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The information in this preliminary prospectus is not complete and may be changed. The securities described herein may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION, DATED OCTOBER 8, 2024

 

 

 

Up to 5,940,000 Ordinary Shares

Up to 15,352,181 Ordinary Shares by the Selling Securityholders

Up to 190,000 Warrants by the Selling Securityholders

 

 

 

 

The Selling Securityholders may sell or otherwise dispose of the New Silexion ordinary shares or New Silexion warrants described in this prospectus in a number of different ways and at varying prices. We will not receive any of the proceeds from such sales of the New Silexion ordinary shares or New Silexion warrants, except with respect to amounts received by us upon exercise of warrants to the extent such warrants are exercised for cash. Given the recent price volatility of our ordinary shares, there is no certainty that warrant holders will exercise their warrants and, accordingly, we may not receive any proceeds in relation to our outstanding warrants.  See “Plan of Distribution” for more information about how the Selling Securityholders may sell or otherwise dispose of the securities being registered for resale pursuant to this prospectus.

 

The Selling Securityholders will pay all brokerage fees and commissions and similar expenses attributable to their sales of securities. We will pay the expenses (except brokerage fees and commissions and similar expenses) incurred in registering the sale of the securities offered hereby, including legal and accounting fees. See “Plan of Distribution.”

 

 

We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

 

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described in the section titled “Risk Factors” beginning on page 6 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

Prospectus dated [       ], 2024

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the Selling Securityholders may, from time to time, sell the ordinary shares and warrants offered by them described in this prospectus. We will not receive any proceeds from the sale by such Selling Securityholders of the ordinary shares or warrants offered by them described in this prospectus, except with respect to amounts received by us upon exercise of warrants to the extent such warrants are exercised for cash. Given the current price level of our ordinary shares, there is no certainty that warrant holders will exercise their warrants and, accordingly, we may not receive any proceeds in relation to our outstanding warrants.

 

Neither we nor the Selling Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the Selling Securityholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the Selling Securityholders will make an offer to sell these ordinary shares in any jurisdiction where the offer or sale is not permitted.

 

We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the section of this prospectus titled “Where You Can Find More Information.”

 

Unless the context indicates otherwise, references in this prospectus to “New Silexion”, “we”, “us,” “our,” “the Company”, “our company” and similar terms refer to Silexion Therapeutics Corp (formerly known as Biomotion Sciences), a Cayman Islands exempted company, and its consolidated subsidiaries. References to “Silexion” refer to Silexion Therapeutics Ltd., an Israeli company and wholly-owned subsidiary of the Company, and references to “Moringa” refer to Moringa Acquisition Corp, a Cayman Islands exempted company and wholly-owned subsidiary of the Company. References to the “Business Combination” refer collectively to the transactions completed on August 15, 2024 pursuant to that certain Amended and Restated Business Combination Agreement, dated as of April 3, 2024 (as amended, the “Business Combination Agreement”), by and among New Silexion, August M.S. Ltd., an Israeli company and a wholly-owned subsidiary of New Silexion (“Merger Sub 1”), Moringa Acquisition Merger Sub Corp, a Cayman Islands exempted company and a wholly-owned subsidiary of New Silexion (“Merger Sub 2”), Moringa and Silexion. Pursuant to the Business Combination Agreement, among other things, (i) Merger Sub 2 merged with and into Moringa, with Moringa continuing as the surviving company and a wholly-owned subsidiary of New Silexion (the “SPAC Merger”) and (ii) Merger Sub 1 merged with and into Silexion, with Silexion continuing as the surviving company and a wholly-owned subsidiary of New Silexion (the “Acquisition Merger”). In connection with the consummation of the Business Combination (the “Closing”), New Silexion changed its name from “Biomotion Sciences” to “Silexion Therapeutics Corp”, and the ordinary shares and warrants of New Silexion commenced trading on the Nasdaq Global Market (“Nasdaq”) under the symbols “SLXN” and “SLXNW”, respectively, on August 16, 2024.

 

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information”.

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The statements contained in this prospectus that are not purely historical are forward-looking statements. Certain statements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding the Company’s and the Company’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about: 

 

 

 

 

 

 

 

 

 

 

The forward-looking statements contained in this prospectus and in any document incorporated by reference are based on current expectations, forecasts and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties, some of which are beyond the Company’s control, or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following factors:

 

 

 

 

 

 

 

 

 

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. It is not possible to predict or identify all such risks. Accordingly, forward-looking statements in this prospectus and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. Those statements are based upon information available to us as of the date of this prospectus and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Those statements are inherently uncertain, and investors are cautioned not to unduly rely upon those statements.

 

TABLE OF CONTENTS

 

  

You should rely only on the information contained in this prospectus, any supplement to this prospectus or in any free writing prospectus, filed with the Securities and Exchange Commission. Neither we nor the Selling Securityholders have authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The Selling Securityholders is offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date.

 

For investors outside of the United States: Neither we nor the Selling Securityholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our securities and the distribution of this prospectus outside the United States.

 

RISK FACTORS

 

Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and related notes appearing at the end of this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our securities. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our ordinary shares could decline, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

 

Risks Related to Our Financial Condition and Capital Requirements

 

Silexion is a development-stage company and has a limited operating history on which to assess its business. Silexion has incurred significant losses since its inception and anticipate that we will continue to incur significant losses for the foreseeable future.

 

Silexion is a development stage company with a limited operating history focused on the discovery and development of treatments based on the emerging therapeutic modality RNA interference (RNAi), a biological process in which ribonucleic acid (RNA) molecules inhibit gene expression. Silexion’s proposed treatment, which we refer to as SIL-204B, consists of locally administered small interfering RNAs, or siRNA, to KRAS G12D- or KRAS G12V-mutations (G12D/V), which is the gene driver that causes development of tumors and human cancer (oncogenic). Silexion has incurred net losses since its inception in November 2008, including net losses of $5.1 million for the year ended December 31, 2023 and $2.9 million for the six months ended June 30, 2024. As of June 30, 2024, Silexion had an accumulated deficit of $29.7 million.

 

Silexion has devoted substantially all of its financial resources to design and develop its product candidates, including conducting preclinical and clinical studies and providing general and administrative support for these operations. To date, Silexion has financed its operations primarily through the sale of equity securities and through royalty-bearing grants that it received from Israel’s Innovation Authority, or the IIA. The amount of its future net losses will depend, in part, on the rate of its future expenditures and its ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Silexion is in the early stages of clinical and preclinical development for its product candidates, Silexion has not yet commenced pivotal clinical studies for any product candidate and it may be several years, if ever, before we complete pivotal clinical studies and have a product candidate approved for commercialization. Even if we obtain regulatory approval to market a product candidate, its future revenue will depend upon the size of any markets in which its product candidates may receive approval, and its ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors, and adequate market share for its product candidates in those markets.

 

Silexion expects to continue to incur significant expenses and increasing operating losses for the foreseeable future. Silexion anticipate that its expenses will increase substantially if and as it:

 

 

 

 

 

 

 

 

 

 

 

 

 

Further, the net losses Silexion incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of its results of operations may not be a good indication of its future performance.

 

Silexion has never generated any revenue from product sales and may never be profitable.

 

Silexion has no products approved for commercialization and has never generated any revenue. Silexion’s ability to generate revenue and achieve profitability depends on its ability, alone or with strategic collaboration partners, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize, one or more of its product candidates. Silexion does not anticipate generating revenue from product sales for the foreseeable future. Silexion’s ability to generate future revenue from product sales depends heavily on its success in many areas, including but not limited to:

 

 

 

 

 

 

 

 

 

 

 

  

Even if one or more of the product candidates that Silexion develops is approved for commercial sale, it anticipates incurring significant costs associated with commercializing any approved product candidate. Silexion’s expenses could increase beyond expectations if Silexion is required by the FDA, the European Medicines Agency (EMA) or other regulatory agencies, domestic or foreign, or ethical committees in medical centers, to change its manufacturing processes or assays or to perform clinical, nonclinical, or other types of studies in addition to those that it currently anticipates. In cases where Silexion is successful in obtaining regulatory approvals to market one or more of its product candidates, its revenue will be dependent, in part, upon the size of the markets in the territories for which it gains regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether it owns the commercial rights for that territory. If the number of its addressable disease patients is not as significant as it estimates, the indication approved by regulatory authorities is narrower than it expects, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, Silexion may not generate significant revenue from sales of such products, even if approved. Additionally, there might be changes in supply or other changes in the approved drugs of which its products will be administrated in combination, where such changes can affect its revenues. Further, if Silexion is not able to generate revenue from the sale of any approved products, Silexion may be forced to cease operations.

 

We expect that we will need to raise substantial additional funding before we can expect to become profitable from product sales. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, or terminate our product development efforts or other operations.

 

Silexion is currently advancing its SIL-204B platform product through preclinical and clinical development. Developing its product candidates is expensive, and we expect its research and development expenses to increase substantially in connection with its ongoing activities, particularly as it advances its product candidates through clinical studies.

 

If its product candidates enter and advance through preclinical studies and clinical trials, Silexion will need substantial additional funds to expand its development, regulatory, manufacturing, marketing and sales capabilities or contract with other organizations to provide those capabilities for it. Silexion has used substantial funds to develop its product candidates and delivery technologies and will require significant funds to conduct further research and development and preclinical testing and clinical trials of its product candidates, to seek regulatory approvals for its product candidates and to manufacture and market products, if any, which are approved for commercial sale.

 

As of June 30, 2024, Silexion’s cash and cash equivalents were $1.75 million. Based upon its then expected level of operating expenditures, Silexion had substantial doubt about its ability to continue as a going concern as of such date. Please see the risk factor below titled “Silexion’s independent registered public accounting firm’s report contains an explanatory paragraph…” Beyond its activities for the next 12 months, Silexion furthermore expects that it will require substantial additional capital to advance manufacturing capabilities for, to obtain regulatory approval for, and to commercialize, its product candidates. In addition, Silexion’s operating plans may change as a result of many factors that may currently be unknown to it, and Silexion may need to seek additional funds sooner than planned. Silexion’s future funding requirements will depend on many factors, including but not limited to:

 

 

 

 

 

 

Any additional fundraising efforts may divert our management from its day-to-day activities, which may adversely affect Silexion’s abilities to develop and commercialize its product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the New Silexion ordinary shares to decline due to expected or actual dilution. The incurrence of indebtedness could result in increased fixed payment obligations, and New Silexion may be required to agree to certain restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely impact its ability to conduct its business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and Silexion may be required to relinquish rights to some of its technologies or product candidates or otherwise agree to terms unfavorable to it, any of which may have a material adverse effect on our business, operating results, and prospects. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

 

If New Silexion is unable to obtain funding on a timely basis, it may be required to significantly curtail, delay, or discontinue one or more of Silexion’s research, development or manufacturing programs or the commercialization of any product candidates, or be unable to expand its operations or otherwise capitalize on its business opportunities, as desired, which could materially affect our business, financial condition, and results of operations.

 

Silexion’s independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about Silexion’s ability to continue as a “going concern.”

 

Silexion has limited cash resources and will need to obtain additional funds in order to satisfy its liquidity needs. Silexion will require significant funds to conduct further research and development and preclinical testing and clinical trials of its product candidates, to seek regulatory approvals for its product candidates and to manufacture and market products, if any, which are approved for commercial sale. In light of Silexion’s significant working capital needs and the absence of any committed source of financing to meet those needs, there may be substantial doubt raised about Silexion’s ability to continue as a “going concern.” Please see the explanatory paragraph under the heading “Substantial Doubt about the Company’s Ability to Continue as a Going Concern” in Silexion’s independent auditors’ report on its financial statements that appear in this prospectus. Those financial statements do not include any adjustments that might result from Silexion’s inability to continue as a “going concern.”

 

The historical financial results of Silexion and unaudited pro forma financial information included herein may not be indicative of what the Company’s actual financial position or results of operations would have been.

 

The historical financial results of Silexion included in this prospectus do not reflect the financial condition, results of operations or cash flows it would have achieved as a public company during the periods presented or those the Company will achieve in the future. The Company’s financial condition and future results of operations could be materially different from amounts reflected in certain of Silexion’s historical financial statements included elsewhere in this prospectus, and it may be difficult for investors to compare the Company’s future results to historical results or to evaluate its relative performance or trends in its business.

 

Similarly, the unaudited pro forma financial information included herein is presented for illustrative purposes only and has been prepared based on a number of assumptions. Accordingly, such pro forma financial information is not necessarily indicative of what the Company’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated, and the Company’s actual financial condition and results of operations may vary materially from such pro forma financial information, including as a result of such assumptions not being accurate. See “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Risks Related to the Research and Development of Silexion’s Product Candidates

 

The approach Silexion is taking to discover and develop novel RNAi therapeutics is unproven for oncology and may never lead to marketable products.

 

Silexion has concentrated its efforts and therapeutic product research on RNAi technology, and RNAi drug delivery and its future success depends on the successful development of this technology and products based on it. Silexion has not received regulatory approval to market therapeutics utilizing RNAi based drugs, including siRNAs, the class of molecule Silexion is trying to develop into products. The scientific discoveries that form the basis for its efforts to discover and develop new drugs are relatively new. The scientific evidence to support the feasibility of developing drugs and the delivery of such drugs based on these discoveries is both preliminary and limited. Skepticism as to the feasibility of developing RNAi therapeutics for oncology has been expressed in scientific literature. For example, there are potential challenges to achieving safe RNAi therapeutics based on the so-called off-target effects and activation of the interferon response, and other potential challenges to achieve safe and potent levels of RNAi drugs due to complications associated with drug delivery. In addition, decisions by other companies with respect to their RNAi development efforts may increase skepticism in the marketplace regarding the potential for RNAi therapeutics.

 

Relatively few product candidates based on these discoveries have ever been tested in animals or humans. siRNAs may not naturally possess the inherent properties typically required of drugs, such as the ability to be stable in the body long enough to reach the tissues in which their effects are required, or the ability to enter cells within these tissues in order to exert their effects. Silexion currently has only limited data, and no conclusive evidence, to suggest that it can introduce these drug-like properties into siRNAs. Silexion may spend large amounts of money trying to introduce these properties, and may never succeed in doing so. In addition, these compounds may not demonstrate in patients the chemical and pharmacological properties ascribed to them in laboratory studies, and they may interact with human biological systems in unforeseen, ineffective or harmful ways. As a result, Silexion may never succeed in developing a marketable product, Silexion may not become profitable and the value of its ordinary shares may decline.

 

The FDA has relatively limited experience with RNAi and siRNA based therapeutics. Limited granted approvals to any person or entity, including us, to market and commercialize therapeutics using RNAi based drugs including siRNA, which may increase the complexity, uncertainty and length of the regulatory approval process for its product candidates. Further, siRNA therapies are part of a broader therapeutic category called oligonueciotides, and there are only a few approved drugs based on this therapeutic category. Silexion may never receive approval to market and commercialize any product candidate.

 

Further, its focus on RNAi technology for developing drugs, as opposed to multiple, more proven technologies for drug development, increases the risks associated with the ownership of New Silexion ordinary shares. If Silexion is not successful in developing a product candidate using RNAi technology, Silexion may be required to change the scope and direction of its product development activities. In that case, Silexion may not be able to identify and implement successfully an alternative product development strategy.

 

Each of Silexion’s product candidates is in the early stages of development and will require additional clinical development (and in some cases additional preclinical development), management of nonclinical, clinical and manufacturing activities, regulatory approval, obtaining adequate manufacturing supply, building of a commercial organization, and significant marketing efforts before we generate any revenue from product sales. Silexion has concluded Phase II study on first-generation Loder and moved on to SIL-204B. Silexion hopes to initiate the next clinical trial with SIL-204B during the first half of 2026 for locally advanced pancreatic cancer. Silexion is not permitted to market or promote any of its product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and Silexion may never receive such regulatory approval for any of its product candidates.

 

Silexion has never submitted marketing applications to the FDA or comparable foreign regulatory authorities. Silexion cannot be certain that any of its product candidates will be successful in clinical studies or receive regulatory approval. Further, its product candidates may not receive regulatory approval even if they are successful in clinical studies. If it does not receive regulatory approvals for its product candidates, Silexion may not be able to continue its operations.

 

Silexion generally plans to seek regulatory approval to commercialize its product candidates in the United States, the EU and in additional foreign countries. To obtain regulatory approval in other countries, Silexion must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing, and distribution of its product candidates. Even if Silexion is successful in obtaining approval in one jurisdiction, it cannot ensure that it will obtain approval in any other jurisdictions. If Silexion is unable to obtain approval for its product candidates in multiple jurisdictions, its revenue and results of operations could be negatively affected.

 

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable. If Silexion is ultimately unable to obtain regulatory approval for its product candidates, its business will be substantially harmed.

 

The time required to develop a drug and obtain approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical studies, and depends upon numerous factors. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. Silexion has not obtained regulatory approval for any product candidate, and it is possible that none of its existing product candidates or any product candidates Silexion may seek to develop in the future will ever obtain regulatory approval.

 

Applications for our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:

 

 

 

 

 

  

 

 

This lengthy development and approval process, as well as the unpredictability of the results of clinical studies, may result in Silexion’s failing to obtain regulatory approval to market any of its product candidates, which would significantly harm its business, and our consolidated results of operations and prospects.

 

Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of preclinical activity or earlier studies may not be predictive of future study results.

 

Before obtaining marketing approval from regulatory authorities for the sale of its product candidates, Silexion must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. The results of preclinical studies and early clinical studies of product candidates often are not predictive of the results of later-stage clinical studies. In general, even product candidates that have shown promising results in preclinical activities or early-stage clinical studies may still suffer significant setbacks in subsequent registration clinical studies. For example, the safety or efficacy results generated to date in preclinical and clinical studies for siG12DLoder or preclinical studies with SIL-204B do not ensure that later clinical studies will demonstrate similar results. There is a high failure rate for drugs and biologics proceeding through clinical studies, and product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical studies. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. Silexion does not know whether any Phase 1, Phase 2, Phase 3 or other clinical studies it may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain regulatory approval to market its drug candidates.

 

Events that may prevent successful or timely completion of clinical development include but are not limited to:

 

 

 

 

 

 

 

 

 

 

 

 

 

If Silexion ultimately is unable to successfully complete clinical development of its product candidates, it would be forced to cease operations. Clinical study delays could also shorten any periods during which its products have patent protection and may allow its competitors to bring products to market before Silexion does, which could impair its ability to obtain orphan exclusivity and to successfully commercialize its product candidates.

 

Silexion may find it difficult to enroll patients in its clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of its product candidates.

 

Identifying and qualifying patients to participate in clinical studies of Silexion’s product candidates is critical to its success. The timing of its clinical studies depends in part on the speed at which it can recruit patients to participate in testing its product candidates, and Silexion may experience delays in its clinical studies if it encounters difficulties in enrollment.

 

Some of the conditions for which Silexion plans to evaluate its current product candidates are relatively rare diseases. For example, according to the National Cancer Institute, approximately 61,000 patients were diagnosed with pancreatic cancer in the U.S. in 2020. Accordingly, there are limited patient pools from which to draw for clinical studies. In addition to the relative rarity of these diseases, the eligibility criteria of its clinical studies will further limit the pool of available study participants as Silexion will require that patients have specific characteristics that it can measure or to assure their disease is either severe enough or not too advanced to include them in a study. Silexion also may not be able to identify, recruit, and enroll a sufficient number of patients to complete its clinical studies because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical studies, the proximity and availability of clinical study sites for prospective patients, and the patient referral practices of physicians.

 

In addition, even for the more prevalent diseases which we target, such as prostate and breast cancer, enrolling patients in its clinical studies may be difficult. There may be several ongoing clinical studies for these diseases (both RNAi based and otherwise), and Silexion may face competition in enrolling patients. The number of patients in such clinical studies might be significantly large. In addition, the time period required to achieve indications of safety and efficacy in such studies may be very long. Some of these competing studies may be conducted by other biopharmaceutical companies with more experience in clinical testing and with much greater financial, technical and human resources than Silexion has.

 

If patients are unwilling to participate in its studies for any reason, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of Silexion’s potential products will be delayed.

 

Silexion’s product candidates and the administration of its product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

 

Undesirable side effects including toxicology caused by its product candidates could cause Silexion or regulatory authorities to interrupt, delay, or halt clinical studies and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. For example, there are known immune stimulation and other side effects associated with RNAi. The implantation of SIL-204B may entail the use of endoscopic ultrasound (EUS) needles, which may cause pancreatitis, bleeding or other procedural related safety issues. The Phase 2 clinical study with siG12DLoder indicated that Loder treatment was well tolerated. Safety events that were observed were primarily related to procedure, mainly reversible abdominal pain. In addition, the presence of a foreign body such as its SIL-204B) in human tissue may cause inflammation. Results of Silexion’s studies could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, such studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order Silexion to cease further development of or deny or withdraw approval of its product candidates for any or all targeted indications.

 

The drug-related, drug-product related, and administration related side effects could affect patient recruitment, the ability of enrolled patients to complete the study, or result in potential product liability claims. Silexion does not currently have product liability insurance and does not anticipate obtaining product liability insurance until such time as Silexion has received FDA or other comparable foreign authority approval for a product and there is a product that is being provided to patients outside of clinical trials.

 

Additionally, if one or more of its product candidates receives marketing approval, and Silexion or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

 

 

 

 

 

 

Any of these events could prevent Silexion from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm its business, results of operations, and prospects.

 

Even if Silexion obtains regulatory approval for a product candidate, its products will remain subject to regulatory scrutiny.

 

If Silexion’s product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-market information, including both federal and state requirements in the United States and other jurisdictions, where the product might be marketed. Accordingly, Silexion and others with whom it works must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control.

 

Any regulatory approvals that Silexion receives for its product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. Silexion will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for its products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, Silexion may not promote its products for indications or uses for which they do not have FDA approval. The holder of an approved NDA or BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. Silexion could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of its products in general or in specific patient subsets. If Silexion obtains original marketing approval via the accelerated approval pathway, it could be required to conduct a successful post-marketing clinical study to confirm clinical benefit for its products. An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval. Furthermore, any new legislation addressing drug safety issues could result in delays in product development or commercialization or increased costs to assure compliance. Foreign regulatory authorities impose similar requirements.

 

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or Silexion, including requiring withdrawal of the product from the market. If Silexion fails to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

 

 

 

 

 

 

 

Any government investigation of alleged violations of law could require Silexion to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect Silexion’s ability to commercialize and generate revenue from its products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of Silexion and its operating results will be adversely affected.

 

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

 

If any of its product candidates are approved and they are found to have been improperly promoted for unapproved uses of those products, Silexion may become subject to significant liability. The FDA and other regulatory agencies or other governmental bodies strictly regulate the promotional claims that may be made about prescription products, such as its product candidates, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If Silexion receives marketing approval for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If Silexion is found to have promoted such unapproved, or off-label, uses, they may become subject to significant liability. The U.S. federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If Silexion cannot successfully manage the promotion of its product candidates, if approved, it could become subject to significant liability, which would materially adversely affect its business and financial condition.

 

Silexion and its collaborators are subject to significant regulation with respect to manufacturing its product candidates. The facilities it subcontracts to for manufacturing may not meet regulatory requirements and may have limited capacity.

 

All entities involved in the preparation of therapeutics for clinical studies or commercial sale are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with current GMP (cGMP) or, in other countries, GMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of its product candidates that may not be detectable in final product testing. Silexion, its collaborators, or any contract manufacturers must supply all necessary documentation in support of an NDA, BLA, or Marketing Authorization Application (MAA) on a timely basis and must adhere to Good Laboratory Practices (GLP) and cGMP/GMP regulations enforced by the FDA and other regulatory agencies through their facilities and data and documentation inspection programs. Silexion has never produced a commercially approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvals to do so. Silexion’s facilities and quality systems, and those of its collaborators and any third-party contractors, must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of its product candidates or any of its other potential products. In addition, the regulatory authorities may, at any time, inspect a manufacturing facility involved with the preparation of its product candidates or its other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a preapproval plant inspection, regulatory approval of the products may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.

 

The regulatory authorities also may, at any time following approval of a product for sale, audit a manufacturing facility. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of its product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time consuming for Silexion or a third party to implement, and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon Silexion or third parties with whom it contracts could materially harm its business.

 

If Silexion, its collaborators, or any of its third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authorities can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, withdrawal of an approval, or suspension of production. As a result, its business, financial condition, and results of operations may be materially harmed.

 

These factors could cause Silexion to incur higher costs and could cause the delay or termination of clinical studies, regulatory submissions, required approvals, or commercialization of its product candidates.

 

Silexion is subject to a multitude of manufacturing risks, any of which could substantially increase its costs and limit supply of its product candidates.

 

The process of manufacturing Silexion’s product candidates is complex, highly regulated, and subject to several risks, including but not limited to:

 

 

 

Any adverse developments affecting manufacturing operations for Silexion’s product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of its product candidates. Silexion may also have to take inventory write-offs and incur other charges and expenses for product candidates that fail to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

 

Risks Related to Silexion’s Reliance on Third Parties

 

Silexion relies on third parties to conduct its preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, Silexion may not be able to obtain regulatory approval for or commercialize its product candidates, and its business could be substantially harmed.

 

Silexion has relied upon and plans to continue to rely upon third-party CROs to monitor and manage data for its ongoing preclinical and clinical programs. Silexion relies on these parties for execution of its preclinical and clinical studies, and control only certain aspects of their activities. Nevertheless, Silexion is responsible for ensuring that each of its studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and its reliance on the CROs does not relieve us of its regulatory responsibilities. Silexion and its CROs and other vendors are required to comply with cGMP and GLP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area (EEA) and comparable foreign regulatory authorities for all of its product candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal and other investigators, study sites, and other contractors. If we or any of its CROs or vendors fail to comply with applicable regulations, the clinical data generated in its clinical studies may be deemed unreliable and the FDA, EMA, or comparable foreign regulatory authorities may require us to perform additional clinical studies before approving its marketing applications. Silexion cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of its clinical studies comply with Good Clinical Practices (GCP) regulations. In addition, its clinical studies must be conducted with product produced under cGMP/GMP regulations. Silexion’s failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.

 

If any of its relationships with these third-party CROs terminate, Silexion may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. In addition, its CROs are not its employees, and, except for remedies available to us under its agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to its on-going clinical, nonclinical, and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to its clinical protocols, regulatory requirements, or for other reasons, its clinical studies may be extended, delayed, or terminated, and Silexion may not be able to obtain regulatory approval for or successfully commercialize its product candidates. CROs may also generate higher costs than anticipated. As a result, its results of operations and the commercial prospects for its product candidates would be harmed, its costs could increase, and its ability to generate revenue could be delayed.

 

Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact its ability to meet its desired clinical development timelines. Though we carefully manage its relationships with its CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects.

 

Silexion currently relies on third parties to manufacture the raw materials and products that we use to create its product candidates and to supply us with the medical devices used to administer such product. This reliance requires us to share its trade secrets with these third parties, which increases the possibility that a competitor will discover them or that its trade secrets will be misappropriated or disclosed.

 

Because Silexion relies on third parties to provide it with the materials that it uses to develop and manufacture its product candidates, Silexion may, at times, share trade secrets with such third parties. Silexion seeks to protect its proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements, or other similar agreements with its collaborators, advisors, employees, and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose its confidential information, such as trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by its competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that its proprietary position is based, in part, on its know-how and trade secrets, a competitor’s discovery of its trade secrets or other unauthorized use or disclosure would impair its competitive position and may have a material adverse effect on its business.

 

Silexion’s reliance on third parties to manufacture the raw materials and products that are used to create its product candidates and to supply it with the medical devices used to administer such product might cause its business harm if manufacturers fail to provide it with sufficient quantities of these materials and products or fail to do so at acceptable quality levels or prices.

 

Silexion does not currently have the infrastructure or capability internally to develop the raw materials and other products that we use to manufacture its product candidates, and it lacks the resources and the capability to manufacture the medical devices which it uses to administer its products. There are a limited number of suppliers for these raw materials, products and devices, and there may be a need to identify alternate suppliers to prevent a possible disruption to its clinical studies, and, if approved, ultimately for commercial sale. Silexion cannot assure you that it will be able to identify alternate suppliers if the need arises at acceptable quality levels or prices.

 

Risks Related to Commercialization of Silexion’s Product Candidates

 

If the market opportunities for its product candidates are smaller than we believe they are, Silexion’s revenue may be adversely affected, and its business may suffer. Because some of the target patient populations of its product candidates are small, Silexion must be able to successfully identify patients and achieve a significant market share to maintain profitability and growth.

 

Silexion focuses a substantial part of its research and product development on treatments for locally advanced pancreatic cancer with certain specific mutations. Given the small number of patients who have this disease with these mutations, it is critical to Silexion’s ability to grow and become profitable that it continue to successfully identify effected patients. Silexion’s projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with its product candidates, are based on its beliefs and estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations, or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. The effort to identify patients with diseases Silexion seeks to treat is in its early stages, and Silexion cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for each of its product candidates may be limited or may not be amenable to treatment with its product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and business.

 

Silexion does not have experience producing its product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce its product candidates at the quality, quantities, locations, and timing needed to support commercialization. Additionally, Silexion intends to rely on third-party manufacturers to produce the raw materials and products that it uses to manufacture its product candidates, but Silexion has not entered into binding agreements with any such manufacturers to support commercialization.

 

Silexion does not currently have the experience or ability to produce its product candidates at commercial levels. Silexion may run into technical or scientific issues related to manufacturing or development that Silexion may be unable to resolve in a timely manner or with available funds. Silexion also has not completed all of the characterization and validation activities necessary for commercialization and regulatory approvals. If Silexion does not conduct all such necessary activities, its commercialization efforts will be harmed.

 

Although Silexion intends to rely on third-party manufacturers for the raw materials and products to support its own manufacturing of its product candidates for commercialization, Silexion has not yet entered into agreements with such manufacturers. Silexion may be unable to negotiate binding agreements with the manufacturers to support its commercialization activities at commercially reasonable terms. Additionally, these third party manufacturers may not be able to supply it with the necessary quantities of these raw materials and products to support its own manufacturing process, or in compliance with cGMP or other pertinent regulatory requirements, and within its planned timeframe and cost parameters, and the development and sales of its products, if approved, may be materially harmed.

 

Silexion faces intense competition and rapid technological change and the possibility that its competitors may develop therapies that are similar, more advanced, or more effective than its, which may adversely affect its financial condition and its ability to successfully commercialize its product candidates.

 

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Silexion is currently aware of various existing therapies in the market and in development that may in the future compete with its product candidates. For example, there is an increasing number of companies commercializing treatments and/or developing programs specifically targeting KRAS mutations, including KRAS G12D and KRAS G12V, in a variety of manners and for a variety of indications, including cancer, including Bristol-Myers Squibb Company (through the recently acquired Mirati Therapeutics, Inc.), Revolution Medicines, Inc., AstraZeneca (in collaboration with Usynova), Boehringer and Gilead. Smaller and other early-stage companies may also prove to be significant competitors. Treatments for cancer currently include surgery, radiation therapy, chemotherapy, hormone therapy, immunotherapy and combined treatment modalities such as chemo-radiotherapy. Other approaches may also emerge for the treatment of any of the disease areas in which Silexion focuses.

 

Silexion has competitors both in the United States and internationally, including major multinational pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies. Silexion’s competitors may succeed in developing, acquiring, or licensing on an exclusive basis, products that are more effective or less costly than any product candidate that Silexion may develop, or achieve earlier patent protection, regulatory approval, product commercialization, and market penetration than it does. Additionally, technologies developed by its competitors may render its potential product candidates uneconomical or obsolete, and Silexion may not be successful in marketing its product candidates against competitors.

 

Silexion currently has no marketing and sales organization. If Silexion is unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell its product candidates, Silexion may be unable to generate any revenue.

 

Silexion as a company has no experience selling and marketing its product candidates, and it currently has no marketing or sales organization. To successfully commercialize any products that may result from its development programs, Silexion will need to develop these capabilities, either on its own or with others. If its product candidates receive regulatory approval, Silexion intends to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize its product candidates in major markets, which will be expensive, difficult, and time consuming. Any failure or delay in the development of its internal sales, marketing, and distribution capabilities would adversely impact the commercialization of its products.

 

Further, given its lack of prior experience in marketing and selling biopharmaceutical products, Silexion’s initial estimate of the size of the required sales force may be materially more or less than the size of the sales force actually required to effectively commercialize its product candidates. As such, Silexion may be required to hire the commercialization of its product candidates, or Silexion may incur excess costs as a result of hiring more sales representatives than necessary. With respect to certain geographical markets, Silexion may enter into collaborations with other entities to utilize their local marketing and distribution capabilities, but Silexion may be unable to enter into such agreements on favorable terms, if at all. If its future collaborators do not commit sufficient resources to commercialize its future products, if any, and Silexion is unable to develop the necessary marketing capabilities on its own, it will be unable to generate sufficient product revenue to sustain its business. Silexion may be competing with companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, Silexion may be unable to compete successfully against these more established companies.

 

The market may not be receptive to its product candidates based on a novel therapeutic modality, and Silexion may not generate any future revenue from the sale or licensing of product candidates.

 

Even if approval is obtained for a product candidate, Silexion may not generate or sustain revenue from sales or licensing of the product due to factors such as whether the product can be sold at a competitive cost and otherwise accepted in the market. The product candidates that Silexion is developing are based on new technologies and therapeutic approaches. Market participants with significant influence over acceptance of new treatments, such as physicians and third-party payors, may not adopt a treatment based on RNAi, including siRNA technology, and Silexion may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement for, its product candidates. Market acceptance of Silexion’s product candidates will depend on, among other factors:

 

 

 

 

 

 

 

 

 

 

 

 

With Silexion’s focus on the emerging therapeutic modality RNAi, these risks may increase to the extent the space becomes more competitive or less favored in the commercial marketplace. Some of Silexion’s target diseases, such as pancreatic cancer, are relatively rare. Because of the small patient population for a rare disease, if pricing is not approved or accepted in the market at an appropriate level for an approved product, such product may not generate enough revenue to offset costs of development, manufacturing, marketing and commercialization. Market size is also a variable in disease indications not classified as rare. Silexion’s estimates regarding potential market size for any indication may be materially different from what it discovers to exist at the time it commences commercialization, if any, for a product, which could result in significant changes in its business plan and have a material adverse effect on its business, financial condition, results of operations and prospects.

 

Even if a potential product displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be fully known until after it is launched. Silexion’s efforts to educate the medical community and third-party payors on the benefits of the product candidates may require significant resources and may never be successful. If its product candidates are approved but fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, and others in the medical community, Silexion will not be able to generate sufficient revenue for us to become or remain profitable.

 

The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit Silexion’s ability to market those products and decrease its ability to generate revenue.

 

Some of Silexion’s target patient populations are small, and, accordingly, the pricing, coverage, and reimbursement of its respective product candidates, if approved, must be adequate to support its commercial infrastructure. Silexion’s per-patient prices must be sufficient to recover its development and manufacturing costs and potentially achieve profitability. Accordingly, the availability and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford expensive treatments such as Silexion’s, assuming approval. Sales of its product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of its product candidates will be paid for by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government authorities, private health insurers, and other third-party payors. If coverage and reimbursement are not available, or are available only to limited levels, Silexion may not be able to successfully commercialize its product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow Silexion to establish or maintain pricing sufficient to realize a return on its investment.

 

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for products such as Silexion’s.

 

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has, and will continue to, put pressure on the pricing and usage of Silexion’s product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that Silexion is able to charge for its product candidates. Accordingly, in markets outside the United States, the reimbursement for its products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

 

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved, and, as a result, they may not cover or provide adequate payment for Silexion’s product candidates. Silexion expects to experience pricing pressures in connection with the sale of any of its product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes like the Inflation Reduction Act. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

 

Healthcare legislative reform measures may have a material adverse effect on Silexion’s business and results of operations.

 

The business and financial condition of pharmaceutical and biotechnology companies are affected by the efforts of governmental and third-party payors to contain or reduce the costs of health care. The U.S. Congress has enacted legislation to reform the health care system. While Silexion anticipates that this legislation may, over time, increase the number of patients who have insurance coverage for pharmaceutical products, it also imposes cost containment measures that may adversely affect the amount of reimbursement for pharmaceutical products. These measures include increasing the minimum rebates for products covered by Medicaid programs and extending such rebates to drugs dispensed to Medicaid beneficiaries enrolled in Medicaid managed care organizations as well as expansion of the 340(B) Public Health Services drug discount program. In addition, such legislation contains a number of provisions designed to generate the revenues necessary to fund the coverage expansion. In foreign jurisdictions there have been, and we expect that there will continue to be, a number of legislative and regulatory proposals aimed at changing the health care system. For example, in some countries other than the United States, pricing of prescription drugs is subject to government control and Silexion expects to see continued efforts to reduce healthcare costs in international markets.

 

Some U.S. states are also considering legislation that would control the prices of drugs, and state Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not being paid. Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on the coverage of particular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for drugs. It is likely that federal and state legislatures and health agencies will continue to focus on additional health care reform in the future although Silexion is unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such legislation or regulation would have on its business. Silexion’s ability to commercialize any product candidates that Silexion may seek to commercialize, is highly dependent on the extent to which coverage and reimbursement for these product candidates will be available from government payors, such as Medicare and Medicaid, private health insurers, including managed care organizations, and other third-party payors, and any change in reimbursement levels could materially and adversely affect its business. Further, the pendency or approval of future proposals or reforms could result in a decrease in its share price or limit its ability to raise capital or to obtain strategic partnerships or licenses.

 

Silexion’s product candidates may be approved and/or commercialized only in part, only as neoadjuvant therapy, or as an adjuvant therapy.

 

Silexion’s product candidates may be approved by the FDA or other regulatory agencies only as a treatment to be provided in association with other treatments, if at all. For example, it may be possible that its SIL-204B be used as adjunct therapy with chemotherapy treatments. Limitation in commercialization of such treatments, including limitations in supply, call-back, clinical holds, changes in medical trends, changes in cost and/or reimbursement policy, may limit its ability to commercialize its product candidates, either directly or via third parties.

 

Risks Related to Competition

 

The pharmaceutical market is intensely competitive. If Silexion is unable to compete effectively with existing drugs, new treatment methods and new technologies, it may be unable to commercialize successfully any drugs that it develops.

 

The pharmaceutical market is intensely competitive and rapidly changing. Many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs for the same diseases that Silexion is targeting or expect to target. Many of its competitors have:

 

  

 

 

 

 

Silexion will face intense competition from drugs that have already been, or may in the future become, approved and accepted by the medical community for the treatment of the conditions for which Silexion may develop drugs. Silexion also expects to face competition from new drugs that enter the market. Silexion believes a significant number of drugs are currently under development, and may become commercially available in the future, for the treatment of conditions for which Silexion may try to develop drugs and therapies. These drugs may be more effective, safer, less expensive, or marketed and sold more effectively, than any product Silexion develops.

 

If Silexion successfully develops its product candidates, and obtains approval for them, it will face competition based on many different factors, including:

 

 

 

 

 

 

 

 

Silexion’s competitors may develop or commercialize products with significant advantages over any products Silexion develops based on any of the factors listed above or on other factors. Silexion’s competitors may therefore be more successful in commercializing their products than Silexion, which could adversely affect its competitive position and business. Competitive products may make any products Silexion develops obsolete or noncompetitive before we can recover the expenses of developing and commercializing its product candidates. Such competitors could also recruit its employees, which could negatively impact its level of expertise and the ability to execute on its business plan.

 

Silexion faces competition from other companies that are working to develop novel drugs and technology platforms using technology similar or in the same field as Silexion’s. If these companies develop drugs more rapidly than Silexion, or their technologies, including delivery technologies, are more effective, Silexion’s ability to successfully commercialize drugs may be adversely affected.

 

In addition to the competition Silexion faces from competing drugs in general, it also faces competition from other companies working to develop novel drugs using technology that competes more directly with its own. Silexion is aware of multiple companies that are working in the field of RNAi therapeutics and or KRAS inhibition, including major pharmaceutical companies such as Bristol Myers Squibb/Mirati; Amgen; AstraZeneca; E.I. Lilly; Pfizer, Novartis International AG, Takeda Pharmaceutical Company Limited and, and biopharmaceutical/pharmaceutical companies such as Alnylam, Revolutions Medicines; Boehringer Ingelheim; Biomea Fusion Inc; Tekmira Pharmaceuticals Corporation, Arrowhead Research Corporation, Silence Therapeutics plc, RXi Pharmaceuticals Corporation, Quark Pharmaceuticals, Inc. and Marina Biotech, Inc.

 

Silexion also competes with companies working to develop antisense-based drugs. Like RNAi therapeutics, antisense drugs target mRNAs in order to suppress the activity of specific genes. Ionis Pharmaceuticals, Inc. is currently marketing an antisense drug and has several antisense product candidates in clinical trials, albeit none in the oncology area at this time.

 

In addition to competition with respect to RNAi and with respect to specific products, Silexion faces substantial competition to discover and develop safe and effective means to deliver RNAi based drugs to the relevant cell and tissue types. Safe and effective means to deliver RNAi based drugs and to the relevant cell and tissue types may be developed by its competitors, and its ability to successfully commercialize a competitive product would be adversely affected. In addition, substantial resources are being expended by third parties in the effort to discover and develop a safe and effective means of delivering RNAi based drugs and into the relevant cell and tissue types, both in academic laboratories and in the corporate sector. Some of its competitors have substantially greater resources than we do, and if its competitors are able to negotiate exclusive access to those delivery solutions developed by third parties, Silexion may be unable to successfully commercialize its product candidates. Also, Silexion competes with companies working to develop non RNAi based treatments for solid tumor cancers. For example, Novartis is working on a SHP2 inhibitor, and Boehringer Ingelheim and Bayer SOS1 inhibitors; Threshold Pharmaceuticals (Threshold) is working to develop therapies that target tumor hypoxia, a common characteristic of the tumor microenvironment. Even if we successfully develop its product candidates, and obtain approval for them, other non RNAi treatments may be preferred, and Silexion may not be successful in commercializing its product candidates

 

Also, Silexion competes with companies commercializing and/or working to develop drug delivery systems, including drug delivery systems for local (or regional) release. For example, various companies are working on nanoparticle technologies, although these products would not give the extended-release delivery of SIL-204B, and other companies on PLGA microparticles. In addition other companies such as SurModics, Inc. is a provider of drug delivery and surface modification technologies to the healthcare industry, including local delivery of drugs from drug eluting stents. Silexion compete with many companies commercializing and/or working to develop drug delivery systems for specific indications, for example for local ocular (in the eye) release of drugs, including degradable and non-degradable products.

 

Risks Related to Silexion’s Intellectual Property

 

If Silexion is unable to obtain and maintain effective patent rights for its product candidates or any future product candidates, it may not be able to compete effectively in its markets.

 

Silexion relies upon a combination of trade secret protection and confidentiality agreements to protect the intellectual property related to its technologies and product candidates. Silexion has only issued one Israeli patent, and two U.S. patents, covering the composition of matter of Silexion’s siRNAs and their use. Silexion’s success depends in large part on its ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries with respect to its proprietary technology and products.

 

Silexion has sought to protect its proprietary position by filing patent applications in the United States and in other countries, with respect to its novel technologies and products, which are important to its business. This process is expensive and time consuming, and Silexion may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection.

 

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that we own may fail to result in issued patents with claims that cover its product candidates in the United States or in other foreign countries. There is no assurance that all potentially relevant prior art relating to its patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover its product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, its patents and patent applications may not adequately protect its intellectual property, provide exclusivity for its product candidates, or prevent others from designing around its claims. Any of these outcomes could impair its ability to prevent competition from third parties, which may have an adverse impact on its business.

 

Silexion has filed several patent applications covering various aspects of its product candidates: PCT/IL2023/051276 filed on Dec. 14, 2023 Priority from: US Provisional Patent Applications; 63/387,504 filed on December 15, 2022; and 63/491,776 filed on March 23, 2023. Silexion cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any product candidates that Silexion may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced.

 

If Silexion cannot obtain and maintain effective patent rights for its product candidates, Silexion may not be able to compete effectively, and its business and results of operations would be harmed.

 

Silexion may not have sufficient patent terms to effectively protect its products and business.

 

In the pharmaceutical and biotechnology industries, the majority of an innovative product’s commercial value is realized during its market exclusivity period. In the United States and in some other countries, when market exclusivity expires and generic versions are approved and marketed or when biosimilars are introduced (even if only for a competing product), there are usually very substantial and rapid declines in a product’s revenues.

 

Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited.

 

While patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent exclusivity term, Silexion cannot provide any assurances that any such patent term extension will be obtained and, if so, for how long. In addition, upon issuance in the United States, any patent term can be adjusted based on certain delays caused by the applicant(s) or the USPTO. For example, a patent term can be reduced based on certain delays caused by the patent applicant during patent prosecution. If Silexion does not have sufficient patent terms or regulatory exclusivity to protect its products, its business and results of operations will be adversely affected. Furthermore, manufacturers of innovative products as well as generic drug manufacturers may be able to design their products around Silexion’s patents and compete with Silexion using the resulting alternative technology. Absent relevant patent protection for a product, once the exclusivity period expires, generic or alternative versions can be approved and marketed.

 

Generic and biosimilar product manufacturers as well as other groups seeking financial gain are also increasingly seeking to challenge patents before they expire, and Silexion could face earlier-than-expected competition for any products at any time. Patents covering Silexion’s key products may be subject to validity, enforceability and infringement challenges in patent litigations and post-grant review patent office proceedings. It may be possible for these parties to successfully challenge Silexion’s rights and launch their versions of its drugs prior to the expiration of its intellectual property rights.

 

In addition, both the U.S. Congress and the U.S. FDA have taken steps to promote the development and approval of generic drugs and biosimilar biologics, including by providing generic and biosimilar developers a private right of action to obtain sufficient quantities of drug samples from the reference product’s manufacturer in order to conduct testing necessary to obtain approval for generic or biosimilar products.

 

Further, in December 2023, the Biden Administration released a proposed framework that for the first time proposed that a drug’s price can be a factor in determining that the drug is not accessible to the public and therefore that the government could exercise “march-in rights” and license it to a third party to manufacture. A comment period on the proposal ran through February 6, 2024, and Silexion is not able to predict whether a final rule will be adopted along the lines proposed and, if adopted, whether the government would seek to exercise march-in rights for any of its products.

 

Patent law, policy or rule changes could increase the uncertainties and costs surrounding the prosecution of Silexion’s patent applications and the enforcement or defense of its issued patent.

 

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of Silexion’s patent or narrow the scope of its patent protection. The laws of foreign countries may not protect Silexion’s rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Silexion therefore cannot be certain that it or its licensors were the first to make the invention claimed in its owned and licensed patent or pending applications, or that it or its licensor were the first to file for patent protection of such inventions. Assuming the other requirements for patentability are met, in the United States prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted on September 16, 2011, the United States has moved to a first to file system. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of Silexion’s business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Silexion’s patent applications and the enforcement or defense of its issued patents, all of which could have a material adverse effect on its business and financial condition.

 

In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of its patents and pending patent applications. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. Furthermore, the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign countries have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. Silexion cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Those changes may materially affect Silexion’s patents or patent applications and its ability to obtain additional patent protection in the future.

 

The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act, or the Bayh-Dole Act. The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself.

 

If Silexion is unable to maintain effective proprietary rights for its product candidates or any future product candidates, Silexion may not be able to compete effectively in its markets.

 

In addition to the protection afforded by any patents that may be granted, Silexion relies on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of its product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. Silexion seeks to protect its proprietary technology and processes, in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors, and contractors. Silexion also seeks to preserve the integrity and confidentiality of its data and trade secrets by maintaining physical security of its premises and physical and electronic security of its information technology systems. While Silexion has confidence in these individuals, organizations and systems, agreements or security measures may be breached, and Silexion may not have adequate remedies for any breach. In addition, its trade secrets may otherwise become known or be independently discovered by competitors.

 

Although Silexion expects all of its employees and consultants to assign their inventions to it, and all of its employees, consultants, advisors, and any third parties who have access to its proprietary know-how, information, or technology to enter into confidentiality agreements, Silexion cannot provide any assurances that all such agreements have been duly executed or that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of its trade secrets could impair its competitive position and may have a material adverse effect on its business. Additionally, if the steps taken to maintain its trade secrets are deemed inadequate, Silexion may have insufficient recourse against third parties for misappropriating the trade secret.

 

Intellectual property rights of third parties could adversely affect Silexion’s ability to commercialize its product candidates, and it might be required to litigate or obtain licenses from third parties in order to develop or market its product candidate. Such litigation or licenses could be costly or not available on commercially reasonable terms.

 

Because the RNAi intellectual property landscape is still evolving, it is difficult to conclusively assess Silexion’s freedom to operate without infringing on third party rights. There are numerous companies that have pending patent applications and issued patents broadly directed to RNAi generally and to RNAi delivery technologies. Silexion’s competitive position may suffer if patents issued to third parties or other third party intellectual property rights cover its products or elements thereof, or its manufacture or uses relevant to its development plans. In such cases, Silexion may not be in a position to develop or commercialize products or its product candidate unless we successfully pursue litigation to nullify or invalidate the third party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. Silexion is also aware of pending patent applications, and there may be others of which Silexion is not aware, that if they result in issued patents, could be alleged to be infringed by its product candidates. If such an infringement claim should be brought and be successful, Silexion may be required to pay substantial damages, be forced to abandon its product candidates or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all. It is also possible that Silexion has failed to identify relevant third party patents or applications. For example, U.S. applications filed before November 29, 2000 and certain U.S. applications filed after that date that will not be filed outside the U.S. remain confidential until patents issue. Patent applications in the U.S. and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering Silexion’s product candidates or platform technology could have been filed by others without its knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover Silexion’s platform technologies, its product candidates or the use of its product candidates. Third party intellectual property right holders may also actively bring infringement claims against Silexion. Silexion cannot guarantee that it will be able to successfully settle or otherwise resolve such infringement claims. If Silexion is unable to successfully settle future claims on terms acceptable to it, Silexion may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing of its product candidates. If it fails in any such dispute, in addition to being forced to pay damages, Silexion may be temporarily or permanently prohibited from commercializing its product candidates that are held to be infringing. Silexion might, if possible, also be forced to redesign its product candidates so that it no longer infringes the third party intellectual property rights. Any of these events, even if Silexion were ultimately to prevail, could require Silexion to divert substantial financial and management resources that it would otherwise be able to devote to its business.

 

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

 

Silexion’s commercial success depends in part on its avoiding infringement of the patents and proprietary rights of third parties. There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Silexion is developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that Silexion’s product candidates may be subject to claims of infringement of the patent rights of third parties.

 

Third parties may assert that Silexion is employing its proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of its product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that Silexion’s product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of its technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of its product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block its ability to commercialize such product candidates unless it obtains a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable.

 

Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of its formulations, processes for manufacture, or methods of use, the holders of any such patents may be able to block Silexion’s ability to develop and commercialize the applicable product candidate unless it obtains a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.

 

Parties making claims against Silexion may obtain injunctive or other equitable relief, which could effectively block its ability to further develop and commercialize one or more of its product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Silexion’s business. In the event of a successful claim of infringement against it, Silexion may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign its infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

 

Silexion may not be successful in obtaining or maintaining necessary rights to its product candidates through acquisitions and in-licenses.

 

Because Silexion’s programs may require the use of proprietary rights held by third parties, the growth of its business will likely depend in part on its ability to acquire, in-license, or use these proprietary rights. In addition, Silexion’s product candidates may require specific formulations to work effectively and efficiently and the rights to these formulations may be held by others. Silexion may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that it identifies as necessary for its product candidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that Silexion may consider attractive. These established companies may have a competitive advantage over Silexion due to their size, cash resources, and greater clinical development and commercialization capabilities.

 

For example, Silexion sometimes collaborates with U.S. and foreign academic institutions to accelerate its preclinical research or development under written agreements with these institutions. Typically, these institutions provide Silexion with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, Silexion may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to it. If Silexion is unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking its ability to pursue its program.

 

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Silexion also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on its investment. If Silexion is unable to successfully obtain rights to required third-party intellectual property rights, Silexion may have to abandon development of that program and our business and financial condition could suffer.

 

Silexion may be involved in lawsuits to protect or enforce its current patent or future patents, which could be expensive, time consuming, and unsuccessful.

 

Competitors may infringe Silexion’s current patent, future patents or the patents of its licensors. If Silexion or a future licensing partner were to initiate legal proceedings against a third party to enforce a patent covering one of its product candidates, the defendant could counterclaim that the patent covering its product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

 

Interference proceedings provoked by third parties or brought by Silexion or declared by the USPTO may be necessary to determine the priority of inventions with respect to Silexion’s patent or patent applications or those of its licensors. An unfavorable outcome could require Silexion to cease using the related technology or to attempt to license rights to it from the prevailing party. Silexion’s business could be harmed if the prevailing party does not offer Silexion a license on commercially reasonable terms. Silexion’s defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract its management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on Silexion’s ability to raise the funds necessary to continue its clinical trials, continue its research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring its product candidates to market.

 

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

 

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

 

Silexion employs or engages as consultants or subcontractors individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including its competitors or potential competitors. Although Silexion tries to ensure that its employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for it, Silexion may be subject to claims that we or its employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of its employees’ former employers or other third parties. Litigation may be necessary to defend against these claims. If Silexion fails in defending any such claims, in addition to paying monetary damages, Silexion may lose valuable intellectual property rights or personnel, which could adversely impact its business. Even if Silexion is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

 

Silexion may be subject to claims challenging the inventorship of its current patent or future patents and other intellectual property.

 

Silexion may be subject to claims that former employees, collaborators or other third parties have an interest in or right to compensation with respect to its current patent, future patents or other intellectual property as an inventor or co-inventor. For example, Silexion may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing its product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or claiming the right to compensation. If it fails in defending any such claims, in addition to paying monetary damages, Silexion may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on its business. Even if Silexion is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. To the extent that its employees have not effectively waived the right to compensation with respect to inventions that they helped create, they may be able to assert claims for compensation with respect to its future revenue. As a result, Silexion may receive less revenue from future products if such claims are successful which in turn could impact our future profitability.

 

Silexion may not be able to protect its intellectual property rights throughout the world.

 

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and its intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

 

Competitors may use Silexion’s technologies in jurisdictions where Silexion has not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where Silexion has patent protection but where enforcement is not as strong as that in the United States. These products may compete with Silexin’s products and its current patent, future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

 

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for Silexion to stop the infringement of its patents or marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce its patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert Silexion’s efforts and attention from other aspects of its business, could put its current patent or future patents at risk of being invalidated or interpreted narrowly and its patent applications at risk of not issuing and could provoke third parties to assert claims against Silexion. Silexion may not prevail in any lawsuits that it initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, its efforts to enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Silexion develops or licenses.

 

Risks Related to New Silexion’s Human Resources

 

The loss of the services of our key personnel would negatively affect its business.

 

To successfully develop its drug candidates, we must be able to attract and retain highly skilled personnel, including consultants and employees. The retention of their services cannot be guaranteed. Our failure to retain or recruit such professionals might impair our performance and materially affect our technological and product development capabilities and our product marketing ability. Our future success depends to a large extent on the continued services of our senior management and key personnel, including in particular, Ilan Hadar, Dr. Mitchell Shirvan, Dr. Racheli Malka and Michal Yaron. Any loss of the services of members of our senior management or key employees would adversely affect our business. We do not currently maintain key-person insurance on the lives of any of our key personnel.

 

New Silexion may be unable to attract, develop and retain additional employees required for its development and future success.

 

New Silexion’s success is largely dependent on the performance of its management team and certain key employees and its continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand, and New Silexion may incur significant costs to attract and retain them. The inability to attract suitably qualified persons when needed, could prevent New Silexion from executing on its business plan and strategy, and New Silexion may be unable to find adequate replacements on a timely basis, or at all.

 

Risks Related to Silexion’s Operations

 

Silexion’s business and operations, or those of its CROs or third parties, may suffer in the event of computer system failures, cyberattacks or deficiencies in its cybersecurity, which could materially affect its results.

 

Silexion receives, generates and stores significant and increasing volumes of sensitive information, such as health information, insurance information and other potentially personally identifiable information. Silexion faces a number of risks relative to protecting the computer systems Silexion relies on and this critical information, including loss of access risk, inappropriate use or disclosure, inappropriate modification and the risk of its being unable to adequately monitor, audit and modify its controls over its critical information. This risk extends to the computer systems and information of any collaboration partners, medical institutions, clinical investigators, CROs, contract laboratories, or other third parties involved in its business.

 

Despite the implementation of security measures, Silexion’s information technology systems, as well as those of CROs or other third parties with which Silexion has relationships, are vulnerable to attack and damage from computer viruses and malware (e.g., ransomware), unauthorized access, natural and manmade disasters, terrorism, war and telecommunication and electrical failures, malfeasance by external or internal parties, and human error (e.g., social engineering, phishing). Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. Furthermore, because the technologies used to obtain unauthorized access to, or to sabotage or disrupt, systems change frequently and often are not recognized until launched against a target, Silexion may be unable to anticipate these techniques or implement adequate preventative measures. Silexion may also experience security breaches that may remain undetected for an extended period. Silexion may not be able to anticipate all types of security threats, and even if identified, Silexion may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. Silexion may also face increased cybersecurity risks due to its reliance on internet technology and the number of its and its service providers’ employees who are (and may continue to be) working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. The White House, SEC and other regulators have also increased their focus on companies’ cybersecurity vulnerabilities and risks.

 

Silexion, its CROs and certain of its service providers are from time to time, subject to cyberattacks and security incidents. While Silexion has not to its knowledge experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in its or its critical third parties’ operations, it could result in delays and/or material disruptions of its research and development programs, its operations and ultimately, its financial results. For example, the loss of trial data from completed, ongoing or planned trials could result in delays in its regulatory approval efforts and significantly increase its costs to recover or reproduce the data. Likewise, Silexion relies on third parties for the manufacture of its product candidates and to conduct clinical trials, and similar events relating to their computer systems could also adversely impact its business. Further, due to the current political uncertainty involving Hamas in Gaza, Russia and Ukraine, there is an increased likelihood that the tensions could result in cyberattacks or cybersecurity incidents that could either directly or indirectly impact its or its critical third parties’ operations. To the extent that any disruption or security breach were to result in a loss of or damage to data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability due to delays in the development and commercialization of its product candidates or other business activities and/or due to reputational harm, litigation, regulatory investigations and enforcement, fines and penalties, or increased costs of compliance and system remediation.

 

Silexion’s existing general liability and cyber liability insurance policies may not cover, or may cover only a portion of, any potential claims related to security breaches to which Silexion is exposed or may not be adequate to indemnify us for all or any portion of liabilities that may be imposed. Silexion also cannot be certain that its existing insurance coverage will continue to be available on acceptable terms or in amounts sufficient to cover the potentially significant losses that may result from a security incident or breach or that the insurer will not deny coverage of any future claim. If the information technology systems of its CROs or other service providers become subject to disruptions or security breaches, Silexion may have insufficient recitsse against such third parties and Silexion may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.

 

If product liability lawsuits are brought against it, Silexion may incur substantial liabilities and may be required to limit commercialization of any approved products.

 

Silexion faces an inherent risk of product liability as a result of the clinical testing of product candidates and will face an even greater risk if we commercialize any products. For example, Silexion may be sued if any product candidate Silexion develops causes or is perceived to cause injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If Silexion cannot successfully defend itself against product liability claims, it may incur substantial liabilities or be required to limit commercialization of any approved products. Even successful defense would require significant financial and management resources.

 

Regardless of the merits or eventual outcome, liability claims may result in:

 

 

 

 

 

 

 

 

 

 

 

Silexion’s inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products Silexion develops, alone or with collaboration partners.

 

Insurance coverage is increasingly expensive. Silexion may not be able to maintain insurance at a reasonable cost or in an amount adequate to satisfy any liability that may arise, if at all. Silexion’s insurance policy contains various exclusions, and Silexion may be subject to a product liability claim for which Silexion has no coverage. Silexion may have to pay any amounts awarded by a court or negotiated in a settlement that exceed its coverage limitations or that are not covered by its insurance, and Silexion may not have, or be able to obtain, sufficient capital to pay such amounts. Even if its agreements with any current or future collaborator entitle Silexion to indemnification against losses, such indemnification is limited and may not be available or adequate should any claim arise.

 

Silexion may not be able to successfully identify and execute strategic alliances or other relationships with third parties or to successfully manage the impacts of acquisitions, dispositions or relationships on its operations.

 

Silexion currently has, and may expand the scope of, and may in the future enter into, strategic alliances with third parties that it believes will complement or augment its existing business. Silexion’s ability to complete further such strategic alliances is dependent upon, and may be limited by, among other things, the availability of suitable candidates and capital. In addition, strategic alliances could present unforeseen integration obstacles or costs, may not enhance its business and may involve risks that could adversely affect us, including the investment of significant amounts of management time that may be diverted from operations in order to pursue and complete such transactions or maintain such strategic alliances. Future strategic alliances could result in the incurrence of debt, costs and contingent liabilities, and there can be no assurance that future strategic alliances will achieve, or that Silexion’s existing strategic alliances will continue to achieve, the expected benefits to its business or that it will be able to consummate future strategic alliances on satisfactory terms, or at all.

 

Although Silexion does not currently plan to engage in other material strategic transactions, such as acquisitions, it may from time to time consider such transactions. Material strategic transactions involve a number of risks, including:

 

 

 

 

 

 

 

A strategic transaction may result in a significant change in the nature of its business, operations and strategy, and Silexion may encounter unforeseen obstacles or costs in implementing a strategic transaction or integrating any acquired business into its operations.

 

Risks Relating to Silexion’s Operations in Israel and China

 

Conditions in the Middle East and in Israel may harm our operations.

 

Our executive offices and research and development facilities are located in Israel. Most of our officers and directors are residents of Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, and between Israel and the Hamas (an Islamist terrorist and political group in the Gaza Strip) and Hezbollah (an Islamist terrorist and political group in Lebanon).

 

 

 

 

Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect its operations and results of operations. In recent years, the hostilities involved missile strikes against civilian targets in various parts of Israel, including areas in which its employees and some of its consultants are located, and negatively affected business conditions in Israel.

 

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.

 

Finally, political conditions within Israel may affect its operations. Israel has held five general elections between 2019 and 2022, and prior to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. To date, these initiatives have been substantially put on hold. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects.

 

It may be difficult to enforce a U.S. judgment against New Silexion, its officers or its directors or to assert U.S. securities law claims in Israel.

 

Service of process upon New Silexion and upon its directors and officers, who reside outside the U.S., may be difficult to obtain within the U.S. In addition, because substantially all of New Silexion’s assets and most of its directors and officers are located outside the U.S., any judgment obtained in the U.S. against New Silexion or any of its directors and officers may not be collectible within the U.S. There is a doubt as to the enforceability of civil liabilities under the Securities Act or the Exchange Act pursuant to original actions instituted in Israel. Subject to particular time limitations and provided certain conditions are met, executory judgments of a U.S. court for monetary damages in civil matters may be enforced by an Israeli court.

 

Under applicable U.S. and Israeli law, Silexion may not be able to enforce covenants not to compete and therefore may be unable to prevent its competitors from benefiting from the expertise of some of its former employees. In addition, employees may be entitled to seek compensation for their inventions irrespective of their agreements with Silexion, which in turn could impact its future profitability.

 

Silexion generally enters into non-competition agreements with its employees and key consultants. These agreements prohibit its employees and key consultants, if they cease working for Silexion, from competing directly with it or working for its competitors or clients for a limited period of time. Silexion may be unable to enforce these agreements under the laws of the jurisdictions in which its employees work and it may be difficult for it to restrict its competitors from benefitting from the expertise its former employees or consultants developed while working for Silexion. For example, Israeli courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the secrecy of a company’s confidential commercial information or the protection of its intellectual property. If it cannot demonstrate that such interests will be harmed, Silexion may be unable to prevent its competitors from benefiting from the expertise of its former employees or consultants and its ability to remain competitive may be diminished.

 

In addition, Chapter 8 of the Israeli Patents Law, 5727-1967, or the Patents Law, deals with inventions made in the course of an employee’s service and during his or her term of employment, whether or not the invention is patentable, or service inventions. Section 134 of the Patents Law, sets forth that if there is no agreement which explicitly determines whether the employee is entitled to compensation for the service inventions and the extent and terms of such compensation, such determination will be made by the Compensation and Rewards Committee, a statutory committee of the Israeli Patents Office. As a result, it is unclear if, and to what extent, Silexion’s research and development employees may be able to claim compensation with respect to Silexion’s future revenue. As a result, Silexion may receive less revenue from future products if such claims are successful, which in turn could impact our future profitability.

 

Governmental control of currency conversion in China may limit New Silexion’s ability to utilize its cash balance effectively and affect the value of its investment.

 

New Silexion may be reliant on dividend payments, equity investments, or other forms of cash infusion from PRC subsidiaries to fund any cash and financing requirements it may have. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange (“SAFE”) (the foreign exchange management administrative body of the People’s Bank of China) by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of PRC subsidiaries in China may be used to pay dividends to parent companies. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, New Silexion would need to obtain SAFE approval to use cash held at PRC subsidiaries to pay outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents New Silexion from obtaining sufficient foreign currencies to satisfy its foreign currency demands, it may not be able to pay dividends in foreign currencies to its shareholders.

 

PRC regulations relating to dividends may restrict the ability of New Silexion’s PRC subsidiaries to make payments to New Silexion, which may have an adverse effect on New Silexion’s ability to conduct its business.

 

Under PRC laws and regulations, New Silexion’s PRC subsidiaries (which are each “wholly foreign-owned enterprises” incorporated in Mainland China) are only permitted to pay dividends out of their respective accumulated profits, as determined in accordance with PRC accounting standards and regulations. In addition, prior to distribution of any dividends, New Silexion’s subsidiaries in China are each required to compensate their past losses with after-tax profits each year, if any, and then set aside at least 10% of their after-tax profits each year to fund a statutory reserve until such reserve reaches 50% of the subsidiary’s total registered capital. Additionally, if New Silexion’s PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to New Silexion.

 

Any limitation on the ability of New Silexion’s PRC subsidiaries to pay dividends or make other distributions to New Silexion could adversely limit New Silexion’s ability to grow, make investments or acquisitions that could be beneficial to its business, pay dividends, or otherwise fund and conduct its business.

 

Risks Relating to this Offering

The ordinary shares (including ordinary shares underlying warrants) being offered under this prospectus by the Selling Securityholders represent a substantial percentage of our outstanding ordinary shares, and the sale of such shares, or the perception that such sales may occur, could cause the price of our ordinary shares to decrease.

 

Following the expiration of the applicable lock-up period, however, and as registration statements are available for use, the market price of the New Silexion ordinary shares could decline if the holders of restricted or locked up shares sell them or are perceived by the market as intending to sell them. As such, sales of a substantial number of New Silexion ordinary shares in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell such shares, could reduce the market price of the New Silexion ordinary shares.

Public securityholders who purchased their New Silexion securities at higher prices than the Selling Securityholders may experience lower rates of return (if any) than the Selling Securityholders, due to differences in purchase prices and the potential trading price at which they may be able to sell.

Depending on market liquidity at the time, resales of New Silexion ordinary shares and New Silexion warrants by the Selling Securityholders may cause the trading price of our ordinary shares and warrants to decrease, and any such decrease could be substantial. Additionally, the sale of a substantial number of New Silexion ordinary shares or New Silexion warrants by the Selling Securityholders, or the perception that such sales may take place, could increase the volatility of the market price of the New Silexion ordinary shares and warrants and depress the trading price of our ordinary shares and warrants and thereby make it more difficult for us to raise capital by selling equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

 

Investors who buy shares at different times from the Selling Securityholders will likely pay different prices.

 

The Selling Securityholders will have discretion, subject to market demand, to vary the timing, prices, and numbers of ordinary shares and warrants sold by them pursuant to this prospectus. If and when they do elect to sell ordinary shares and/or warrants, the Selling Securityholders may sell all, some or none of such shares or warrants at any time or from time to time at their discretion and at different prices. As a result, investors who purchase our securities from Selling Securityholders in this offering at different times will likely pay different prices for those securities, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value of the securities they purchase from the Selling Securityholders as a result of future sales made by Selling Securityholders to other investors at prices lower than the prices such earlier investors paid for their securities from the Selling Securityholders.

There can be no assurance that the New Silexion warrants will ever be in the money at the time they become exercisable or otherwise, and they may expire worthless.

Risks Relating to Owning New Silexion Ordinary Shares

 

The price of New Silexion ordinary shares and New Silexion warrants may be volatile, and the value of New Silexion ordinary shares and New Silexion warrants may decline.

We cannot predict the prices at which New Silexion ordinary shares or New Silexion warrants will trade. The price of New Silexion ordinary shares and New Silexion warrants may not bear any relation to any established criteria of the value of our business and prospects. In addition, the trading price of New Silexion ordinary shares and New Silexion warrants is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in New Silexion ordinary shares and New Silexion warrants as you might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the trading price of New Silexion ordinary shares and New Silexion warrants include the following:

●

actual or anticipated fluctuations in our financial condition or results of operations;

●

other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to those events.

Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our ordinary shares. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

A substantial number of our ordinary shares may be issued pursuant to the conversion terms of the Company’s convertible notes (consisting of the A&R Sponsor Promissory Note and the EarlyBird Convertible Note), which could cause the price of the ordinary shares to decline.

 

Amounts outstanding under two convertible promissory notes that we issued in connection with the consummation of the Business Combination— consisting of the A&R Sponsor Promissory Note in an amount of $3,433,000 issued to the Moringa Sponsor and the EarlyBird Convertible Note, due December 31, 2025, in an amount of $1.25 million to be paid to EarlyBird (together, the “Convertible Notes”) are convertible into our ordinary shares, at conversion prices that relate to the market price of our ordinary shares and/or the price at which we raise capital from equity financings. The issuance of any of these shares will dilute our other equity holders, which could cause the price of our ordinary shares to decline.

 

The requirement that we repay the EarlyBird Convertible Note could adversely affect our business plan, liquidity, financial condition, and results of operations.

 

If not converted, we are required to repay, in cash, principal that is outstanding under the EarlyBird Convertible Note, as well as interest thereon, in connection with equity financings by us, or upon the maturity of the note on December 31, 2025. That obligation could have important consequences on our business. In particular, it could:

 

 

 

 

No assurances can be given that we will be successful in making the required payments under the EarlyBird Convertible Note. If we are unable to make the required cash payments, there could be a default under the EarlyBird Convertible Note. In such event, or if a default otherwise occurs under the EarlyBird Convertible Note:

 

 

Because we have no current plans to pay cash dividends on our ordinary shares for the foreseeable future, you may not receive any return on investment unless you sell New Silexion ordinary shares for a price greater than that which you paid for it.

 

We will likely retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of the Company’s board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, funds lawfully available therefor and other factors that the Company’s board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our ordinary shares unless you sell our ordinary shares for a price greater than that which you paid for it.

 

The Company qualifies as an “emerging growth company” as well as a “smaller reporting company” within the meaning of the Securities Act, and if the Company takes advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, it could make the Company’s securities less attractive to investors and may make it more difficult to compare the Company’s performance to the performance of other public companies.

 

The Company qualifies as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, the Company will be eligible for and intends to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements. The Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of the Company’s ordinary shares that are held by non-affiliates is equal to or exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first issuance of our ordinary shares in the Business Combination. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as the Company is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to opt out of such extended transition period and, therefore, the Company may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Investors may find our ordinary shares less attractive because we rely on these exemptions, which may result in a less active trading market for our ordinary shares and its price may be more volatile.

 

Additionally, the Company qualifies as a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K promulgated by the SEC. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. The Company will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the Company’s ordinary shares held by non-affiliates is equal to or exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) its annual revenues is equal to or exceeds $100 million during such completed fiscal year and the market value of the Company’s ordinary shares held by non-affiliates is equal to or exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent the Company takes advantage of such reduced disclosure obligations, it may also make comparison of its financial statements with other public companies difficult or impossible.

 

Risks Related to U.S. Federal Income Taxation

 

The PFIC status of New Silexion could result in adverse U.S. federal income tax consequences to U.S. Holders.

 

In general, a non-U.S. corporation is a PFIC for U.S. federal income tax purposes for any taxable year in which, after applying certain look-through rules, either (i) 50% or more of the average value of its assets (generally determined on the basis of a weighted quarterly average) consists of assets that produce, or are held for the production of, passive income, or (ii) 75% or more of its gross income consists of passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. Cash and cash equivalents generally are passive assets. The value of goodwill will generally be treated as an active or passive asset based on the nature of the income produced in the activity to which the goodwill is attributable. For purposes of the PFIC rules, a non-U.S. corporation that owns, directly or indirectly, at least 25% by value of the stock of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation.

The annual PFIC income and asset tests in respect of New Silexion will be applied based on the assets and activities of the combined business. Based on the composition of New Silexion’s income and assets, it cannot be determined whether New Silexion will be classified as a PFIC for its taxable year that includes the date of the Business Combination or in any future taxable year. Further, changes in the composition of New Silexion’s income or composition of New Silexion’s assets may cause New Silexion to be or become a PFIC for the current or subsequent taxable years. Whether New Silexion is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty.

 

If New Silexion is treated as a PFIC for any taxable year, or portion thereof, that is included in the holding period of a U.S. Holder, such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. For a further discussion, see “Material U.S. Federal Income Tax Considerations — PFIC Rules.” U.S. Holders are strongly encouraged to consult their own advisors regarding the potential application of these rules to the ownership of New Silexion ordinary shares and/or New Silexion public warrants.

 

If a U.S. person is treated as owning at least 10% of the shares of New Silexion, such person may be subject to adverse U.S. federal income tax consequences.

 

If a U.S. Holder is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of the shares of New Silexion, such holder may be treated as a “United States shareholder” with respect to each of New Silexion and its direct and indirect subsidiaries (the “New Silexion Group”) that is a “controlled foreign corporation,” (a “CFC”), for U.S. federal income tax purposes. A non-U.S. corporation is considered a CFC if more than 50% of (1) the total combined voting power of all classes of stock of such corporation entitled to vote, or (2) the total value of the stock of such corporation is owned, or is considered as owned by applying certain constructive ownership rules, by United States shareholders on any day during the taxable year of such non-U.S. corporation. If the New Silexion Group includes one or more non-U.S. subsidiaries, certain of New Silexion’s non-U.S. subsidiaries could be treated as CFCs regardless of whether New Silexion is treated as a CFC.

 

If New Silexion or any of its non-U.S. subsidiaries is a CFC, 10% “United States shareholders” will be subject to adverse income inclusion and reporting requirements with respect to such CFC. No assurance can be provided that New Silexion will assist holders in determining whether it or any of its non-U.S. subsidiaries is treated as a CFC or whether any holder is treated as a United States shareholder with respect to any of such CFCs, or furnish to any holder information that may be necessary to comply with reporting and tax payment obligations with respect to such CFCs.

 

General Risks

 

The Company may be subject to securities litigation, which is expensive and could divert management attention, including securities class action and derivative lawsuits which could result in substantial costs.

 

The Company’s share price may be volatile and, in the past, companies that have experienced volatility in the market price of their stock or shares have been subject to securities litigation, including class action litigation. The Company may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on the Company’s business, financial condition, and results of operations. Any adverse determination in litigation could also subject the Company to significant liabilities.

 

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger or business combination agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition. We cannot predict whether any such lawsuits will be filed.

 

TRANSACTIONS RELATED TO OFFERING UNDER THIS PROSPECTUS

The New Silexion securities to be offered by the Selling Securityholders under this prospectus include, in large part, New Silexion ordinary shares and New Silexion ordinary warrants that were issued pursuant to a number of transactions completed in connection with the Closing of the Business Combination. We describe those transactions below:

Issuance of EarlyBird Convertible Note as Part of Settlement of Amounts Due Under Marketing Agreement with EarlyBird

 

Prior to the Closing, Moringa reached agreement with EarlyBird on the reduction, to $1.6 million, in the aggregate, of the fee payable to EarlyBird under the Business Combination Marketing Agreement entered into by Moringa with EarlyBird at the time of Moringa’s initial public offering (the “Marketing Agreement”). Pursuant to the final invoice provided by EarlyBird under the Marketing Agreement at the Closing, Moringa paid $350,000 of cash to EarlyBird from Moringa’s trust account holding the proceeds from Moringa’s IPO and its concurrent private placement (the “Trust Account”) at the Closing, and New Silexion issued to EarlyBird the EarlyBird Convertible Note, which is due on December 31, 2025, in an amount of $1,250,000 to be paid by New Silexion to EarlyBird in cash and/or via conversion of outstanding amounts into New Silexion ordinary shares.

 

The EarlyBird Convertible Note bears interest at a rate of 6% per annum and matures on December 31, 2025 (the “Maturity Date”). If not repaid on or prior to the Maturity Date or such earlier date as to which the repayment obligation may be accelerated under the note, or not converted in accordance with the terms thereof, the rate of interest applicable to the unpaid principal amount would be adjusted to (15%) per annum. New Silexion is required to make mandatory prepayments on the note (which shall first be applied to accrued interest and then to principal) from time to time in amounts equal to ten percent (10%) of the gross proceeds received by New Silexion from any equity financings consummated by it prior to the Maturity Date. New Silexion is entitled to voluntarily prepay any additional part of, or all of, the principal and accrued interest, in one or more installments without penalty, prior to the Maturity Date.

 

EarlyBird, in turn, may elect, at its sole discretion, at any time on or prior to the Maturity Date, to elect to convert all or part of the then outstanding principal and/or accrued interest under the EarlyBird Convertible Note into New Silexion ordinary shares, at a per share conversion price equal to 95% of the volume weighted average price of a New Silexion ordinary share for the five trading days immediately prior to the date of New Silexion’s receipt of a conversion notice, provided, however, New Silexion is not required to issue, and EarlyBird may not elect to convert the principal and/or accrued interest into an aggregate number of New Silexion ordinary shares that would exceed the maximum number of ordinary shares permitted by Section 5635 of the Nasdaq Listing Rules to be issued without the approval of New Silexion’s shareholders, unless such approval is obtained.

 

Under the EarlyBird Convertible Note, New Silexion agreed to promptly file a registration statement with the SEC covering the resale of the ordinary shares that may be issued upon conversion of the note and use its best efforts to have such registration statement declared effective as soon thereafter as possible. In the event such registration statement is not declared effective by the SEC within 180 days from the date hereof, then an event of default shall have occurred under the note, triggering all amounts under the note to become due and payable immediately and automatically. The registration statement of which this prospectus forms a part is being filed, in part, to comply with that registration requirement.

 

The foregoing summary provides only a brief description and does not purport to be complete. The summary is qualified in its entirety by the full text of the final invoice provided by EarlyBird under the Marketing Agreement at the Closing, and the EarlyBird Convertible Note, which serve as Exhibits 10.1.1 and 10.1.2 to the registration statement of which this prospectus forms a part, and which are incorporated herein by reference.

 

PIPE Financing

 

In connection with, and immediately prior to the Closing of, the Business Combination, Moringa raised $2.0 million via a private investment in public entity financing (the “PIPE Financing”), whereby Moringa sold to Greenstar, LP, an affiliate of the Moringa Sponsor (the “PIPE Investor”), 200,000 newly issued Moringa ordinary shares at a price of $10.00 per share, pursuant to a subscription agreement, dated as of August 15, 2024, by and among Moringa, New Silexion and the PIPE Investor (the “PIPE Agreement”). Those 200,000 shares automatically converted upon the Closing of the Business Combination into an equivalent number of New Silexion ordinary shares (the “PIPE Shares”). The PIPE Investor is entitled to customary registration rights in respect of the PIPE Shares under the PIPE Agreement, pursuant to which New Silexion has agreed that, within 60 days after the date of the Closing, it will file with the SEC a registration statement registering the resale of the PIPE Shares by the PIPE Investor, and use its commercially reasonable efforts to have that registration statement declared effective by 180 days after the Closing (or 90 days after the Closing if the SEC does not review that filing).

 

The funds raised from the PIPE Financing, together with remaining funds in Moringa’s Trust Account after payments to redeeming public shareholders, were used for financing support for Moringa and New Silexion, as well as for payment to service providers to whom outstanding amounts were owed by Moringa, including parties that had provided financial advisory services and capital markets advisory services to Moringa during the period leading up to the Closing.

 

The foregoing summary provides only a brief description of the PIPE Agreement and does not purport to be complete. The summary is qualified in its entirety by the full text of the PIPE Agreement, which serves as Exhibit 10.2 to the registration statement of which this prospectus forms a part, and which is incorporated herein by reference.

Amended and Restated Registration Rights and Lock-Up Agreement

 

Prior to the Closing under the Business Combination Agreement, on August 14, 2024, New Silexion, Moringa, Moringa Sponsor, the distributees of Sponsor Investment Shares, certain of Silexion’s pre-Business Combination shareholders and the PIPE Investor entered into (and EarlyBird will be bound by) the A&R Registration Rights and Lock-Up Agreement, which became effective as of the Closing. Under the agreement, New Silexion has assumed Moringa’s existing obligations under Moringa’s prior registration rights agreement (entered into in connection with its IPO) and has granted registration rights to the Moringa Sponsor, the distributees of Sponsor Investment Shares, certain of Silexion’s pre-Business Combination shareholders, the PIPE Investor and EarlyBird with respect to certain securities of New Silexion.

 

Under the A&R Registration Rights and Lock-Up Agreement, New Silexion has agreed to provide the holders party thereto customary demand and shelf registration rights (subject to certain minimum size offerings) and piggy-back rights on primary and secondary offerings, subject to customary cut-back provisions.

 

Under the lock-up provisions of the agreement, lock-up periods will apply following the Closing to securities of New Silexion that are held by the holders who are party to the agreement, subject to permitted transfers to certain categories of “Permitted Transferees”. Specifically, those lock-up periods will apply to the following categories of securities for the following periods of time post-Closing:

 

The foregoing summary provides only a brief description of the A&R Registration Rights and Lock-Up Agreement and does not purport to be complete. The summary is qualified in its entirety by the full text of the A&R Registration Rights and Lock-Up Agreement, which serves as Exhibit 10.4 to the registration statement of which this prospectus forms a part, and which is incorporated herein by reference.

 

Amended and Restated Sponsor Promissory Note

 

Effective as of the Closing, New Silexion issued to the Sponsor, and Sponsor accepted, in amendment and restatement, and replacement, in their entirety, of all existing promissory notes issued by Moringa to the Sponsor from the IPO until the Closing (and as to which the obligations of Moringa were assigned to New Silexion upon the Closing), the A&R Sponsor Promissory Note, in an amount of $3,433,000, which reflected the total amount owed by Moringa to the Sponsor through the Closing. The maturity date of the A&R Sponsor Promissory Note is the 30-month anniversary of the Closing (i.e., February 15, 2027). Amounts outstanding under the A&R Sponsor Promissory Note may be repaid (unless otherwise decided by New Silexion) only by way of conversion into New Silexion ordinary shares (“Note Shares”) in accordance with the terms set forth in the form of A&R Sponsor Promissory Note. New Silexion and the Sponsor may also convert amounts outstanding under the A&R Sponsor Promissory Note at the price per share at which New Silexion conducts an equity financing following the Closing, subject to a minimum conversion amount of $100,000, in an amount of Note Shares constituting up to thirty percent (30%) of the number of New Silexion ordinary shares issued and sold by New Silexion in such equity financing. The Sponsor may also elect to convert amounts of principal outstanding under the note into New Silexion ordinary shares at any time following the 24-month anniversary of the Closing, subject to a minimum conversion of $10,000, at a price per share equal to the volume weighted average price of the New Silexion ordinary shares on the principal market on which they are traded during the 20 consecutive trading days prior to the conversion date.

 

The foregoing summary provides only a brief description of the A&R Sponsor Promissory Note and does not purport to be complete. The summary is qualified in its entirety by the full text of the A&R Sponsor Promissory Note, which serves as Exhibit 10.5 to the registration statement of which this prospectus forms a part, and which is incorporated herein by reference.

MARKET AND INDUSTRY DATA

 

Information contained in this prospectus concerning the market and the industries in which New Silexion competes, including its market position, general expectations of market opportunities and market size, is based on information from various third-party sources, publicly available information, various industry publications, internal data and estimates, and assumptions made by New Silexion based on such sources. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which New Silexion operates and New Silexion management’s understanding of industry conditions. This information and any estimates provided herein involve numerous assumptions and limitations, and you are cautioned not to give undue weight to such information. Third-party sources generally state that the information contained in such sources has been obtained from sources believed to be reliable. Although we believe that such information is reliable, there can be no assurance as to the accuracy or completeness of such information. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. Although we are responsible for all of the disclosure contained in this prospectus and we believe the third-party market position, general expectations of market opportunity and market size data included in this prospectus are reliable, we have not independently verified any third-party information and each publication speaks as of its original publication date (and not as of the date of this prospectus). In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein.

  

USE OF PROCEEDS

 

We expect to use the net proceeds received from the exercise of the warrants, if any, for general corporate purposes, including working capital. Accordingly, we retain broad discretion over the use of the proceeds from the exercise of the warrants. The precise amount and timing of the application of such proceeds will depend upon our liquidity needs and the availability and cost of other capital over which we have little or no control. As of the date hereof, we cannot specify with certainty the particular uses for the proceeds, if any, from the exercise of the warrants See “Plan of Distribution” elsewhere in this prospectus for more information.

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DETERMINATION OF OFFERING PRICE

 

We cannot currently determine the price or prices at which ordinary shares or warrants may be sold by the Selling Securityholders under this prospectus.

 

MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY

 

Market Information

 

 

Dividend Policy

 

We have never declared or paid any dividends on ordinary shares. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Any decision to declare and pay dividends in the future will depend on, among other things, the consent of our lender(s), our results of operations, cash requirements, financial condition, contractual restrictions, funds lawfully available therefor and other factors that our board of directors may deem relevant.

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The registrant, Silexion Therapeutics Corp (formerly known as Biomotion Sciences), a Cayman Islands exempted company (“New Silexion”) is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the business combination and related transactions (collectively, the “Transactions”) involving Moringa Acquisition Corp (“Moringa”) and Silexion Therapeutics Ltd. (“Silexion”). The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Moringa and Silexion, as adjusted to give effect to the Transactions. Capitalized terms included in this section containing unaudited pro forma condensed combined financial information and not otherwise defined in this section have the same meaning as is provided elsewhere in this prospectus.

 

Parties to the Transaction

 

Moringa is a Cayman Islands exempted company that was originally a blank check company that was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses. As of June 30, 2024 and December 31, 2023, there was approximately $5.924 million and $5.698 million, respectively, held in Moringa’s trust account, which was held for the benefit of Moringa’s public shareholders (the “Trust Account”). The Trust Account was liquidated upon the completion of the Transactions, as described below.

 

Silexion, an Israeli company that was known previously as Silenseed Ltd., is a pioneering biopharma developmental-stage company dedicated to the development of innovative treatments for pancreatic cancer.

 

New Silexion is a newly formed entity that was formed for the purpose of effecting the Transactions, and now serves as a publicly-traded holding company of its subsidiaries — including Moringa and Silexion — after the Closing of the Transactions.

 

Description of the Transactions

 

On August 15, 2024, the parties completed the previously-reported Transactions pursuant to that certain amended and restated business combination agreement, dated April 3, 3024 (the “Business Combination Agreement”) by and among New Silexion (then known as Biomotion Sciences), August M.S. Ltd., an Israeli company and a wholly owned subsidiary of New Silexion (“Merger Sub 1”), Moringa Acquisition Merger Sub Corp, a Cayman Islands exempted company and a wholly owned subsidiary of New Silexion (“Merger Sub 2”), Moringa and Silexion.

 

Pursuant to the Transactions, Merger Sub 2 merged with and into Moringa, with Moringa continuing as the surviving company of such merger and a wholly-owned subsidiary of New Silexion (the “SPAC Merger”), and Merger Sub 1 merged with and into Silexion, with Silexion continuing as the surviving company of such merger and a wholly-owned subsidiary of New Silexion (the “Acquisition Merger”). Upon the effectiveness of the SPAC Merger, each outstanding Moringa Class A ordinary share and the sole outstanding Moringa Class B ordinary share converted into an ordinary share of New Silexion on a one-for-one basis. Each outstanding warrant to purchase one Moringa Class A ordinary share converted into a warrant to purchase one New Silexion ordinary share, at the same exercise price. Upon the effectiveness of the Acquisition Merger, each outstanding ordinary share and preferred share of Silexion converted into such number of ordinary shares of New Silexion as is equal to the quotient obtained by dividing (x) the quotient obtained by dividing (1) $62,500,000 by (2) the number of fully diluted Silexion equity securities, by (y) $10.00 (the “Silexion Equity Exchange Ratio”). Each outstanding Silexion warrant and Silexion option to purchase one Silexion share, and Silexion restricted share unit (RSU) that may be potentially settled for one Silexion share, became exercisable for, or became subject to settlement for (as applicable), such number of New Silexion ordinary shares as are equal to the Silexion Equity Exchange Ratio. The exercise price per New Silexion ordinary share of each such converted Silexion option and Silexion warrant were adjusted based on dividing the existing per share exercise price by the Silexion Equity Exchange Ratio. The terms of vesting, exercise and/or settlement, as applicable, of such converted options, warrants and RSUs remain the same following such conversion, except that the vesting of each Silexion option accelerated immediately prior to the Acquisition Merger, such that the New Silexion option into which it has been converted was fully vested, and all Silexion warrants were exercised (on a cashless basis) immediately prior to the Acquisition Merger.

 

Immediately prior to the Closing, seven directors were appointed to New Silexion’s board of directors, of whom five were designated by Silexion and two were designated by Moringa’s sponsor (Moringa Sponsor, LP, a Cayman Islands exempted limited partnership and/or its wholly-owned subsidiary, Moringa Sponsor US L.P., a Delaware limited partnership) (collectively, the “Moringa Sponsor”).

 

In connection with the Closing, the ordinary shares and warrants of New Silexion were approved for listing on the Nasdaq Global Market and began trading under the symbols “SLXN” and “SLXNW”, respectively.

 

The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP. Under this method of accounting, Silexion was treated as the accounting acquirer and Moringa was treated as the “acquired” company for financial reporting purposes. Silexion was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

 

 

 

 

Under the reverse recapitalization accounting method, the Business Combination is deemed to be the equivalent of a capital transaction in which Silexion has issued shares for the net assets of Moringa. The net assets of Moringa are stated at fair value, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are of Silexion.

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2024 combines the historical condensed balance sheet of Moringa as of June 30, 2024 with the historical balance sheet of Silexion as of June 30, 2024, with such adjustments as are necessary to properly understand New Silexion’s financial position and results of operations upon consummation of the Business Combination and related transactions — all in accordance with Article 11 of SEC Regulation S-X, as amended by the final rule, SEC Release No. 33-10786 “Amendments to Financial Disclosures About Acquired and Disposed Businesses” (collectively, the “Pro Forma Adjustments”) — giving effect to the Business Combination as if it had been consummated as of June 30, 2024.

 

The following unaudited pro forma condensed combined statements of operations for the six-months period ended June 30, 2024 and year ended December 31, 2023 combine the historical condensed statement of operations of Moringa for the six-months period ended June 30, 2024 and for the year ended December 31, 2023 with the historical statements of operations of Silexion for the six-months period ended June 30, 2024 and for the year ended December 31, 2023, subject to the Pro Forma Adjustments, giving effect to the Business Combination as if it had been consummated on January 1, 2023, the beginning of the earliest period presented.

 

Unaudited Condensed Combined Pro Forma Financial Statements

 

The unaudited pro forma condensed combined financial statements have been derived from and should be read in conjunction with:

 

 

 

 

 

 

 

 

 

The unaudited pro forma condensed combined financial information is for illustrative purposes only and is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions included in the Pro Forma Adjustments taken place on the dates indicated, nor are they indicative of the future results of operations or financial position of New Silexion. The Pro Forma Adjustments are based on currently available information and certain assumptions and estimates that New Silexion believes are reasonable under the circumstances. Management performed a comprehensive review of the accounting policies between the two entities. Management is not aware of any significant accounting policy differences and has therefore not made any adjustments to the pro forma condensed combined financial information related to any potential differences.

 

The unaudited condensed combined pro forma financial information is qualified in its entirety by reference to, and should be read together with, Silexion’s and Moringa’s audited financial statements and related notes included in this prospectus, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in each of this prospectus and the Moringa Q2 Form 10-Q.

 

SILEXION THERAPEUTICS CORP
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2024
(in thousands, except share and per share amounts)