A. History and Development of the Company Our History Our legal and commercial name is Scinai Immunotherapeutics Ltd. We are a company limited by shares organized under the laws of Israel. We were incorporated in Israel in 2003 as a privately held company. In February 2007, we completed an initial public offering of our ordinary shares on the Tel Aviv Stock Exchange (TASE), and we voluntarily delisted from the TASE in January 2018. In May 2015 we completed an initial public offering of ADSs and ADSs warrants (which have since expired) on the Nasdaq Capital Market. On September 6, 2023, we announced the change of our corporate name to Scinai Immunotherapeutics Ltd. from BiondVax Pharmaceuticals Ltd. to reflect better our fresh start and new direction. Our principal executive offices are located at Jerusalem BioPark, 2nd floor, Hadassah Ein Kerem Campus, Jerusalem, Israel, and our telephone number is +972-8-930-2529. Our website is www.scinai.com. The information we post on our website may be deemed material. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. However, the information contained on, or accessible through, our website is not incorporated by reference herein and shall not be considered part of this prospectus. Our agent for service of process in the United States is Puglisi & Associates, whose address is 850 Library Avenue, Suite 204, Newark, Delaware, and whose telephone number is (302) 738-6680. Our capital expenditures for twelve months ended December 31, 2025 and December 31, 2024 amounted to approximately $24 and $12 thousand, respectively. These expenditures were primarily for factory leasehold improvements, computers and laboratory equipment. B. Business Overview We are a biopharmaceutical company with two complementary business units: (i) Scinai R&D, focused on the development of innovative therapeutics in inflammation and immunology, and (ii) our contract development and manufacturing organization (CDMO) business, which operates through our subsidiary, Scinai Biopharma Services Ltd. Our R&D activities are centered around two pillars: ● PC111 Program – In 2025, we entered into an option agreement, as amended on September 11, 2025 and February 28, 2026, to acquire Pincell S.r.l., an Italian biotechnology company and the owner of PC111, a fully human monoclonal antibody targeting pathways involved in keratinocyte cell death and inflammation, with potential applications in severe dermatological conditions. ● NanoAbs Platform – We are developing a pipeline of novel therapeutics based on NanoAbs (VHH antibody fragments), which possess unique physicochemical properties and are suitable for advanced mono- and multi-specific antibody formats. Our NanoAbs activities are conducted in collaboration with the Max Planck Society (“MPG”), including the Max Planck Institute for Multidisciplinary Sciences (“MPI-MS”), and the University Medical Center Göttingen (“UMG”) in Germany. We continue to evaluate and in-license or acquire additional therapeutic assets aligned with our focus areas. In addition, we are currently evaluating the development strategy for our IL-17 program in light of scientific, technical and market considerations, including the evolving competitive landscape for IL-17-targeting therapies. As part of this process, we are assessing alternative approaches and prioritization of our R&D programs. Our CDMO business provides integrated development and manufacturing services to small and emerging biotech companies, supporting clients from early-stage development through clinical-stage production. Following our acquisition of Recipharm Israel Ltd. on February 17, 2026 (subsequently renamed Scinai Biopharma Services Ltd.), we are in the process of consolidating our CDMO activities under this subsidiary, including the planned transfer of certain CDMO-related assets, operations and employees pursuant to Section 104 of the Israeli Income Tax Ordinance, subject to applicable approvals and implementation. Under our license agreements with MPG and UMG, certain development milestones apply, including the submission of an Investigational New Drug (IND) application within specified timelines. We have requested extensions to the applicable IND submission deadlines in order to support modifications to our development strategy. There can be no assurance that such extensions will be granted or on what terms. In addition, we are currently evaluating the development strategy for our IL-17 program in light of scientific, technical and market considerations, including the evolving competitive landscape for IL-17-targeting therapies. As part of this process, we are assessing alternative approaches and prioritization of our R&D programs. 38 Development of I&I biological therapeutic products NanoAbs Since inception, we have conducted eight clinical trials, including a Phase 3 trial of our former lead product candidate, M-001, a universal influenza vaccine, which enrolled approximately 12,400 participants across seven countries. Following the Phase 3 results in the fourth quarter of 2020, which did not meet the primary clinical endpoints, the Company implemented a strategic turnaround. This process included raising additional capital, strengthening management (including the appointment of a new CEO), entering into a research collaboration agreement, and in-licensing new intellectual property from leading academic institutions. Since then, we have been developing a pipeline of diversified product candidates based on nanosized antibody fragments (NanoAbs), as well as, more recently, additional molecules that we may acquire, such as the antibody PC111. NanoAbs are nanosized antibody fragments derived from camelid animals, also referred to as VHH antibodies or Nanobodies. “Nanobody” is a registered trademark of ABLYNX N.V., a wholly owned subsidiary of Sanofi. We have no affiliation with, and are not endorsed by, Sanofi. In parallel, we established our CDMO business unit to leverage our laboratory and manufacturing capabilities at our cGMP facility in Jerusalem. As part of the turnaround, on December 22, 2021, we entered into a definitive exclusive, worldwide license agreement with the Max Planck Society (“MPG”), the parent organization of the Max Planck Institute for Multidisciplinary Sciences (“MPI”), and the University Medical Center Göttingen (“UMG”), for the development and commercialization of NanoAb-based therapeutics targeting COVID-19. The agreement included upfront payments, development and commercial milestones, and royalties. In addition, we entered into a related research collaboration agreement to support development activities conducted by MPI and UMG. This collaboration included monthly payments and was intended to continue until the earlier of two years or the initiation of first-in-human clinical trials. Following our decision to pursue partnering opportunities for the COVID-19 program, we agreed with MPG and UMG to terminate this research collaboration. On March 23, 2022, we entered into a five-year Research Collaboration Agreement (the “RCA”) with MPG and UMG, covering the discovery, selection and characterization of NanoAbs directed against up to nine molecular targets across multiple indications, including plaque psoriasis, psoriatic arthritis, asthma and wet macular degeneration. These targets are clinically validated for antibody-based intervention, which we believe reduces discovery risk and may shorten development timelines. We believe that NanoAbs offer advantages such as strong binding affinity, thermal stability, and potential flexibility in routes of administration. Each NanoAb candidate is intended to represent a novel molecule, supported by patent filings, while collectively forming a pipeline based on a shared discovery, development and manufacturing platform. Under the RCA, we hold an exclusive option to enter into pre-negotiated worldwide license agreements for the development and commercialization of each NanoAb candidate. On June 5, 2023, as part of this collaboration, we entered into an exclusive worldwide license agreement to develop and commercialize NanoAbs targeting Interleukin-17 (IL-17) across multiple potential indications, initially focusing on psoriasis and psoriatic arthritis. In June 2023, we also announced the cessation of active development of our COVID-19 NanoAb program, due to evolving viral variants, challenges in achieving broad-spectrum activity, and reduced market and funding interest. Any further development of this program would be subject to securing a strategic partner. We are currently advancing our IL-17 NanoAb program with two product profiles in development, subject to ongoing evaluation of development strategy and positioning within the competitive landscape for IL-17-targeting therapies. The first is an intradermal IL-17A/F NanoAb designed for localized treatment of mild-to-moderate psoriasis, targeting patients with limited but clinically meaningful disease. This approach is intended to enable localized delivery with minimal systemic exposure and is supported by translational data. The second program is a bispecific IL-17A/F NanoAb combined with an additional target (VHH-Fc format), designed as a long-acting systemic therapy for moderate-to-severe inflammatory and immunology indications, including psoriasis, psoriatic arthritis, hidradenitis suppurativa (HS) and other related conditions. This approach is intended to leverage a multi-specific antibody design to enhance biological activity and extend half-life. We submitted two separate applications under the European Funds for a Modern Economy (FENG) program, one for each program, on March 30 and March 31, 2026, each seeking approximately €12 million in grant funding to support drug development activities towards IND submission for the bispecific program and for IND enabling studies plus Phase 1/2a clinical trials for the intradermal program. Award decisions for both applications are expected in July 2026. There can be no assurance that either application will be approved or on what terms. In addition, we have filed new patent applications for a NanoAb targeting IL-13 and, under the RCA, we hold an exclusive option to enter into a worldwide license agreement for its development and commercialization under pre-agreed financial terms. We have also filed patent applications for four additional NanoAbs arising from our collaboration with MPG and UMG and are evaluating the exercise of our exclusive licensing options for these candidates. Furthermore, we expect to apply for funding under the European Funds for a Modern Economy (FENG) program to support the development of a multi-specific antibody targeting TH2-related diseases, including asthma, atopic dermatitis and COPD. 39 PC111 On March 27, 2025, we announced that we had entered into a binding option agreement for the acquisition of the Italian biotech company Pincell S.r.l., the owner of PC111, a fully human monoclonal antibody in development for the treatment of pemphigus, Stevens-Johnson Syndrome (SJS) and toxic epidermal necrolysis (TEN). PC111 targets soluble Fas ligand (FasL) and is designed to inhibit apoptosis of keratinocytes, a pathway implicated in severe skin blistering disorders. Pursuant to the terms of the option agreement, we have the right to exercise, at our sole discretion, a full transfer of Pincell’s shares, subject to the satisfaction of certain closing conditions. These conditions include receipt of Golden Power regulatory clearance by the Italian government and the fulfillment of specified funding requirements, consisting of either obtaining a grant award under the European Funds for a Modern Economy (FENG) program for our wholly owned Polish subsidiary or securing $3 million to fund the development of PC111. On June 5, 2025, we announced that the Italian government had granted Golden Power regulatory clearance. The remaining condition relates to the funding requirement. On September 18, 2025, we were notified that our initial application for a FENG grant was not selected for funding, and a subsequent appeal was rejected. We have submitted a revised application on March 30, 2026, incorporating feedback received during the prior review process. A decision on the revised application is expected in July 2026. If we do not satisfy the funding condition by August 31, 2026, we will not be able to exercise the option. On September 11, 2025 and February 28, 2026, the parties entered into amendments to the option agreement extending the deadline for fulfillment of the option conditions to August 31, 2026 and the exercise of the option to September 30, 2026. If the option is exercised and the acquisition is completed, Pincell’s shareholders will be eligible for development milestone payments, sublicense-related payments based on the stage of development at the time of such sublicense, and royalties on future net sales of PC111 in the low single-digit range. In addition, Pincell’s management team is expected to join a wholly owned subsidiary of the Company in Poland, and Pincell’s founder, Prof. Carlo Pincelli, is expected to join the Company’s Scientific Advisory Board. Under the terms of the option agreement, if we or our affiliates do not file an Investigational New Drug (IND) application for PC111 with the FDA, or a comparable regulatory submission in another jurisdiction, by December 31, 2028, each seller will have the right to repurchase the shares it sold at the lower of (i) fair market value and (ii) the aggregate amount funded by us or our affiliates into Pincell (subject to a minimum equal to the nominal value of the shares). PC111 is a fully human monoclonal antibody that binds to soluble Fas ligand (FasL), thereby blocking activation of apoptosis in keratinocytes. The Fas/FasL pathway has been implicated in multiple severe dermatological conditions. Unlike certain currently available therapies for inflammatory conditions, PC111 is not designed to broadly suppress the immune system. Pincell has developed a proprietary humanized FasL mouse model and has conducted in vitro, ex vivo and in vivo studies supporting the role of soluble FasL as a therapeutic target. In preclinical models of pemphigus, PC111 has been shown to inhibit blister formation without the use of steroids. In addition, preclinical data suggest that PC111 may modulate disease progression in SJS/TEN, including improvement of early-stage manifestations such as conjunctivitis and edema. Pemphigus, SJS and TEN are rare but severe dermatological conditions associated with significant morbidity and mortality. Pemphigus is a chronic autoimmune blistering disease with an incidence of approximately 0.5 to 3.0 cases per 100,000 people annually and a prevalence of 15 to 30 per 100,000 people. The disease often requires long-term immunosuppressive treatment, has a substantial impact on quality of life and may be life-threatening without treatment. SJS and TEN are severe mucocutaneous reactions, typically triggered by medications, with an incidence of approximately one to six cases per million people annually for SJS and 0.4 to 1.2 cases per million for TEN. These conditions are characterized by widespread epidermal cell death and skin detachment. SJS has a mortality rate of up to 10%, while TEN has a mortality rate of 30–50%. Current treatments for pemphigus include corticosteroids, immunosuppressive agents and biologics such as rituximab. There are no approved therapies for SJS/TEN, and treatment is generally supportive, with the use of immunomodulatory agents in certain cases. These conditions represent areas of significant unmet medical need. 40 CDMO Services On September 6, 2023, we announced the launch of a new business unit, Scinai Bioservices (now renamed Scinai Biopharma Services), focused on providing contract development and manufacturing services for early-stage biopharmaceutical programs. Our CDMO activities are primarily focused on analytical method development, process development, and cGMP manufacturing of clinical-stage materials, including aseptic processing and biologic drug substance development, with an emphasis on supporting early-stage biotechnology companies. Since inception, our CDMO business has secured multiple customer engagements, including both research and GMP manufacturing projects, and has developed a growing pipeline of repeat and new clients, primarily from Israel and the United States. We continue to expand our commercial activities, with additional contracts under negotiation and increasing utilization of our development and manufacturing capabilities. As an early-stage business, the growth of our CDMO operations depends on our ability to secure additional customers, which is uncertain and may require additional funding to support operations during the scale-up phase. Our CDMO services are supported by advanced laboratory infrastructure and a cGMP pilot manufacturing facility in Jerusalem, designed to meet EMA and FDA regulatory requirements. Our capabilities include upstream and downstream process development, process optimization and scale-up, cGMP manufacturing, fill and finish operations, analytical method development and GMP quality control, all supported by a comprehensive quality management system. Our manufacturing infrastructure incorporates modular, single-use technologies that provide operational flexibility, reduce changeover time and associated costs, and support efficient clinical manufacturing. In December 2024, we established a U.S.-based subsidiary, Scinai Bioservices Inc., to support business development and client engagement in the U.S. market. On February 17, 2026, we acquired 100% of the shares of Recipharm Israel Ltd. (subsequently renamed Scinai Biopharma Services Ltd.), which operates a cGMP manufacturing site in Yavne, Israel, and entered into a long-term strategic commercial collaboration with Recipharm. The Yavne site provides early chemistry development and small-scale manufacturing of active pharmaceutical ingredients (APIs), expanding our capabilities beyond biologics to include small-molecule development. We currently operate our CDMO activities across two sites: our Jerusalem facility, comprising approximately 1,850 square meters (approximately 20,000 square feet), focused on early-stage development, analytics and biologics manufacturing, and the Yavne site, comprising approximately 660 square meters (approximately 7,100 square feet), which complements our capabilities with small-molecule development and manufacturing. Together, these facilities support an integrated CDMO platform spanning early development through clinical-stage manufacturing. The acquisition of the Yavne site and the collaboration with Recipharm expand our manufacturing footprint, enhance our technical capabilities, and broaden our service offering to include both biologics and small-molecule programs. This expanded platform is intended to support a wider range of customer needs and increase our ability to attract and retain clients. Strategic Commercial Collaboration with Recipharm In connection with the acquisition, we and Recipharm entered into a Commercial Collaboration Agreement intended to support customer projects across multiple stages of the development lifecycle. Under the collaboration framework: ● We act as a preferred partner within the Recipharm network for early-stage development and clinical manufacturing projects. ● Recipharm acts as one of our preferred partners for late-stage clinical and commercial manufacturing, subject to capacity and technical suitability 41 ● We have access to Recipharm’s global manufacturing network under predefined commercial terms, enabling us to support client programs that extend beyond our internal capabilities, including those of the Yavne site ● The parties may refer client projects to one another and share economics as programs transition between development stages The collaboration is designed to enable clients that begin development programs with us at the early stage to transition, or “graduate,” to Recipharm for late-stage clinical and commercial manufacturing, while allowing us to remain involved in the program and participate in its downstream economics. As a result of the acquisition and the collaboration, our CDMO platform is intended to support a broader range of modalities, including recombinant proteins, antibodies, peptides, small molecules and oligonucleotides, through a combination of internal capabilities and access to Recipharm’s network. Our Competitive Strengths We believe that our business is supported by a combination of strategic, scientific and operational capabilities that are intended to enable us to advance our pipeline while managing development risk and capital constraints. ● Dual business model combining R&D and CDMO operations: We operate both a drug development business and a contract development and manufacturing (CDMO) platform. Our CDMO activities provide operational expertise in chemistry, manufacturing and controls (CMC), generate external revenues, and support our internal development programs. We believe this model provides a degree of financial and operational flexibility not typically available to early-stage biotechnology companies. ● Capital-efficient development supported by non-dilutive funding: We have an established focus on advancing our programs through non-dilutive funding sources, including grant applications, which we believe supports capital-efficient development. This approach is intended to enable progression of our pipeline through key value inflection points while reducing reliance on equity financing and managing dilution. ● Flagship development asset with potential regulatory and development advantages: We have access to externally sourced development assets with defined biological rationale and potential regulatory advantages, such as PC111, which has received orphan drug designation for pemphigus from the European Medicines Agency. We believe that such designation, together with the targeted indication and clinical development strategy, may provide opportunities for expedited regulatory pathways and potentially earlier commercialization relative to traditional development timelines, subject to regulatory approval and successful clinical development. These characteristics may enhance the attractiveness of such programs for potential partners. ● Platform-based pipeline with multiple development options: Our NanoAb platform, developed through our collaboration with the Max Planck Society (MPG) and the University Medical Center Göttingen (UMG), provides access to multiple potential product candidates targeting clinically validated pathways. This approach is intended to support pipeline diversification and provide optionality across different therapeutic formats and indications. ● Selective platform validation strategy: We are pursuing a focused approach to platform validation by prioritizing programs that we believe offer a more efficient path to proof-of-concept and partnering opportunities. This includes evaluating different product formats and development approaches in light of scientific, technical and commercial considerations. ● Manufacturing and CMC capabilities supporting development and partnering: We operate cGMP manufacturing facilities in Jerusalem and Yavne, supporting biologics and small-molecule development and clinical manufacturing. These capabilities enable us to advance internal programs and support external clients and may enhance our credibility in business development and partnership discussions. ● Strategic collaboration with Recipharm enabling lifecycle support: Through our collaboration with Recipharm, we are able to support customer programs from early-stage development through late-stage clinical and commercial manufacturing. This model is intended to allow programs initiated with us to transition to Recipharm as they advance, while enabling us to participate in downstream economics. ● Experienced leadership with industry and operational expertise: Our management team and Board have experience across biotechnology, pharmaceuticals, manufacturing and corporate strategy, including prior roles at Novartis, GSK and Bristol Myers Squibb, as well as involvement in the founding and development of multiple biotechnology companies. ● Business development and partnership orientation: We are actively pursuing partnerships and strategic transactions as part of our development model. We believe our combination of pipeline assets, platform technologies and manufacturing capabilities may support our ability to enter into such collaborations, although there can be no assurance that such efforts will be successful. 42 Our Business Strategy Our strategy is to build a diversified and capital-efficient biotechnology business by combining selective pipeline development, non-dilutive funding, and an integrated CDMO platform. We aim to advance our programs through key value inflection points while managing development risk and capital requirements. R&D Business Strategy Our R&D strategy focuses on a combination of internally developed platform-based programs and externally sourced assets, with an emphasis on capital efficiency, risk management and optionality. ● Advancing selected lead assets with defined development pathways: We prioritize assets that we believe have a clear biological rationale, potential regulatory advantages and the ability to reach meaningful clinical milestones within a reasonable timeframe. This includes externally sourced programs such as PC111, as well as selected internal programs. ● Capital-efficient development through non-dilutive funding: We seek to advance our programs using non-dilutive funding sources, including grants, to support preclinical and early clinical development. This approach is intended to enable progression of multiple programs while reducing reliance on equity financing. ● Platform-based pipeline with selective prioritization: Through our collaboration with the Max Planck Society (MPG) and the University Medical Center Göttingen (UMG), we have access to a pipeline of NanoAb-based candidates targeting clinically validated pathways. We selectively prioritize programs based on scientific, technical and commercial considerations, including development timelines, funding availability and partnering potential. ● Focus on clinically validated targets and differentiated product profiles for NanoAb programs: For product candidates originating from our collaboration with the Max Planck Society (MPG) and the University Medical Center Göttingen (UMG), our development approach emphasizes targets that have already been clinically validated by existing therapies, which may reduce scientific risk and support more efficient development. We seek to develop differentiated product candidates through alternative formats, delivery approaches or positioning within existing therapeutic landscapes, while taking into account the competitive environment and evolving standards of care in each indication. ● Selective advancement of externally sourced assets with differentiated regulatory and clinical pathways: In parallel, we pursue externally sourced programs, such as PC111, that may address areas of high unmet medical need and offer potential regulatory advantages, including orphan drug designation. We believe such programs may provide opportunities for accelerated development pathways and differentiated clinical positioning, although their development involves distinct scientific and regulatory considerations. ● Flexible asset sourcing strategy: In addition to internally generated programs, we actively evaluate opportunities to acquire or in-license therapeutic candidates, including assets that may offer a more advanced starting point or a defined development pathway. ● Partnership-oriented development model: We intend to pursue strategic collaborations, out-licensing transactions and other partnership opportunities to support the development and commercialization of our programs. The timing and structure of such transactions will depend on the maturity of each program and market conditions 43 CDMO Business Strategy Our CDMO strategy is to develop an integrated development and manufacturing platform that supports both external clients and our internal pipeline. ● Focus on early-stage development and clinical manufacturing: We target early-stage biotechnology companies requiring analytical development, process development and cGMP manufacturing for clinical programs, where we believe there is demand for flexible and responsive service providers. ● Leveraging CDMO operations to support R&D and reduce costs: Our CDMO activities enable us to utilize our manufacturing infrastructure, generate revenues, and support our internal programs, thereby helping to absorb fixed costs and reduce overall cash burn. ● Expanding capabilities across modalities and manufacturing technologies: Through our facilities in Jerusalem and Yavne, we support both biologics and small-molecule development, enabling us to broaden our service offering and address a wider range of client needs. ● Integration with Recipharm for lifecycle support: Through our collaboration with Recipharm, we are able to support programs from early-stage development through late-stage clinical and commercial manufacturing. This model is intended to allow client programs to transition from our platform to Recipharm as they advance, while enabling us to participate in downstream economics. ● Scaling commercial activity and client base: We aim to expand our CDMO business through business development activities, repeat engagements and new client acquisition, although there can be no assurance that such efforts will result in sustained growth. Research and Development Our research and development activities focus on advancing a pipeline of antibody-based therapeutic candidates, including both internally developed NanoAb programs and externally sourced assets. PC111 Program PC111 is a fully human monoclonal antibody targeting soluble Fas ligand (FasL), which is implicated in keratinocyte apoptosis in severe dermatological conditions, including pemphigus, Stevens-Johnson Syndrome (SJS) and toxic epidermal necrolysis (TEN). Preclinical studies conducted by Pincell have demonstrated activity of PC111 across in vitro, ex vivo and in vivo models. These studies include evidence of inhibition of keratinocyte apoptosis and reduction in blister formation in pemphigus models, as well as effects on disease-relevant markers in SJS/TEN models. In addition, pharmacokinetic and pharmacodynamic data have been generated in vivo. Development of PC111 is subject to the exercise of our option to acquire Pincell, as described above. If the option is exercised, we intend to advance PC111 through further preclinical development and into clinical studies, subject to the availability of funding and other factors. 44 IL-17 NanoAb Program We are developing NanoAb candidates targeting IL-17A and IL-17F for the treatment of inflammatory conditions, including psoriasis. Preclinical studies, including ex vivo human skin models and in vivo studies, have demonstrated anti-inflammatory effects and reduction of disease-associated markers. In June 2024, we received scientific advice from the Paul Ehrlich Institute (PEI) supporting our proposed development pathway toward a Phase 1/2a clinical trial. We continue to evaluate development approaches for this program, including formulation and delivery strategies, as well as its positioning within the broader therapeutic landscape for IL-17-targeting treatments. Further advancement of the program, including initiation of clinical studies, is expected to depend on securing funding, completion of required preclinical activities and ongoing strategic prioritization decisions. Additional NanoAb Programs Through our collaboration with the Max Planck Society (MPG) and the University Medical Center Göttingen (UMG), additional NanoAb candidates have been identified, including targets such as IL-13 and TSLP for inflammatory diseases. We hold exclusive options to license these candidates under pre-agreed terms. We are evaluating these programs based on scientific, technical and commercial considerations, as well as available resources. COVID-19 NanoAb Program We have suspended active development of our COVID-19 NanoAb program due to changes in market conditions and are not currently pursuing further development unless a suitable partner is identified. Competition Generally, our competitors include large, fully integrated pharmaceutical companies as well as companies and academic research institutes in various developmental stages attempting to develop (i) products for the prevention and treatment of disease targets that are the subject of our broader agreement with MPG and UMG, such as psoriasis, atopic dermatitis, asthma and AMD and (ii) the indications targeted by PC111. In addition, we face competition from large, fully integrated pharmaceutical companies that are already commercially selling products for the treatment of therapeutic indications that we aim to address. In the case of PC111, the current first-line treatment for Pemphigus, is systemic corticosteroids, and the current second-line treatment is Rituximab, sold under the brand name Rituxan®. In the case of Steven Johnson’s Syndrome (SJS) and Toxic Epidermal Necrolysis (TEN), there is no approved treatment aside from hospitalization in an ICU or a burn unit with supportive care. To our knowledge, there are no molecules or targeted therapy currently in development for SJS/TEN. Marketing and Sales We do not currently have any pharmaceutical product marketing or sales capabilities. We intend to license to, or enter into strategic alliances, with third parties in the pharmaceutical business, which are equipped to market and/or sell any products that we acquire or develop in the future. We may seek to establish such capabilities internally in the future, if and when appropriate, in addition to any such licensing arrangements or strategic alliances. For our CDMO business, we pursue targeted marketing activities, including online advertisements, direct outreach campaigns and participation in major pharmaceutical conferences at which we market our CDMO services and meet with prospective clients. Manufacturing We built, own, and operate a biologics manufacturing facility in Jerusalem, which is capable of manufacturing GMP-compliant product candidates for use in either clinical trials or for small to medium scale commercial supply. We have manufactured the COVID-19 and IL-17 NanoAbs for our preclinical in vivo studies in our facility, and although we currently anticipate using our facility for future manufacturing of product candidates, we may also rely on a third party CMO for commercial manufacturing. As part of our acquisition of Scinai Biopharma from Recipharm, we also acquired Scinai Biopharma’s manufacturing capabilities at a facility in Yavne, Israel. Scinai Biopharma operates a cGMP manufacturing site, providing early chemistry development and small-scale manufacturing of active pharmaceutical ingredients (APIs) for biopharmaceutical customers’ clinical programs. 45 Properties Facilities Leasing Agreements We conduct our operations across two primary facilities in Israel, located in Jerusalem and Yavne, which together support our integrated contract development and manufacturing (CDMO) platform. We lease approximately 1,850 square meters (approximately 20,000 square feet) in the Jerusalem BioPark, located on the Ein Kerem Hadassah campus, adjacent to Hadassah University Hospital and the Hebrew University Medical School. The lease expires on December 31, 2032. The Jerusalem facility is focused on biologics development and clinical-stage manufacturing and includes laboratories, offices, and cGMP manufacturing suites. Capabilities at this site include upstream and downstream process development, process optimization and scale-up, cGMP manufacturing and limited aseptic fill and finish operations for clinical supply. The facility is supported by infrastructure designed to accommodate a range of biologics manufacturing processes and equipment and features modular, single-use systems that provide operational flexibility and enable adaptation to multiple manufacturing platforms, including recombinant proteins based products. Our wholly owned subsidiary, Scinai Biopharma Services Ltd., leases approximately 660 square meters (approximately 7,100 square feet) in Yavne, Israel. The lease expires in August 2030. The Yavne facility is a cGMP development site focused on early-stage chemistry development and small-scale manufacturing of active pharmaceutical ingredients (APIs) for preclinical and clinical studies. It includes laboratories, offices, production rooms, analytical laboratories and a Class D cleanroom supporting cGMP operations. Capabilities at the site include medicinal chemistry, custom synthesis, route scouting and optimization, scale-up development, analytical method development and validation, stability studies, and small-batch cGMP manufacturing of APIs for toxicology and Phase 1/2 clinical trials. The facility operates in compliance with cGMP standards and supports customers across multiple countries. Together, the Jerusalem and Yavne facilities provide complementary capabilities across biologics and small-molecule development, enabling us to support customer programs from early-stage development through clinical manufacturing. We believe that these facilities are adequate for our current needs and for the foreseeable future. We may seek to renew the leases upon expiration, subject to market conditions and agreement with the respective landlords, and may expand our facilities if required. Fixed Assets Our fixed assets are comprised of factory leasehold improvements, laboratory equipment, furniture, software and improvements in leased property. As of December 31, 2025, these assets relate to our Jerusalem facility. The accumulated depreciation as stated in our financial statements is deducted from the gross value of fixed assets. Our fixed assets, net of accumulated depreciation, were $7.8 million as of December 31, 2025 and $9.2 million as of December 31, 2024. Laboratories and Manufacturing Infrastructure Our facilities in Jerusalem and Yavne include laboratories and manufacturing infrastructure supporting our research, development and CDMO activities. These facilities are equipped to support analytical testing, process development, and cGMP manufacturing for biologics and small-molecule programs. Our Jerusalem site includes analytical and process development laboratories and cGMP manufacturing suites supporting upstream and downstream processing, formulation and aseptic fill and finish for clinical supply. Our Yavne site includes laboratories and production areas supporting medicinal chemistry, analytical services and small-scale cGMP manufacturing of active pharmaceutical ingredients (APIs) for preclinical and clinical programs. Both sites are supported by quality systems, controlled storage areas and infrastructure designed to meet applicable regulatory requirements. 46 Research and other Grants Finance Contract with European Investment Bank and Restructuring We borrowed 24 million Euro under a Finance Contract with the EIB, to finance a portion of the cost of developing our previous leading drug candidate M-001and building our GMP biologics manufacturing facility. As part of the Finance Contract, we also entered into a security agreement (the “Security Agreement”), whereby we created a first ranking floating charge in favor of EIB over substantially all of our assets (other than certain licensed intellectual property related to our former M-001 program). On August 21, 2024, we announced that we had closed the Restructuring Agreement with the EIB, which included an amendment to the Finance Contract (the transactions contemplated by the Restructuring Agreement called the “EIB Restructuring Transaction”). In connection with the EIB Restructuring Transaction, an amount equal to approximately EUR 26.6 million (equal to approximately $27.9 million), including interest accrued to date, owed by us to the EIB under the Finance Contract was converted into 1,000 of our preferred shares, no par value per share. Following such conversion, the total outstanding amount owed by us to the EIB is EUR 250,000 (equal to approximately $260,000). The outstanding amount has a maturity date of December 31, 2031, is not prepayable in advance, and no interest accrues or is due and payable on such amount. The terms of the Preferred Shares are set forth in our Amended and Restated Articles of Association approved by our shareholders at the Extraordinary Meeting of Shareholders held August 12, 2024. See “Prospectus Summary – Recent Developments” above. Israeli Innovation Authority Since 2006, we have received approximately $6.2 million in grants to the Israeli Innovation Authority (IIA), formerly known as the Office of the Chief Scientist. The grants were for research and development of M-001. In light of the Phase 3 clinical trial results, we do not currently expect any future revenues from M-001 and therefore do not currently expect to make any royalty payments to the IIA. The Company is subject to various other restrictions pursuant to the grants, including limitations on transferring IP developed with grant funds. In light of the Company’s new strategy, we do not expect these restrictions to be material to our ongoing operations. In November 2023, we announced that the IIA had approved a non-dilutive grant, with effective date being September 1, 2023, covering 66% of the costs of an NIS 3.5 million (approximately $1.0 million) project aimed at ramping up our new CDMO business unit. The grant is neither subject to repayment nor tied to royalty payments of any kind. The grant covers approved expenses required for further developing Scinai’s CDMO service for the 12 months from grant. IIA informed us that in August 2024 Scinai can apply for a grant extension covering 66% of additional NIS 1.5 million. In October 2025, we announced that we were awarded a grant of NIS 809,000 (about $246,000) from the IIA, which will fund approximately 66% of a NIS 1.23 million ($373,000) project aimed at acquiring and installing an advanced fill-and-finish system for sterile manufacturing. In February 2026, we announced that following an additional review by the IIA, the Company's project to advance a robotic aseptic fill & finish platform has been approved for expanded support. We are also exploring potential research grants from other potential governmental sources. Government Regulation United States FDA Regulations In the United States, the FDA regulates pharmaceuticals and biologics under the Food, Drug & Cosmetics Act, and the Public Health Service Act, and their implementing regulations. These products are also subject to other federal, state, and local statutes and regulations, including federal and state consumer protection laws, laws protecting the privacy of health-related information, and laws prohibiting unfair and deceptive acts and trade practices. The process required by the FDA before a new drug product may be marketed in the United States generally involves the following: completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s Good Laboratory Practice, or GLP, regulations; submission to the FDA of an IND application, which must allow become effective before human clinical trials may begin and must be updated annually; performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposed indication; and submission to the FDA of a “new drug application (“NDA”) for a drug, and Biologic License Application (BLA) for biological product, after completion of all pivotal clinical trials. 47 An IND application, while technically a request for a federal approval to transport or distribute a drug across state lines, is, in effect, a request for authorization from the FDA to administer an investigational drug product to humans. In the future, we may consider submitting an IND application to the FDA for initiating clinical trials or, if required, to conduct a bridging clinical study to allow licensure of a Company product candidate in the U.S. Clinical trials involve the administration of the investigational drug to human subjects under the supervision of qualified investigators in accordance with current Good Clinical Practices, or GCP, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approval must also be obtained from each clinical trial site’s IRB, before the trials may be initiated, and the IRB must monitor the trial until completed. There are also requirements governing the reporting of ongoing clinical trials and clinical trial results to public registries. Generally, three phases of clinical trials are conducted prior to receiving regulatory marketing approval: Phase 1 clinical trials are normally conducted in small groups of healthy volunteers to assess safety and find the potential dosing range. After a safe dose has been established, the drug is administered to small populations of eligible participants (Phase 2) to look for initial signs of efficacy in treating the targeted disease or condition and to continue to assess safety. In the case of vaccines, the participants are healthy, and the signs of efficacy can be obtained in early Phase 1, therefore this Phase is defined as Phase 1/2. Phase 3 clinical trials are usually multi-center, double-blind controlled trials in hundreds or even thousands of subjects at various sites to assess as fully as possible both the safety and effectiveness of the drug. The FDA, the IRB, or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group reviews unblinded data from clinical trials and provides authorization for whether or not a trial may move forward at designated check points based on access to certain data from the trial. We may also suspend or terminate a clinical trial based on evolving business objectives and/or the competitive climate. Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational drug product information is submitted to the FDA in the form of a BLA as compared to an NDA for general traditional small molecule drugs requesting approval to market the product for one or more indications. The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, and controls and proposed labeling, among other things. Given the complexities of manufacturing biological products that are processed from living material, BLA content must also demonstrate purity specifically in terms of showing that the final product does not contain extra material. Once the BLA submission has been accepted for filing, the FDA’s goal is to review applications within 10 months of filing. However, the review process is often significantly extended by FDA requests for additional information or clarification. The FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it typically follows such recommendations. After the FDA evaluates the BLA and conducts inspections of manufacturing facilities where the drug product will be formulated and where the drug will be produced, it may issue an approval letter or, instead, a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. A Complete Response Letter may require additional clinical data and/or an additional Phase 3 clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information is submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. The FDA could also approve the BLA with a risk evaluation and mitigation strategy to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, participant registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials. Such post-market testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization. 48 After regulatory approval of a drug product is obtained, the drug producer is required to comply with a number of post-approval regulations. As a holder of an approved BLA, we would be required to report, among other things, certain adverse reactions and production problems to the FDA, to provide updated safety and efficacy information, and to comply with requirements concerning advertising and promotional labeling for any of our products. These promotion and advertising requirements include, among others, standards for direct-to-consumer advertising, prohibitions against promoting drugs for uses in participant populations that are not described in the drug’s approved labeling (known as “off-label use”), rules for conducting industry-sponsored scientific and educational activities and other promotional activities, Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. Failure to comply with FDA requirements can have negative consequences, including the immediate discontinuation of marketing activities and noncomplying materials, adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties. Such enforcement may also lead to scrutiny and enforcement by other government and regulatory bodies. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval to ensure and preserve the long-term stability of the drug product. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive, and record keeping requirements. In addition, changes to the manufacturing process are strictly regulated and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities of our CMOs or licensees that may disrupt production or distribution or require substantial resources to correct. In addition, discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of any Company product candidates we may develop in the future. The FDA also may require post-marketing testing, or Phase 4 testing, as well as risk minimization action plans and surveillance to monitor the effects of an approved product or place conditions on an approval that could otherwise restrict the distribution or use of the product. Expedited Development and Review Programs The FDA has a number of programs intended to expedite the development and review of product candidates. For example, Fast Track designation is intended to expedite or facilitate the process for reviewing new biological products that meet certain criteria. Specifically, new biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new biological product may request the FDA to designate the biological product as a Fast Track product at any time during the clinical development of the product. Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. FDA may revoke the Fast Track designation if it believes that the designation is no longer supported by data emerging in the clinical trial process. 49 Under the Breakthrough Therapy program, products intended to treat a serious or life-threatening disease or condition may be eligible for Breakthrough Therapy designation, which includes eligibility for the benefits of the Fast Track program, when preliminary clinical evidence demonstrates that such product may have substantial improvement on one or more clinically significant endpoints over existing therapies. Additionally, FDA will seek to ensure the sponsor of a breakthrough therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently as possible. A product is eligible for priority review if it is intended to treat a serious condition and, if approved or licensed, it would provide a significant improvement in safety or effectiveness. FDA intends to take action on a priority review marketing application within six months of receipt, compared to 10 months of receipt for regular review submissions. Additionally, a product may be eligible for accelerated approval if it is intended to treat a serious or life-threatening disease or condition and would provide meaningful therapeutic benefit over existing treatments. Accelerated approval may be granted on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality and is reasonably likely to predict an effect on irreversible morbidity, mortality, or other clinical benefit. As a condition of approval, the FDA may require that a sponsor of a biological product receiving accelerated approval diligently perform adequate and well-controlled post marketing clinical studies demonstrating clinical benefit. In addition, the FDA requires as a condition for accelerated approval the submission of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, priority review and accelerated approval do not change the standards for licensure but may expedite the review process. Pediatric Studies and Exclusivity Under the Pediatric Research Equity Act of 2003, a BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. With enactment of the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, sponsors must also submit pediatric study plans prior to the assessment data. Those pediatric study plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation. The applicant, the FDA and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after licensure of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in FDASIA. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. Pediatric exclusivity is a type of non-patent marketing exclusivity in the U.S. and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application. 50 FDA Review of BLAs After completion of the required clinical testing, a BLA is prepared and submitted to the FDA. FDA approval of the BLA is required before marketing of the product may begin in the U.S. The BLA must include the results of all preclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting a BLA is substantial. The submission of most BLAs is additionally subject to a substantial application user fee, currently exceeding $4,310,002 for fiscal year 2025, and the manufacturer and sponsor under an approved BLA are also subject to annual program fees, currently $403,889 for each prescription product. These fees are typically increased annually. Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees. The FDA has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. The FDA may request additional information rather than accept a BLA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of BLAs to encourage timeliness. Applications for standard review drug products are meant to be reviewed within ten months; applications for priority review drugs are meant to be reviewed in six. Priority review can be applied to drugs that the FDA determines offer major advances in treatment or provide a treatment where no adequate therapy exists. The review process for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission. The FDA is required to refer an application for a novel biological product to an advisory committee or explain why such referral was not made. An advisory committee is typically a panel that includes clinicians and other experts—for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not license the product unless compliance with cGMPs is satisfactory, and the application meets the appropriate standard. A BLA must include data that demonstrate that the biological product is safe, pure, and potent. After the FDA evaluates the BLA and accompanying information and the manufacturing facilities, it issues either an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. An approval or licensure letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of BLA licensure, the FDA may require a REMS, to help ensure that the benefits of the biological product outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals and ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product licensure may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product licenses may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing. 51 If the FDA approves a product, it may limit the approved indications for use for the product; require that contraindications, warnings or precautions be included in the product labeling; require that postmarketing studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after licensure; require testing and surveillance programs to monitor the product after commercialization; or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval, as applicable, of a new BLA or supplement before the change can be implemented. A BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing supplements as it does in reviewing BLAs. Biosimilars and Reference Product Exclusivity The BPCIA created an abbreviated approval pathway for biological product candidates shown to be highly similar, or “biosimilar,” to or interchangeable with an FDA licensed reference biological product. Biosimilarity, which requires that a product is highly similar to the reference product notwithstanding minor differences in clinically inactive components, and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can generally be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the interchangeable biosimilar and the reference biological product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product. A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles and have slowed implementation of the BPCIA by the FDA. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of reference product exclusivity, another company may obtain FDA licensure and market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. A biological product can also obtain pediatric market exclusivity in the U.S. As stated above, pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate implementation of the BPCIA is subject to significant uncertainty. Post-Licensure FDA Requirements Biological products manufactured or distributed pursuant to FDA licenses are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion with the product. After licensure, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and licensure. There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data. 52 Often times, even after a biological product has been licensed by the FDA for sale, the FDA may require that certain post-licensure requirements be satisfied, including the conduct of additional clinical studies. If such post-approval requirements are not satisfied, the FDA may withdraw its licensure of the biological product. In addition, holders of a biological product license are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to cGMP after approval. In addition, biological product manufacturers and their subcontractors are required to register their establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements and other aspects of regulatory compliance. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Among the conditions for BLA licensure is the requirement that the manufacturing operations conform on an ongoing basis with cGMP. In complying with cGMP, we must expend time, money and effort in the areas of training, production and quality control within our own organization and at our contract manufacturing facilities. A successful inspection of the manufacturing facility by the FDA is usually a prerequisite for final licensure of a biological product. Following licensure of the BLA, we and our manufacturers will remain subject to periodic inspections by the FDA to assess continued compliance with cGMP requirements and the conditions of licensure. We will also face similar inspections coordinated by foreign regulatory authorities. The FDA periodically inspects the sponsor’s records related to safety reporting and/or manufacturing facilities; this latter effort includes assessment of compliance with cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Once licensure is granted, the FDA may withdraw licensure if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, including total or partial suspension of production, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-licensure clinical trials; ● refusal of the FDA to license pending BLAs or supplements, or suspension or revocation of product licensure; ● product seizure or detention, or refusal to permit the import or export of products; ● consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ● mandated modification of promotional materials and labeling and the issuance of corrective information; ● the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ● injunctions or the imposition of civil or criminal penalties. 53 The FDA closely regulates marketing, labeling, advertising and promotion of products that are placed on the market. Biological products may be promoted only for the licensed indications and in accordance with the provisions of the approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off label uses may be subject to significant liability. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. In addition, the distribution of prescription drug products, including most biological products that require a prescription, is subject to the Prescription Drug Marketing Act, or the PDMA, which regulates the distribution of drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription drug product samples and impose requirements to ensure accountability in distribution. Other U.S. Healthcare Laws and Compliance Requirements Among others, the FDA, HHS, Office of Inspector General, the CMS and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the preclinical and clinical development, manufacture, marketing, and distribution of drugs such as those we are developing. These agencies and other federal, state, and local entities regulate, among other activities, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, sales, commercialization, marketing, advertising and promotion, distribution, post-approval monitoring and reporting, sampling, and export and import of our product candidates. Any drug candidates that we develop must be approved by the FDA before they may be legally marketed in the U.S. and by the appropriate foreign regulatory agency before they may be legally marketed in those foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the U.S., although there can be important differences. Additionally, some significant aspects of regulation in the EU are addressed in a centralized way, but country-specific regulation remains essential in many respects. Although we do not currently have any products on the market, in addition to FDA restrictions on marketing of pharmaceutical products, we are also subject to healthcare statutory and regulatory requirements and enforcement by the U.S. federal and state governments. Pharmaceutical companies like us are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such regulation may constrain the financial arrangements and relationships through which we research, develop, and, ultimately, sell, market, and distribute any products for which we obtain marketing approval. Such laws include, without limitation: ● The federal Anti-Kickback Statute, an intent-based criminal statute that prohibits, among other activities, persons and entities from knowingly and willfully soliciting, offering, paying, receiving, or providing any remuneration (including any kickback, bride, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order, or recommendation of, any item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as Medicare or Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. ● The federal civil and criminal false claims laws, including the civil FCA, which prohibit individuals or entities from, among other activities, knowingly presenting, or causing to be presented, to the federal government claims for payment or approval that are false, fictitious, or fraudulent; knowingly making, using, or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government. In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. The FCA also permits a private individual acting as a “whistleblower” to bring qui tam actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery or settlement. 54 ● The federal civil monetary penalties laws, which prohibit, among other activities (1) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program, (2) failing to report and return a known overpayment, or (3) offering or transferring any remuneration to a Medicare or Medicaid beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of items or services reimbursable by Medicare or Medicaid, unless an exception applies. ● The federal criminal statutes enacted under HIPAA which impose criminal liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program; knowingly and willfully embezzling or stealing from a healthcare benefit program; willfully preventing, obstructing, misleading, or delaying a criminal investigation of a healthcare offense; and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items, or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. ● The federal Physician Payment Sunshine Act, enacted as part of the ACA, which imposes annual reporting requirements for certain manufacturers of drugs, devices, biological products, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, for certain payments and “transfers of value” provided to “covered recipients,” which include U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by such physicians and their immediate family members. For reports submitted to CMS on or after January 1, 2022, such obligations will include the reporting of payments and other transfers of value provided in the previous year to certain other healthcare professionals, including physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse midwives. ● Analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply with respect to healthcare items or services reimbursed by non-governmental third party-payors and may be broader than their federal equivalents; state and foreign laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and/or the relevant compliance guidance promulgated by the federal government or otherwise restricting payments that may be made to healthcare providers; state laws and regulations requiring drug manufacturer disclosures to state agencies and/or commercial purchasers with respect to certain price increases; state and foreign laws requiring drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers and restricting marketing practices or requiring disclosure of marketing expenditures and pricing information; and state and local laws that requiring registration of pharmaceutical sales representatives. 55 We are also subject to the Foreign Corrupt Practices Act, or FCPA, which prohibits improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business. Safeguards we implement to discourage improper payments or offers of payments by our employees, consultants, and others may be ineffective, and violations of the FCPA and similar state laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, financial condition and results of operations. Violations of any of these laws or any other applicable laws or regulations may result in significant penalties, including, without limitation, administrative, civil, and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations to resolve allegations of noncompliance, exclusion from participation in federal and state healthcare programs, such as Medicare and Medicaid, and imprisonment. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from its business. Coverage and Reimbursement Sales of any pharmaceutical product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance, and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a payor-by-payor basis. These third-party payors are increasingly reducing coverage and reimbursement for healthcare items (including drugs) and services. Moreover, for products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which our product is used. In addition, the U.S. government, states, and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement, and requirements for substitution of lower-cost or generic products. Adoption of price controls and cost-containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures could further limit sales of any drug product. Decreases in third-party reimbursement for any drug product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales. Moreover, as a condition of participating in, and having products covered under, certain federal healthcare programs, such as Medicare and Medicaid, we may become subject to federal laws and regulations that require pharmaceutical manufacturers to calculate and report certain pricing metrics to the government, including the Average Manufacturer Price, or AMP, and Best Price under the MDRP, the Medicare Average Sales Price, the 340B Ceiling Price, and Non-Federal AMP reported to the Department of Veteran Affairs, and with respect to Medicaid, pay statutory rebates on utilization of manufacturers’ products by Medicaid beneficiaries. Compliance with these laws and regulations will require significant resources and may have a material adverse effect on our revenues. Healthcare Reform In the U.S., in March 2010, the ACA was enacted, which substantially changed the way healthcare is financed by both governmental and private payors, and significantly affected the pharmaceutical industry. The ACA contained a number of provisions, including those governing the federal healthcare programs, provider reimbursement, and healthcare fraud and abuse laws. For example, the ACA: ● increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the AMP; 56 ● required collection of rebates for drugs paid by Medicaid managed care organizations; ● expanded beneficiary eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; ● extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; ● expanded the types of entities eligible for the 340B Drug Pricing Program; ● established a new methodology by which rebates owed by manufacturers under MDRP are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ● required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70 percent point-of-sale discounts off negotiated prices of applicable branded drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; ● imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” and biologic agents apportioned among these entities according to their market share in certain federal government programs; ● established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; ● created the Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; ● required reporting of certain financial arrangements between manufacturers of drugs, biologics, devices, and medical supplies and physicians and teaching hospitals under the federal Physician Payments Sunshine Act; and ● required annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners. Since its enactment, there have been executive, judicial, and legislative branch challenges to certain aspects of the ACA, and, on June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden had issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, policies that create barriers to obtaining access to health insurance coverage through the ACA marketplaces. It is unclear how healthcare reform measures enacted by Congress or implemented by the Biden administration or other efforts to challenge, repeal or replace the ACA, if any, will impact the ACA. Other legislative changes have been proposed and adopted in the U.S. since the ACA was enacted. These changes include the Budget Control Act of 2011, which, among other changes, led to aggregate reductions in Medicare payments to providers of up to 2% per fiscal year that started in April 2013 and, due to subsequent legislation, will continue into 2031, with the exception of a temporary suspension of the payment reduction from May 1, 2020 through December 31, 2021 due to the COVID-19 pandemic, unless additional Congressional action is taken. Effective January 1, 2024, manufacturers’ MDRP rebate liability is no longer capped, meaning manufacturers may pay more in MDRP rebates than they receive on the sale of certain covered outpatient drugs. In the future, there may be additional challenges and/or amendments to the ACA. 57 The cost of prescription drugs has been the subject of considerable policy discussion and debate in the U.S. Congress has considered and passed legislation, and the former Trump administration pursued several regulatory reforms to further increase transparency around prices and price increases, lower out-of-pocket costs for consumers, and decrease spending on prescription drugs by government programs. Congress has also continued to conduct inquiries into the prescription drug industry’s pricing practices. While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the Biden administration have expressed support for legislative and/or administrative measures to address prescription drug costs. The Biden administration has also taken several executive actions that signal changes in policy from the prior administration, including with respect to executive actions by the Trump administration related to prescription drug costs. At the state level, legislatures are increasingly passing legislation and states are implementing regulations designed to control spending on, and patient out-of-pocket costs for, drug products. We expect that additional state and federal healthcare reform and/or drug pricing measures will be adopted in the future, any of which could affect the pricing and/or availability of drug products, the amounts that federal and state governments and other third-party payors will pay for healthcare products and services, and/or our ability to generate revenue, attain or maintain profitability, or commercialize products for which we may receive regulatory approval in the future. Other U.S. Healthcare Laws and Compliance Requirements For products distributed in the United States, we will also be subject to additional healthcare regulation and enforcement by the federal government and the states in which we conduct our business. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. Although we believe our business practices are structured to be compliant with applicable laws, it is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our future operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from third party payor programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians, providers or entities with whom we may do business with will be found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs. Many aspects of these laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations which increases the risk of potential violations. In addition, these laws and their interpretations are subject to change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, and damage our reputation. In addition, from time to time in the future, we may become subject to additional laws or regulations administered by the FDA, the Federal Trade Commission, or by other federal, state, local or foreign regulatory authorities, to the repeal of laws or regulations that we generally consider favorable, or to more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals or interpretations, and we cannot predict what effect additional governmental regulation, if and when it occurs, would have on our business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements. Any such developments could have a material adverse effect on our business. 58 Israel Before an entity or person can conduct clinical testing on humans in Israel, such entity or person must receive special authorization from the ethics committee (also known as a “Helsinki Committee”) and general manager of the institution in which such entity or person intends to conduct its study, as required under the Guidelines for Clinical Trials in Human Subjects implemented pursuant to the Israeli Public Health Regulations (Clinical Trials in Human Subjects), as amended from time to time, and other applicable legislation. These regulations also require authorization from the Israeli Ministry of Health in certain circumstances, such as genetic trials and special fertility trials. The institutional ethics committee must, among other things, evaluate the anticipated benefits that are likely to be derived from the project to determine if it justifies the risks and inconvenience to be inflicted on the human subjects, and the committee must ensure that adequate protection exists for the rights and safety of the participants as well as the accuracy of the information gathered in the course of the clinical testing. If we perform future clinical studies in Israel, we will be required to obtain authorization from the ethics committee and general manager of each institution in which we intend to conduct our clinical trials, and in most cases, from the Israeli Ministry of Health. Europe and Other Territories Before obtaining regulatory approval for a product, we must obtain authorization to conduct clinical trials. In the European Union, clinical trials are governed by the Clinical Trials Regulation (EU No. 536/2014), which became fully applicable on January 31, 2022. This regulation harmonizes the assessment and supervision of clinical trials across EU member states and allows for a single submission through the Clinical Trials Information System (CTIS) for trials conducted in multiple countries. Clinical trial applications must be approved by both the relevant national competent authority and an independent ethics committee prior to initiation. To obtain marketing approval in the European Union, we may submit a marketing authorization application under the centralized procedure, which, if approved, results in a single authorization valid across all EU member states. The centralized procedure is mandatory for certain categories of products, including biologics and orphan medicinal products, and may be used for other innovative products. The standard evaluation timeline is up to 210 days, excluding clock stops, although accelerated assessment may be granted in certain cases where a product is considered to be of major public health interest. In addition, other regulatory pathways, such as decentralized or national procedures, may be available depending on the nature of the product and development strategy. For countries outside the European Union, including in Eastern Europe, Latin America and Asia, regulatory requirements governing clinical trials, product approval, pricing and reimbursement vary by jurisdiction. In all cases, clinical trials must be conducted in accordance with Good Clinical Practice (GCP) and applicable regulatory and ethical standards. Failure to comply with applicable regulatory requirements in any jurisdiction may result in sanctions, including fines, suspension or withdrawal of approvals, product recalls, operational restrictions or criminal penalties. 59 Intellectual Property Our intellectual property strategy is based on a combination of in-licensed rights, proprietary know-how and manufacturing expertise. PC111 Program Our lead clinical asset, PC111, is based on intellectual property licensed from third parties. These rights include patents and related know-how covering the development and commercialization of the product candidate. We hold exclusive rights under the applicable agreements to develop and commercialize PC111 in the licensed territories, subject to customary obligations such as milestone payments and royalties. The scope and duration of these rights are defined in the relevant license agreements and generally extend on a country-by-country basis for the life of the underlying patents and, in certain cases, for a period following first commercial sale. NanoAbs Platform We license the core intellectual property for our NanoAbs program from the Max Planck Society (MPG) under an exclusive license agreement. This agreement provides us with an exclusive, worldwide license to develop and commercialize NanoAbs based on certain patents and related intellectual property owned by MPG. Under the terms of the agreement, the license continues on a product-by-product and country-by-country basis until the later of (i) the expiration or abandonment of the relevant patent rights in such country and (ii) ten years from the date of first commercial sale of such product in such country. We also have the right to access additional nanobody targets under similar terms. Additional Know-How and Capabilities In addition to licensed intellectual property, we rely on proprietary know-how, trade secrets and accumulated expertise, particularly in biologics development and manufacturing. Our integrated capabilities, including process development and manufacturing at our facility, form an important component of our overall competitive position, especially in connection with our CDMO activities. We seek to protect our intellectual property through a combination of patents, contractual rights, confidentiality obligations and other measures, although there can be no assurance that such protections will be adequate or enforceable. Environmental Matters We are subject to various environmental, health and safety laws and regulations, including those governing the use, management and disposal of hazardous and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, operations and facilities are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations. Our laboratory personnel have ongoing communication with the Israeli Ministry of Environmental Protection in order to verify compliance with relevant instructions and regulations. In addition, all of our laboratory personnel participate in instruction on the proper handling of chemicals, including hazardous substances before commencing employment, and during the course of their employment, with us. In addition, all information with respect to any chemical substance that we use is filed and stored as a Material Safety Data Sheet, as required by applicable environmental regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on us. The operation of our facilities, however, entails risks in these areas. Significant expenditures could be required in the future if we are required to comply with new or more stringent environmental or health and safety laws, regulations or requirements. C. Organizational Structure Our wholly-owned subsidiary, Scinai BioServices Inc., was incorporated in Delaware on December 5, 2024 to serve as a CDMO contracting party for clients based in the United States. On March 24, 2025, we acquired a Polish company, Scinai Immunotherapeutics Spółka z ograniczoną odpowiedzialnością, as to serve as our wholly-owned subsidiary in Poland and as an applicant for potential grants under programs established by the Polish government. On February 16, 2026, we acquired Scinai Biopharma, our wholly-owned subsidiary incorporated in Israel. Scinai Biopharma operates a cGMP manufacturing site, providing early chemistry development and small-scale manufacturing of active pharmaceutical ingredients (APIs) for biopharmaceutical customers’ clinical programs. 60 D. Property, Plants and Equipment Our principal executive offices and main laboratory are located at Jerusalem BioPark, 2nd floor, Hadassah Ein Kerem Campus, Jerusalem, Israel, next to Hadassah University Hospitals and Hebrew University’s Medical School. We lease there approximately 1,850 square meters (20,000 square feet), and the lease expires on December 31, 2032. Our wholly-owned subsidiary, Scinai Biopharma, also operates a laboratory in Yavne, Israel. We lease there approximately 660 square meters (7,100 square feet), and the lease expires on August 11, 2030, and provides for automatic extensions for two additional 60-month terms unless we provide three months’ notice prior to the end of the then-current term. For the year ended December 31, 2025, cash outflow for our office and laboratory leases amounted to $0.09 million. Our fixed assets are comprised of factory leasehold improvements, laboratory equipment, furniture and software. The accumulated depreciation as stated in our financial reports is deducted from the fixed assets value. Our fixed assets, less deduction for the accumulated depreciation, were $7.8 million as of December 31, 2025 and $9.2 million as of December 31, 2024. For a description of our current laboratory see