

The Exercise Price of each Option;

4.4.3

The vesting period;

4.4.4

The date of grant of the Options granted to the Offeree;

4.4.5

Selection of the taxation plan applicable

4.4.6

To accelerate, or to postpone (with the Offeree's approval) the vesting period and/or the Offeree's entitlement to exercise the options, in whole or part;

4.4.7

Any other matter required in the Company's Board of Directors' opinion for the Plan's operation;

These details shall be included in the Option Grant Deed delivered to any Offeree.

4.5

Any Exercise Share under an Option, which for any reason is not exercised and expires, will return to the Exercise shares pool under the Plan, as determined from time to time by the Board of Directors, and shall be re-issuable. The Company shall retain an adequate quantity of Company ordinary shares in its registered capital so that it shall be able at any given moment to comply with the exercise of Option Grant Deeds allocated under the Plan.

4.6

The Company may, at any time, at its sole discretion, change the terms of the Plan and/or to replace it and/or to terminate it with respect to future allocations, as it sees right. It is further clarified that the Company shall be entitled to change the terms of the Plan with respect to allocations performed to Offerees, as long as the terms of the Options already allocate as foregoing shall not be changed in a way that would materially adversely affect the Offerees' rights, without the Offerees' consent. The Company's Board of Directors shall determine at its sole discretion whether any change would materially adversely affect the Offerees' rights.

4.7

The Plan will be managed by the Board of Directors. The Board of Directors shall have full discretion on all matters related to all parameters required in order to implement the Plan, as well as full authority to interpret the provisions of the Plan or any part thereof, as well as the provisions of the Option Grant Deeds granted under the Plan.

4.8

All decisions and resolutions of the Board of Directors with respect to the Plan's implementation shall be final and shall bind all Offerees as well as any other holder of the Company's Option Grant Deeds.

4.9

This Plan exhausts all rights of the Offerees holding Option Grant Deeds or Exercise Shares under it. This Plan replaces and supersedes any right to shares and/or options that any of the Offerees had prior to joining the Plan.

4.10

The Company's Board of Directors is empowered to grant certain Offerees Options with terms differing from those determined by the Plan, all as determined by the Option Grant Deed. Any terms not specifically determined in the Option Grant Deed shall be pursuant to the provisions of the Plan. In case of any contradiction between the provisions of the plan and the Option Grant Deed granted to the Offeree, the provisions of the Option Grant Deed shall prevail, subject to the Board of Directors' approval.

The Offerees

5.1

Pursuant to the Plan, the Options shall be offered to the Offerees at the Board of Director's exclusive discretion. The Options shall be offered to the Offerees of the Company or of Related Companies on an individual and personal basis, subject to the provisions of any law, pursuant to the recommendation of the Company's CEO and the Board of Director's approval with respect to each and every Offeree, as long as: (1) Employees receive only a "102 Option"; (2) non-Employees receive only a 3(i) Option.

5.2

The Option Grant Deed shall be granted to any Offeree provided however that on the Grant Date as foregoing, such Offeree is an Employee or an Office Holder in the Company and/or a consultant contractually engaged with the Company or with a Related Company, and provided that he accepts and approves with his signature his unconditional agreement to the terms of allocation of the Options under the Plan.

5.3

It is clarified that Options granted pursuant to the provisions of Section 102 of the Ordinance shall not be granted to Offerees who are not Employees or Office Holders in the Company or in a Related Company and as long as they are not Controlling Shareholders in the Company or will become Controlling Shareholders in the Company following the allocation.

Option Grant

6.1

Upon the recommendation of the Company's CEO, and following the approval of the Company's Board of Directors and any other approval required pursuant to any law, each Offeree shall be granted an Option Grant Deed subject to the Plan terms. The Option Grant Deed shall include details with respect to: (1) the number of shares under the Option granted to the Offeree; (2) the exercise price of each Option; (3) the vesting period; (4) the Grant Date; (5) the taxation plan applicable to the Option; and (6) any other matter necessary in the opinion of the Board of Directors.

6.2

The Options granted to the benefit of an Offeree shall be allocated to the Trustee and shall be kept in trust to the benefit of the Offeree until the Options' Exercise Date. Notwithstanding the foregoing, the Company's Board of Directors, at its sole discretion, shall be allowed to determine that Options allocated not pursuant to Section 102 of the Ordinance, shall be directly held by the Offeree and not through a trustee, or that the vesting period in the Trustee's holding of such Options will be shorter.

6.3

Exercise Shares exercised by the Offeree and bonus shares, if any are allocated on account of the Exercise Shares allocated to the Offeree, shall also be held by the Trustee throughout the Lock-Up Period. Bonus shares allocated for Options or Exercise Shares allocated pursuant to Section 102 of the Ordinance, shall be subject to the provisions of Section 102 of the Ordinances and the rules thereunder for all intents and purposes.

6.4

A notice with respect to the grant of the Option Grant Deed shall be delivered to the Offeree and to the Trustee.

Option Terms

7.1

The Options shall be granted to the Offerees either for consideration or for no consideration, as determined by the Company's Board of Directors.

7.2

Each Option will be exercisable into one Exercise Share. Each Option Grant Deed shall state the maximum number of Exercise Shares the Offeree is entitled to exercise at the lapse of the vesting period (hereinafter: the "Maximum Number of Shares").

7.3

Each Option Grant Deed shall state the Exercise Price of the Option into an Exercise Share.

7.4

It is hereby clarified that in the event that an Oferee is gramnted Certain Option Grant Deeds at different grant dates, the maturity date, exercise price etc. of each Option Grant Deed, shall be as set forth in the Option Grant Deed pursuant to which the Options were granted.

7.5

It is clarified that the Option Grant Deed shall not grant its holder any right to the Company's profits or any other right as a shareholder in the Company prior to the exercise of the Option into the Exercise Shares.

7.6

The Offeree's entitlement to exercise the Option Grant Deed into Exercise Shares shall be formed throughout the exercise period of the Option, subject to the Offeree's continued employment or engagement with or by the Company. The maturity dates shall be as determined by the Option Grant Deed.

7.7

Option Grant Deeds not exercised into shares shall automatically expire within 10 (ten) years of the allocation date, or any other date set in the Option Grant Deed, and shall have no value (hereinafter: the "Expiry of the Exercise Period").

7.8

If the Company's engagement with the Offeree is terminated for any reason, the following shall apply:

7.8.1

If the engagement with the Offeree is terminated before he fully exercises the Option Grant Deed, then the Offeree shall be entitled to exercise all of the then vested Options not yet exercise by that date, within a period of 90 days from the date of the termination of the engagement. If Option Grant Deeds exercisable as foregoing are not exercised by the end of such 90 days period, then the Option Grant Deed shall expire and shall have no value. For the removal of doubt, in the 90-day period commencing as of the date of the termination of the engagement, the Offeree's entitlement to exercise the unvested Options into the Exercise Shares shall not continue to mature.

7.8.2

Unvested Options at the date of Termination of Engagement (un-vested options) shall automatically expire and shall have no force and effect.

7.8.3

Notwithstanding the provisions of Subsection 7.8.1 above, if the engagement is Termination of the Engagement for Special Causes as provided in Section 2.23 above, then all Options granted to the Offeree not yet exercised shall immediately expire, including any vested options, and shall be invalidated.

7.8.4

It is clarified that an Offeree with whom the engagement was terminated prior to the forming of his entitlement to the Maximum Number of Exercise Shares shall not be entitled to make the claim against the Company that he was prevented from continuing to cumulate Exercise Shares as of the Termination Of The Engagement until the accumulation of the Maximum Number of Share, and he shall not be entitled to any compensation for the shares that would have been cumulated to his benefit if it were not for the termination of the engagement with him.

7.8.5

For the purposes of this Section 7, the term "Termination of Engagement" shall also include temporary termination of engagement due to the loss of earning capacity and retirement for reasons of age after the retirement age, as determined pursuant to the Retirement Age Law, 5764 - 2004.

7.9

It is prohibited to sell, assign, transfer, pledge, foreclose or make any other disposition in the Option Grant Deeds, except under a will or under the inheritance laws. The transfer of Option Grant Deeds pursuant to a last will or inheritance laws shall be valid and shall bind the Company only after it is issued approvals establishing, to the Company's satisfaction, the transferee's right, and only after receiving the transferee's written consent to comply with all provisions of the Plan and to pay all payments required in connection with the transfer of the Option Grant Deeds, in a form prepared by the Company.

7.10

Subject to all provisions of the Plan, no person except for the Offeree, shall have any rights in connection with the Option Grant Deeds allocated to the Offeree under the Plan and during the Offeree's lifetime the Options, granted in the Option Grant Deed, shall be exercisable solely by the Offeree.

7.11

Notwithstanding the foregoing, if an Offeree passes away, the then vested Option Grant Deeds bequeathed to his heirs shall be exercisable by the heirs or by the executor of the testator's estate, until the later of one year after the date of death or the last date on which the testator would have been entitled to exercise these. All or any Nonvested Option Grant Deeds bequeathed to heirs, on the date of death, shall expire and shall be invalidated.

7.12

For the avoidance of doubt it is hereby clarified that the Options and/or the Exercise Shares are special and unique benefits and that they are not and shall not be considered a salary component for any intent or purpose, including for the purpose of calculating severance pay pursuant to the Severance Pay Law, 5723 – 1963, and the regulations enacted under it.

7.13

Adjustments

In case of the distribution of a dividend in cash, bonus shares, issue of rights and consolidation of capital, the following rules shall apply:

In case of the distribution of a dividend in cash, bonus shares, rights issue and consolidation of share capital, the following rules shall apply:

7.13.1

In case the Company distributes a dividend, as this term is defined in the Companies Law, in cash only, with the determining date for entitlement to the distribution of such dividend is after the grant date of the Option Grant Deed, the exercise price of the Options shall be adjusted so that the exercise price of the Options shall equal the previous exercise rate, without linkage differences, if any, on the effective date of the distribution, deducting the Net Distribution Amount (defined below) for each Exercised Share, however the exercise price shall not be less than the Company's shares' nominal value at that time, subject to the instructions of the Stock Exchange's as in effect from time to time. The adjustment of the exercise price as set forth herein above shall be subject to the receipt of all permits and approvals required pursuant to any applicable law, including the approval of the Tax Authority.

"Net Distribution Amount Per Share" means the amount of distribution by the Company for each share, minus the income tax amount deducted by the Company from Israeli resident individuals who are not material shareholders, as this term is defined in Section 88 of the Income Tax Ordinance [New Version] 5721 – 1961, pursuant to law.

7.13.2

If the Company distributes to its shareholders bonus shares, or in case of a stock split, each Offeree shall be entitled to receive when exercising the shares, in addition to the Exercise Shares resulting from the exercise of the Options, and for no additional payment, Exercise Shares in an amount to which he would have been entitled to if he had exercised its Options immediately prior to the issuance of the bonus shares, allowing it to participate in the issuance of the bonus shares. It is clarified that the exercise price of the Options shall not change in case of the issue of a bonus share, but that payment for each share shall decrease accordingly.

If the Company offers its shareholders any securities by way of a rights issue during the Exercise Period, the exercise price of the Option Grant Deeds shall not be adjusted, however the number of exercise shares under the Option Grant Deeds, yet to be exercised into the Exercise Shares, on the effective date for the rights offered in the rights issue (the "Effective Date") shall be adjusted in accordance with the benefit pursuant to the rights issue as reflected in the ratio between the price of the share as set on the Stock Exchange on the last trading day immediately prior to the "ex" day and the price of the share on the "ex-rights" day.

If the Company consolidates the ordinary shares in its issued share capital into shares of a higher par value, or divides them in a subdivision into shares of a smaller par value, then the number of Exercise Shares allocated following the exercise of Option Grant Deeds will decrease or increase as relevant.

7.14

Without derogating from the foregoing, any grant of an Option shall be approved and implemented subject to the provisions of any law, as these may be in effect from time to time, including the Companies Law, the Securities Law and the regulations enacted under them.

Exercise of the Options and Price

8.1

Without derogating from the provisions of Section 7.7 above and subject to the provisions of any law, the Option Grant Deeds will be exercisable by the Offeree at any time, commencing as of the lapse of the vesting period and until the lapse of the exercise period.

8.2

Insofar as pursuant to the regulations or instructions of the Stock Exchange or the provisions of any law, certain actions must be taken by the Offeree in order to exercise the Option, then the Offeree shall perform such necessary actions and the allocation of Exercise Shares in case of the Options' exercise shall be stipulated on performing such actions. Without derogating from the generality of the foregoing, as long as the Company is required pursuant to the provisions of the regulations and instructions of the Stock Exchange to allocate the shares in the name of a nominee company, the Company shall not be required to allocate the shares as long as it is not provided the Offeree's bank account details.

8.3

An Offeree desiring to exercise vested Options into shares shall submit to the Trustee and/or the Company a request in the format agreed upon with the Trustee and the Company (hereinafter: the "Exercise Notice"). Each Offeree submitting to the Trustee and/or the Company an Exercise Notice must state the number of Options that he desires to exercise. In the Exercise Notice, the Offeree shall be entitled to request only the exercise of that quantity of Options which pursuant to the provisions of this Plan he is entitled to exercise on the exercise date, in whole or part as he decides. An Offeree who desires to exercise his Options and to sell the Exercise Shares in the Stock Exchange shall be allowed to instruct the Trustee to transfer to the Company the exercise amount out of the sale's consideration.

8.4

The date on which the Trustee and/or the Company receive, as required in the Option Grant Deed, an Exercise Notice meeting all the above conditions, shall be considered the exercise date for all intents and purposes (hereinafter: the "Exercise Date").

8.5

The exercise of the right under the Option is stipulated on paying the Company the exercise price in accordance with the exercise price stated in the Option Grant Deed, and the payment of all taxes as applicable on the Exercise Date. The Company shall allocate the Exercise Shares for the Option specified in the Exercise Notice pursuant to the Company's procedures and subject to the provisions of any law. In case of a grant pursuant to the provisions of Section 102 of the Ordinance, the share shall be allocated in the name of the Trustee who shall hold it pursuant to the provisions of Section 102 of the Ordinance.

8.6

Exercise Notices filed on dates that do not allow the exercise of the Option Grant Deed or that do not specify the correct or any number of shares shall not be accepted and shall have no effect. The Offeree, desiring to exercise Options he holds, shall sign any document required pursuant to any law or in the opinion of the Company or the Trustee for the purpose of allocating the shares pursuant to the Option terms.

8.7

No option exercise shall be performed on the effective date for a bonus share distribution, an offer by way of rights, a dividend distribution, a capital consolidation, capital split or capital reduction (each of the foregoing, hereinafter: a "Company Event"). If the "ex" day of a Company Event is before the effective date of a Company Event, the exercise of options on the "ex" day as foregoing shall not be possible.

8.8

Insofar as the exercise of the option into a share is a tax event, the exercise is stipulated on the Company being satisfied that tax had been or will be paid by the Offeree. The Company shall be allowed to demand from the Offeree in this case collaterals for the payment of tax.

8.9

An Option Grant Deed that was fully exercised shall be canceled and shall not grant the Offeree any right. An Option Grant Deed that was partially exercised shall be canceled to the extent that it refers to that exercised component.

Rights of the Exercise Shares

9.1

The Exercise Shares are the Company's ordinary shares and shall be equal in their rights for all intents and purposes to ordinary shares of that class already existing in the Company's capital. The foregoing shares shall be entitled to any dividend or other right the effective date for the right to receive occurs on the date of allocation of the Exercise Shares or following it.

9.2

As long as the Exercise Shares are registered in the Trustee's name, the dividend amount shall be paid to the Trustee (following deduction of tax as legally required) who shall transfer it to the Offeree following the deduction of tax at source as legally required.

9.3

For the avoidance of doubt it is hereby clarified that the Exercise Shares shall not be a separate class of shares but an integral part of the Company's ordinary share capital.

9.4

Any change in the Company's Articles of Association causing a change in the rights of its shares shall also apply to the Option Grant Deeds and to the shares allocated under this Plan, and the Plan's provisions shall apply mutatis mutandis as required by the change of the regulations.

9.5

Without derogating from the provisions of Section 7.7 above and subject to the provisions of the Company's Articles of Association and the provisions of any law (including a lock-up by the Stock Exchange), an Offeree shall be allowed, at any time, to instruct the Trustee to sell the Exercise Shares he holds in trust. An Offeree desiring to sell the Exercise Shares shall submit to the Trustee a written request in the format agreed upon with the Trustee (hereinafter: the "Sale Notice"). If the Offeree desires to sell his shares prior to the end of the Lock-Up Period, then the provisions of Section 102(b)(4) of the Ordinance shall apply (see Section 11.5 below).

10.

Taxation

10.1

The Options granted under the Plan may be granted pursuant to the provisions of Section 102 of the Ordinance, in a trustee plan, or Section 3(i) of the Ordinance. A grant to an employee and/or Office Holder, except for a Controlling Shareholder in the Company (as this term is used in Section 102 of the Ordinance) shall be performed and taxed pursuant to Section 102 of the Ordinance, and a grant to any non-employee, i.e. a consultant and/or officeholder who is a Controlling Shareholder (as this term is used in Section 102 of the Ordinance) shall be performed and taxed pursuant to Section 3(i) of the Ordinance.

10.2

Any tax applicable to the Options and/or to their exercise into the Exercise Shares and/or to their sale and/or to the receipt of a dividend by their virtue shall apply to the Offerees alone, and in case of their death, to their heirs, without the Company bearing it directly or indirectly and without any requirement for the Company to gross it up. The applicable tax shall be deducted from the consideration of the sale on the date of obligation by the Trustee or the Company, as relevant.

10.3

In case the Company decides to grant Options pursuant to the provisions of Section 102 of the Ordinance, it has the option of selecting one of 2 taxation plans: (1) the capital profit plan through a trustee; (2) the work income plan through a trustee; (3) the work income plan, without a trustee. The Company intends to contact the Income Tax Commission with a request for its approval of allocation as part of the Plan pursuant to Section 102 of the Income Tax Ordinance in the capital profit plan. The Company does not undertake to apply to the Plan any specific taxation plan, and it shall be allowed to change its selection with regard to the taxation plan applied to future allocations, subject to any law.

10.4

An allocation shall be performed no earlier than 30 days after the date on which the Company files with the tax assessment officer a request for the approval of this Plan, unless the tax assessment officer's approval is received for the allocation of the Options before this 30-day period transpires.

10.5

Subject to receiving the commission's approval of this Plan, the tax liability of the Offerees pursuant to Section 102 of the Ordinance, from the sale of the Exercise Shares (or that of their heirs in case of death) shall be determined in this case pursuant to the provisions of Section 102 of the Ordinance and the Income Tax Rules (Tax Reliefs in Allocation of Shares to Employees), 5763 – 2003.

10.6

The tax liability of the Offerees pursuant to Section 3(i) of the Ordinance, from the sale of the Exercise Shares (or that of their heirs in case of death) shall be determined pursuant to Section 3(i) of the Ordinance.

10.7

Before the tax is paid, it shall not be possible to transfer, assign, pledge, foreclose or otherwise willingly pledge the Exercise Shares or the rights deriving from them, and no power of attorney or transfer Option Grant Deed shall be given for them, whether with immediate effect or with a future effective date, except for a transfer by power of a last will or pursuant to law and subject to the Plan's terms; in case the shares are transferred by power of a last will or pursuant to law as foregoing, then the provisions of Section 102, as relevant, shall apply to the Offeree's heirs or transferees.

10.8

The results of any future change in the taxation arrangement applicable to the allocation of the Exercise Shares to the Offerees shall be applied to the Offerees pursuant to the provisions of any law, and they shall bear their full cost, unless explicitly determined otherwise in the changed arrangement.

10.9

Without derogating from the Offeree's duty to pay all taxes applicable pursuant to the foregoing, the Company and/or the Trustee, as relevant, shall be allowed to deduct tax at source pursuant to any law from all payments due to the Offeree (including dividend money, sale of Exercise Shares etc.) as well as amounts for fees, charges and other expenses which in the discretion of the Board of Directors and/or the Trustee are required pursuant to any law.

11.

Trust

11.1

The Options and/or Exercise Shares allocated under Section 102 to the Trustee to the benefit of an Offeree who is an Employee or an Office Holder, excluding a Controlling Shareholder in the Company (as this term is used in Section 102 of the Ordinance), shall be held in trust at least during the Lock-Up Period, and also after this period until the earlier of the date of the sale of the Exercise Shares or the date of the release of the shares from the trust.

11.2

The Options and/or Exercise Shares allocated to the Trustee to the benefit of an Offeree who is not an Employee or an Office Holder as foregoing shall be held in trust until the earlier of the date of the sale of the Exercise Shares or the date of the release of the Exercise Shares from the trust, this under the condition that the tax was paid on the exercise date of the Option Grant Deeds.

11.3

If the Offeree terminates is employment and/or service for the Company, then the Board of Directors shall be allowed to stipulate further holding of the Exercise Shares by the Trustee to the benefit of an Offeree on the Offeree's participation in the Trustee's fees.

11.4

If bonus shares are allocated for the Exercise Shares allocated to the Offeree, then the bonus shares shall be transferred by the Company to the Trustee. To such allocated bonus shares shall apply the provisions of Section 102 of the Ordinance and the rules enacted under it for all intents and purposes.

11.5

At the end of the Lock-Up Period, any Offeree (or his heir) shall be entitled to demand from the Trustee, at any time, to transfer to his name the Option or the Exercise Shares he is entitled to, or to sell the Exercise Shares as detailed below:

11.5.1

The Offeree shall be entitled to give the Trustee an order in writing to sell the Exercise Shares, in whole or part, held in trust for him by the Trustee (hereinafter: a "Sale Order"). The Offeree shall send to the Company a copy of the Sale Order when delivering it to the Trustee. Upon receiving the Sale Order, the Trustee shall take those actions necessary in order to execute it, in coordination with the Company. The remainder of the consideration received from the sale (after deduction of taxes as foregoing and after deduction of the exercise price) shall be paid by the Trustee directly to the Offeree.

11.5.2

Alternatively, the Offeree may give the Trustee a written order to transfer the Exercise Shares under his name (hereinafter: a "Transfer Order"). The Offeree shall transfer to the Company a copy of the Transfer Order when delivering it to the Trustee. Upon receiving the Transfer Order, the Trustee shall take those actions necessary in order to execute it, in coordination with the Company. Subject to the payment of the full tax as foregoing to the Company's full satisfaction, and pursuant to the Trustee's instructions, the Company shall transfer the Exercise Shares to the Offeree's name.

12.

Change of Structure or Control

12.1

Without derogating from the provisions of Section 4.6 above, in any case of a Material Event, the Board of Directors, at its absolute discretion, shall be allowed to adjust and change the Options' terms under the Plan for all Offerees or for certain Offerees at the sole discretion of the Board of Directors, inter alia by: (a) accelerating the maturity dates with respect to Options that have yet to mature, so that it will be possible to exercise these immediately shortly before the occurrence of the Material Event; (b) replacing the vested Options with the securities of the buyer (or absorbing) corporation (hereinafter: the "Buyer Corporation") and/or of another corporation belonging to the Buyer Corporation's group of companies, or with financial or other compensation, as long as the conversion rate and/or the financial compensation are determined at a conversion rate determined for all shareholders. If the Buyer Corporation refuses to replace the Options with its securities and/or the securities of a corporation in its group, then the Company's Board of Directors shall be allowed to order the giving of financial compensation to the Option holders, equal in economic value to the consideration received by the other shareholders, with the required adjustments and deducting the exercise price.

12.2

The non-vested Options shall expire shortly before the Material Event or shall be exercised pursuant to the Board of Directors' decision.

12.3

The Board of Directors shall be allowed to demand from the Offerees that they exercise all vested Options shortly before the occurrence of the Material Event, and any Option not exercised as foregoing shall expire and shall be invalidated.

13.

Changes in the Company's Share Capital

The offer of the Option Grant Deeds and/or the Exercise Shares allocated to the Offerees under them shall not restrict the Company in any way with respect to the creation of additional and/or other share classes in the future, including share classes preferable in any way to the ordinary shares currently in existence which are offered to the Offerees under this Plan, and shall not grant any of the Offerees any right to any compensation in case of the creation of such an additional share class or to the equalization of rights between share classes.

14.

The Plan's Period of Effect

The Option Plan shall be in effect commencing as of the date of the adoption of the Plan and until October 31, 2023. Notwithstanding the foregoing, the Options granted until the Plan's expiry date as foregoing, whether or not they matured by that date, shall remain in effect and shall not expire until their expiry date as provided in Section 7.7 above.

15.

Miscellaneous

15.1

The Board of Directors may, from time to time, terminate or change this Plan, at any time and in any manner as it sees right. In any case, subject to the provisions of Section 12 above, the terms of the Options already allocated shall not be changed in any change that adversely affects the rights of the Offerees, without the Offerees' approval, whether or not the Options matured. For the avoidance of doubt it is clarified that such a decision by the Board of Directors shall not stop the maturity period of Options granted before the Board of Directors' decision to terminate or change the Plan as foregoing.

15.2

This Plan does not constitute any direct or indirect undertaking by the Company towards the Offerees to continue employing any Offeree under the Plan as an employee and/or officeholder and/or consultant of the Company.

15.3

Exclusive and sole jurisdiction in all matters related to this Plan and to the Options allocated under it shall be given to the court in Tel Aviv Jaffa, and the laws applied to it shall be the laws of the State of Israel.

15.4

Any consideration received by the Company as the result of the allocation and/or exercise of shares under this Plan may be used for any purpose at the decision of the Board of Directors, as made from time to time.

15.5

The terms of allocation of the Options under this Plan may differ from one Offeree to another, and may also differ between different allocation certificates applicable to a certain Offeree.

16.

Required Approvals

The activation of the Plan is subject to its filing with the Tax Authority and to any additional approval required by any law.


	Kitov Pharmaceutical Holdings Ltd.