NASDAQ: CMMB

CM-101, our lead clinical
product candidate, is a first-in-class humanized monoclonal antibody that attenuates the basic function of the soluble chemokine CCL24,
also known as eotaxin-2, as a regulator of major inflammatory and fibrotic pathways. We have demonstrated that CM-101 interferes with
the underlying biology of inflammation and fibrosis through a novel and differentiated mechanism of action. Based on these findings, we
are actively advancing CM-101 in Phase 2 clinical studies directed toward two distinct clinical indications that include patients with
liver or skin, and/or lung fibrosis. We are currently conducting a Phase 2 clinical study in PSC, a rare obstructive and cholestatic liver
disease. The study is actively recruiting patients in the U.S., Europe and Israel and is being expanded by adding clinical sites, an additional
high dose arm (20mg/kg) as well as an open label extension. We had earlier proposed to add both low and high dose arms to the study but
the recent encouraging results reported from our Phase 2 liver fibrosis trial in NASH patients, dosed at 5mg/kg, along the positive Phase
1b data we previously reported in non-alcoholic fibrotic liver disease (NAFLD) patients dosed at 5mg/kg and 2,5mg/kg, are seen as providing
us sufficient data on the performance of the lower dose to drop it from the current trial, which is focusing on the 10mg/kg and 20g/kg
doses. We believe this change will facilitate timely conduct and completion of the trial. If regulators in the future do not agree that
the existing low dose data are sufficient, we always have the option to add a lower dose group as part of the Phase 3 clinical program.

We are also planning to open a Phase 2 clinical
trial in SSc about midyear 2023. The trial in SSc, a rare autoimmune rheumatic disease characterized by fibrosis in the skin and lung
and other organs, will focus on establishing biological and clinical proof of concept in this patient population. Although our primary
focus is on these two rare indications, as we noted, an additional Phase 2 clinical study in patients with liver fibrosis due to non-alcoholic
steatohepatitis, or NASH has recently been completed. This trial provided safety and pharmacokinetic (PK) data and is informative
in determining whether the company advances the development of its current subcutaneous formulation of CM-101. Additionally, the trial
measured a number of biomarkers that may be relevant to the potential activity of CM-101 in other fibro-inflammatory conditions. We recently
reported results from this trial, which showed that the trial met its primary endpoint of safety and tolerability, and that CM-101 demonstrated
encouraging activity in secondary endpoints that include a range of liver fibrosis biomarkers and physiologic assessments.

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Fibrosis is the abnormal
and excessive accumulation of collagen and extracellular matrix, the non-cellular component in all tissues and organs, which provides
structural and biochemical support to surrounding cells. When present in excessive amounts, collagen and extracellular matrix lead to
scarring and thickening of connective tissues, affecting tissue properties and potentially leading to organ dysfunction and failure. Fibrosis
can occur in many different tissues, including lung, liver, kidney, muscle, skin, and the gastrointestinal tract, resulting in a wide
array of progressive fibrotic conditions. Fibrosis and inflammation are intrinsically linked. While a healthy inflammatory response is
necessary for efficient tissue repair; after disease or injury, an excessive, uncontrolled inflammatory response can lead to tissue fibrosis
that in turn can further stimulate inflammatory processes in a fibro-inflammatory vicious cycle.

Recent
Developments

FDA
Clearance of our IND Application for CM-101 in Phase 2 Trial in SSc Patients

On February 21, 2023, we reported U.S. Food
and Drug Administration (FDA) clearance of our Investigational New Drug (IND) Application to evaluate CM-101 in a Phase 2 trial in adults
with systemic sclerosis (SSc). The Phase 2 ABATE trial is a multicenter, randomized, double-blind, proof-of-biology study to evaluate
the sAfety, toleraBility, and Activity
of CM-101 in patients with sysTEmic sclerosis. It expects to enroll 45 patients with clinically
active dermatologic, vascular or pulmonary SSc. The study population is expected to be roughly split between patients with diffuse SSc
and patients with limited SSc. The primary outcome measure is safety. Secondary endpoints include multiple serum-based biological markers
and a variety of exploratory biological and clinical outcomes, including the American College of Rheumatology Composite Response Index
in Systemic Sclerosis (ACR-CRISS) score and its revisions (rCRISS). The trial includes a 24-week double blind period during which active
treatment patients will receive 10 mg/kg of CM-101 by intravenous infusion every three weeks, followed by a 24-week open label extension,
where all patients will receive a 10 mg/kg dose. The trial includes multiple clinical assessments of the skin, vasculature and pulmonary
function. It is expected to generate additional information about disease mechanisms, provide data relevant to future patient stratification
strategies and inform the selection of appropriate endpoints for future studies. The trial is expected to begin enrolling patients
midyear of 2023.A topline data read-out is targeted for the second half of 2024.

Report Topline Results from CM-101 Phase 2a
Liver Fibrosis Biomarker Trial in NASH Patients

On January 3, 2023, we reported positive topline results from our
Phase 2a liver fibrosis biomarker trial of CM-101 in NASH patients. This trial was primarily designed to assess a subcutaneous formulation
of CM-101 and to evaluate the drug’s impact on liver fibrosis biomarkers relevant to both NASH and the fibro-inflammatory conditions
that represent the focus for the company, such as PSC and SSc. The trial met its primary endpoint of safety and tolerability, and CM-101
demonstrated encouraging activity in secondary endpoints that include a range of liver fibrosis biomarkers and physiologic assessments
measured at baseline and at week 20.

The randomized, placebo-controlled
trial enrolled 23 NASH patients with stage F1c, F2 and F3 disease who were randomized to receive either CM-101 or placebo. Patients received
a dose of 5 mg/kg of study drug administered by subcutaneous (SC) injection once every two weeks, for a treatment period of 16 weeks.
Key findings of the CM-101 Phase 2a trial included the following.

•

CM-101 appeared to be safe and well tolerated when administered subcutaneously. Most reported adverse
events observed were mild, with one unrelated serious adverse event reported. No significant injection site reactions were reported and
no anti-drug antibodies were detected.

•

CM-101 administered subcutaneously demonstrated favorable pharmacokinetics and target engagement profiles
as expected, and were similar to what the company has previously reported.

•

CM-101-treated patients showed greater improvements than the placebo group in a number of liver fibrosis-related
biomarkers, including ProC-3, ProC-4, ProC-18, TIMP-1 and ELF.

4

•

A majority of CM-101-treated patients showed improvements in multiple liver fibrosis-related biomarkers—almost
60% of CM-101 patients were “multiple responders”, responding in at least three biomarkers at week 20, compared to no patients
in the placebo group.

•

CM-101-treated patients with higher CCL24 levels at baseline showed greater reductions in fibrosis-related
biomarkers than patients with lower levels of CCL24 at baseline. More CM-101-treated patients with higher CCL24 levels also were “multiple
responders”, responding in three or more of the fibrosis-related biomarkers, compared to patients with lower CCL24 levels at baseline.
These findings further add to the growing body of evidence validating the role of CCL24 in the pathophysiology of fibrotic liver disease.

•

A higher proportion of patients in the CM-101-treated group showed improvement in a physiologic measure
of liver stiffness as compared to placebo (reduction of at least one grade of fibrosis score as assessed by the non-invasive elastography
method known as FibroScan®).

•

After completion of the study, the unblinded data showed that patients in the CM-101-treated group had
higher baseline levels of fibrosis compared to placebo patients. The impact of this difference on the results, if any, is unknown.

We believe that the data
from this trial provide important insights in support of the CM-101 development program, including the favorable safety and tolerability
of CM-101 in patients with serious liver disease, confirmation of early signs of biomarker activity that are relevant for a number of
fibro-inflammatory disorders, and support for the tolerability and pharmacokinetic data needed to assess next steps in the development
of our SC formulation.

Results
Reported for Clinical Study of CM-101 in Patients with COVID-19-Derived Lung Damage

On November 9, 2022,
positive clinical data from an investigator-initiated clinical study assessing CM-101 activity and safety in hospitalized patients with
severe lung injury derived from COVID-19 was presented at the 2022 Union Conference, an international conference on lung health. Some
of the mechanisms underlying lung inflammation resulting from COVID-19 infection are similar to those seen in systemic sclerosis and other
chronic diseases involving lung inflammation and fibrosis. The objective of the study was to evaluate the drug’s safety and activity
in hospitalized COVID-19 patients with severe pneumonia, including its impact on biomarkers related to lung inflammation that are also
relevant in SSc. The open label, single arm trial enrolled 16 hospitalized adult COVID-19
patients with severe respiratory involvement. All patients were receiving standard of care therapy. All were treated with a single 10mg/kg
intravenous dose of CM-101 on the first day of the study and followed for 30 days.

Administration of CM-101
to this acutely ill patient population appeared safe and was well tolerated. CM-101 exposures and target engagement profiles were similar
to what our researchers have seen in previous clinical studies of CM-101. Importantly, rapid reductions in serum biomarkers of lung inflammation,
fibrogenesis and neutrophil activity were observed post-treatment with CM-101. Overall, this
study confirmed and extended the safety and tolerability profile of CM-101 and demonstrated clinically relevant changes in biomarkers
associated with lung inflammation and fibrogenesis, further supporting CM-101’s anti-inflammatory and anti-fibrotic effects. Moreover,
we believe that these results add to the data suggesting that CM-101 has the potential to attenuate lung inflammation and fibrosis, further
strengthening the rationale for treating SSc patients with this drug. These new clinical data also contribute to a growing body of evidence
demonstrating CM-101’s anti-fibrotic and anti-inflammatory effects in varied organs including the lung, liver and skin.

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Pipeline

Chemomab’s lead
product candidate, CM-101, is a first-in-class humanized monoclonal antibody targeting CCL24 that is being advanced in two orphan indications:
PSC and SSc. CCL24 has been extensively studied in airway inflammation and, more recently, Chemomab has demonstrated in preclinical studies
and early clinical studies that it plays an important role in additional indication areas, including inflammation and fibrosis of the
liver, skin and lung. Although found in low levels in blood or tissue samples taken from healthy volunteers, elevated levels of both CCL24
and its receptor CCR3, have been found in patients with PSC, SSc and NASH. CCL24 levels have even been correlated to different phases
of disease. Chemomab expects that neutralizing CCL24 with an antibody will exert anti-fibrotic and anti-inflammatory effects in patients.
CM-101 has been granted orphan drug designation by both the FDA and the EMA in its primary indications of PSC and SSc based on extensive
preclinical and non-clinical data. This designation provides multiple benefits, including the potential for exclusive marketing and development
rights for a period of time for these indications.

PSC is a rare, chronic
cholestatic liver disease characterized by progressive inflammation, fibrosis, and destruction of the intrahepatic and extrahepatic bile
ducts with no identifiable cause. Cholestasis is a symptom of liver injury and is characterized as the interruption of bile flow from
hepatocytes to the intestine, which leads to bile acid accumulation in the liver, resulting in oxidative stress, inflammation, apoptosis,
and fibrosis. PSC affects approximately 30,000-45,000 patients in the United States and is commonly associated with inflammatory bowel
disease. Median survival is between 10-12 years.

Fibrosis and inflammatory
responses induce a progressive spread of the fibrotic condition. No treatment aside from a liver transplant has been associated with change
of the disease course or significant long-term improvement in the clinical outcome. PSC is a clear serious unmet medical need with no
FDA approved therapeutics for which the current standard of care is inadequate.

SSc is a rare connective
tissue disease characterized by excessive fibrosis and extracellular matrix accumulation in the skin, lung, and other visceral organs.
The disease initiates with an early inflammatory phase involving the immune cell network, as well as endothelial cells. As the disease
progresses, the inflammation increases and fibroblasts and myofibroblasts generate tissue fibrosis, while endothelial cells promote vascular
injury, which can lead to skin fibrosis, interstitial lung disease, myocardial insufficiency, vascular obliteration, distal ulcerations,
and gangrene. SSC affects approximately 75,000-100,000 patients in the United States. SSc has the highest mortality rate among the systemic
rheumatic diseases and has high unmet need, as current treatments manage only disease manifestations and there is no disease modifying
drug available.

Chemomab is primarily
focused on the orphan indications PSC and SSc, but believes that it may have additional opportunities in other fibrotic-inflammatory disease
areas such as idiopathic pulmonary fibrosis, or IPF and nonalcoholic steatohepatitis, or NASH. CM-101 has shown promising anti-fibrotic
and anti-inflammatory effects in preclinical studies of liver fibrosis and PSC, with significant reductions in fibrotic genes, liver enzymes,
bile acid and cholangiocyte proliferation, all reflecting a potential improvement in disease status. In preclinical studies of SSc,
CM-101 reduced inflammatory and fibrotic injury resulting in reductions in dermal thickness, collagen concentration in the skin and the
lung,

and immune cell infiltration in the lung.

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Chemomab has completed
two Phase 1a single ascending dose studies with intravenous, or IV, and subcutaneous, or SC, administrations of CM-101 in 40 healthy volunteers.
The drug was shown to be safe and well-tolerated, with a PK profile supporting dosing once every 2-4 weeks. The Company also completed
a Phase 1b multiple administration ascending dose study in 16 non-alcoholic fatty liver disease (NAFLD) patients, expanding its safety,
tolerability, and pharmacodynamics database with patients with early liver disease. Early evidence of an anti-fibrotic effect was also
seen in this study.

Chemomab recently reported topline results
from its Phase 2a randomized, double-blind, placebo-controlled study in patients with liver fibrosis derived due to NASH. The trial met
its primary endpoint of safety and tolerability, and CM-101 demonstrated promising activity in secondary endpoints that included pharmacokinetic
and target engagement profiles of the SC formulation as well as a range of liver fibrosis biomarkers and physiologic assessments measured
at baseline and at week 20.

The randomized, placebo-controlled
trial enrolled 23 NASH patients with stage F1c, F2 and F3 disease who were randomized to receive either CM-101 or placebo. Patients received
eight doses of 5 mg/kg of study drug administered by SC injection once every two weeks, for a treatment period of 16 weeks. Key findings
of the CM-101 Phase 2a trial included the following.

•

CM-101 appeared to be safe and was well tolerated when administered subcutaneously. Most reported adverse events observed were mild,
with one unrelated serious adverse event reported. No significant injection site reactions were reported and no anti-drug antibodies,
or ADAs, were detected.

•

CM-101 administered subcutaneously demonstrated favorable pharmacokinetics and target engagement profiles as expected, which were
similar to what the company has previously reported.

•

CM-101-treated patients showed greater improvements than the placebo group in a number of liver fibrosis-related biomarkers, including
ProC-3, ProC-4, ProC-18, TIMP-1 and ELF.

•

A majority of CM-101-treated patients showed improvements in more than one liver fibrosis-related biomarker—almost 60% of CM-101
patients responded in at least three biomarkers at week 20, compared to no patients in the placebo group.

•

A higher proportion of patients in the CM-101-treated group showed improvement in a physiologic measure of liver stiffness as compared
to placebo (reduction of at least one grade of fibrosis score as assessed by the non-invasive elastography method known as FibroScan®).

•

CM-101-treated patients with higher CCL24 levels at baseline showed greater reductions in fibrosis-related biomarkers than patients
with lower levels. Multiple fibrosis-related biomarkers showed more pronounced reductions in CM-101-treated patients who had higher CCL24
levels at baseline than in patients with lower CCL24 baseline levels, adding to the growing body of evidence validating the role of CCL24
in the pathophysiology of fibrotic liver disease.

•

After completion of the study, the unblinded data showed that patients in the CM-101-treated group had higher baseline levels of
fibrosis compared to placebo patients. The impact of this difference on the results, if any, is unknown.

7

Data from this trial
provide important insights in support of the CM-101 development program, including the favorable safety and tolerability of CM-101 in
patients with serious liver disease, confirmation of early signs of biomarker activity that are relevant for a number of fibro-inflammatory
disorders, and additional tolerability and pharmacokinetic data needed to assess next steps in the development of our current subcutaneous
formulation.

Recently, Chemomab also
reported positive clinical data from an investigator-initiated clinical study assessing CM-101 activity and safety in hospitalized patients
with severe lung injury derived from COVID-19. The objective of the study was to evaluate the drug’s safety and activity in hospitalized
COVID-19 patients with severe pneumonia, including its impact on biomarkers related to lung inflammation that are also relevant in systemic
sclerosis. The open label, single arm trial enrolled 16 hospitalized adult COVID-19 patients with severe respiratory involvement. All
patients were receiving standard of care therapy. All were treated with a single 10mg/kg intravenous dose of CM-101 on the first day of
the study and followed for 30 days. Administration of CM-101 to this acutely ill patient population appeared to be safe and was well tolerated.
CM-101 exposures and target engagement profiles were similar to what our researchers have seen in previous clinical studies of CM-101.
Importantly, rapid reductions in serum biomarkers of lung inflammation, fibrogenesis and neutrophil activity were observed post-treatment
with CM-101. Overall, this study confirmed and extended the safety and tolerability profile of CM-101 and demonstrated clinically relevant
changes in biomarkers associated with lung inflammation and fibrogenesis, further supporting CM-101’s anti-inflammatory and anti-fibrotic
effects.

Chemomab is currently conducting a randomized, double-blind, placebo-controlled
study of CM-101 in PSC patients, and is planning to initiate a new study in SSc patients around midyear of 2023.

The Phase 2 randomized, double-blind, placebo-controlled SPRING
study is currently enrolling patients with PSC who are treated with CM-101 or placebo for 15 weeks. The company has expanded the trial
by implementing a dose finding component to the CM-101 development program and evaluating a higher dose level of CM-101 (20mg/kg)
to support future potential registrational trials. In addition, the company is adding an open-label extension to the trial to evaluate
the safety, tolerability and durability of effect over longer treatment durations.

Chemomab is currently conducting a randomized, double-blind, placebo-controlled
study of CM-101 in PSC patients, and is planning to initiate a new study in SSc patients around midyear of 2023.

Chemomab may also explore
CM-101 in other indications, where the dual activity of CM-101 acting on both inflammation and fibrosis could provide new avenues for
treating inflammatory and fibrotic conditions.

Chemomab was founded
in 2011, based on a novel discovery originating from the Sourasky Medical Center in Tel-Aviv, Israel, where Professor Jacob George first
identified CCL24 as a key regulator of unstable plaque formation in atherosclerotic patients. In its early years, Chemomab focused on
research directed at clarifying the role and effectiveness of CCL24 blockade. In 2015, Chemomab selected its proprietary lead product
candidate, CM-101, and started product development directed towards human testing.

Chemomab has assembled
an executive team with highly relevant experience in inflammation and fibrosis, and biologics drug discovery and clinical development.
Adi Mor, Ph.D., Chemomab’s Chief Scientific Officer and Co-founder, has 15 years of experience in Immunology and has led the CM-101
program from discovery stage into Phase 2 clinical studies. Matthew Frankel, M.D., Chemomab’s Chief Medical Officer, brings deep
experience in clinical development. Dr. Frankel, who is based in the U.S., has more than 25 years of experience in the discovery and clinical
development of novel therapeutics and has held senior executive roles at both global pharmaceutical and biotechnology companies. Jack
Lawler, Chemomab’s Vice President of Global Development Operations, is highly experienced in managing clinical trials across a wide
range of indications and geographies.

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Company strategy

Chemomab aims to become
a world-leading company for the treatment of diseases involving inflammation and fibrosis, developing novel therapies across a wide range
of indications. To achieve this, the company is focused on the following key strategies:

•

Advance Chemomab’s lead product, CM-101, for the treatment of PSC and SSc, through
clinical development to approval

The clinical development
plan of lead product candidate CM-101 was optimized to maximize the clinical information obtained, generating additional important data
to support future advancement to registration trials, and decreasing the overall risk in the CM-101 clinical development program in the
lead indications of PSC and SSc, as well as potentially in additional indications where the scientific rationale is strong.

The Company expects that
the current trial designs will provide important data on the clinical dose response relationship to inform the broader development program
and to identify the optimal dose to advance in later PSC and SSc trials. The study design is also expected to generate proof of concept
data on clinically relevant aspects of SSc, a complex rheumatological disorder, to best inform the development path for a novel, first-in-class
therapeutic like CM-101, along with relevant safety and tolerability data to support the evaluation of higher doses and inform decisions
on next steps in the development of the subcutaneous formulation.

•

Expand Chemomab’s next generation pipeline

Based on the know-how,
knowledge and experience it has gathered in diseases involving both inflammation and fibrosis, Chemomab is assessing opportunities to
expand its pipeline with novel products developed against new targets. Chemomab may also explore targeting CCL24 with additional, complementary
fibrotic and/or inflammatory mechanisms, including acquiring or in-licensing innovative product candidates.

•

Selectively evaluate partnership opportunities

Chemomab continuously
explores partnership opportunities to advance CM-101 development in PSC and SSc, identifying companies with drugs (either approved or
in development) that could possibly be combined with CM-101, extending the development of CM-101 to new indications beyond PSC and SSc,
and seeking additional significant commercial or drug development capabilities that may accelerate CM-101’s time to market. The
Company also continues to evaluate opportunities to in-license or acquire other novel investigational therapeutics addressing relevant
fibro-inflammatory disorders.

•

Explore opportunities for CM-101 in additional inflammatory/fibrotic indications

Chemomab continuously
evaluates the potential benefit of CM-101 outside of its two lead indications, PSC and SSc, in order to maximize the product’s potential.
CM-101 has shown anti-fibrotic activity in animal models and human tissue studies of IPF and NASH. Chemomab will continue to assess ways
to leverage the dual anti-inflammatory an anti-fibrotic activity of CM-101 into new disease areas and to form additional collaborations
with global medical researchers and drug developers.

•

Strengthen Chemomab’s intellectual property portfolio

Chemomab believes that
it has developed a strong intellectual property portfolio and will continue to seek, maintain, and defend its patent rights, whether developed
internally or licensed to protect and enhance the proprietary technology, inventions, and improvements that are commercially important
to the development of its business proprietary position in the field of inflammation and fibrosis.

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Fibrosis
and inflammation

Tissue damage activates
a repair process that includes acute inflammation followed by either successful complete repair or tissue replacement by fibrosis. However,
persistent and repeated damage can result in continuous activation of the repair process leading to chronic inflammation, progressive
tissue fibrosis and sclerosis.

Fibrosis is an accumulation
of non-functional tissue and can occur in many different tissues, including lung, liver, kidney, muscle, skin and the gastrointestinal
tract, resulting in a number of chronic fibrotic conditions. Liver fibrosis is the process of excessive accumulation of extracellular
matrix proteins, predominantly collagen, which occurs as the result of liver injury. In cases of acute temporary damage, these changes
are transient and liver fibrosis may resolve. In chronic cases, however, the liver damage persists and chronic inflammation and accumulation
of the extracellular matrix eventually lead to cirrhosis. The various fibrotic manifestations in conditions like SSc are still not well
understood. Disease progression is characterized by an early inflammatory onset followed by tissue fibrosis, vascular injury and organ
damage. Fibrosis, and specifically lung fibrosis, is the main cause of disease progression and mortality in SSc, although manifestation
of the disease in other organs can cause patients considerable distress and adversely impact their health and their quality of life.

Fibrosis and inflammation
are intrinsically linked; a healthy inflammatory response is necessary for efficient wound healing, however, a prolonged response can
contribute to the pathogenesis of fibrosis. The inflammatory response during chronic liver injury is a dynamic process with intrahepatic
accumulation of diverse immune cells. Recruitment and infiltration of these cells to the liver and their localization is mainly determined
by chemokines and cytokines that are produced by hepatocytes, immune cells, biliary epithelial cells, and endothelial cells. Notably,
activated liver fibroblasts, the hepatic stellate cells, or HSCs, secrete various chemokines, thereby contributing to the ongoing immune
response during fibrotic liver diseases. Similarly, for SSc, the early inflammatory phase leading to fibrosis in multiple organs of the
body includes activation of the immune cell network of lymphocytes, eosinophils, and monocytes, as well as endothelial and endothelial
progenitor cells. In the advanced SSc phase, fibroblasts and myofibroblasts take the lead to generate tissue fibrosis.

Chemokine
involvement in inflammation and fibrosis

Chemokines are a group
of small signaling proteins thought to be involved in the etiology, or causation, of multiple inflammatory diseases. They are not only
implicated in immune cell recruitment during inflammation, but also contribute to immune surveillance, direct cells to target organs in
homeostasis, and exert pleiotropic, or diverse, effects on non-immune cells, for instance, directly influencing the functionality of fibrogenic
cells. Chemokines and their corresponding chemokine receptors are key players in orchestrating the sequential influx of immune cells into
damaged or diseased organs, driving inflammatory responses to specific triggers.

In the liver, chemokines
have a key role in the development of inflammation and wound healing responses, which can lead to either resolution of liver injury or
promote, if ongoing, maladaptive responses with chronic inflammation, fibrosis, and development of clinically manifest liver disease.
Although the pathophysiology underlying PSC has not yet been fully clarified, animal models of PSC have contributed to dissecting the
molecular basis of this disease and highlighting the role of cytokines and chemokines as important pathogenetic mediators of liver inflammation
and fibrosis. Recently published studies demonstrated that in most of the processes suggested for the onset and development of PSC, chemokines
and chemokine receptors play a key role. HSCs may be the main producers of cytokines and play an initial role in the progression of liver
fibrosis by attracting different types of immune cells, resulting in further production of cytokines and liver injury in a vicious disease
cycle. Extensive proliferation, trans-differentiation and activation of HSCs result in ongoing chronic tissue remodeling and severe fibrosis.
In addition, chemokines are also involved in promoting polarization of the recruited immune cells. Therefore, chemokines may participate
in PSC by promoting migration of inflammatory and fibrotic cells, by activating inflammatory and fibrotic cells locally, or by inducing
cytokines that promote collagen and matrix deposition.

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Likewise, in SSc pathogenesis,
chemokines foster migration and activation of inflammatory and fibrotic cells, inducing the secretion of cytokines that promote collagen
and matrix deposition in affected organs. Indeed, patients with SSc exhibit increased systemic levels of proinflammatory chemokines and
some of these have also been shown to correlate with limited or diffuse cutaneous disease phenotype and/or to organ-specific pathology
such as lung disease or skin vascular inflammation.

The
role of CCL24

CCL24 is a chemokine
that promotes various types of cellular processes that regulate inflammatory and fibrotic activities through the CCR3 receptor. This chemokine
is known to be expressed by activated T-cells, monocytes, epithelial cells and endothelial cells, as well as by activated fibroblasts.
CCL24 induces chemotaxis and activation of CCR3-expressing cells, including immune cells and fibroblasts.

Chemomab has been the
driving force in establishing the role of CCL24 in the pathogenesis of PSC and SSc, however, others have highlighted its contribution
to other indications. For example, published work has shown that both CCL24 and CCR3 are involved in lung and skin inflammation and fibrosis.
CCR3 is robustly expressed on eosinophils and recent data has suggested that eosinophilic inflammation may be involved in the pathogenesis
and progression of SSc. For example, in SSc patients, eosinophil counts, but not total leukocytes, were significantly higher than in patients
with other connective autoimmune diseases. Eosinophil counts correlated positively with both interstitial lung disease severity and the
modified Rodnan skin thickness score, or mRSS.

Notably, CCR3 was shown
to be expressed on oral and dermal fibroblasts where it modulates wound healing and tissue remodeling processes. A recent academic study
also demonstrated overexpression of CCR3 on monocyte populations isolated from SSc patients. CCL24 was shown to be involved in proinflammatory
reactions, specifically contributing to the type 2 immune reaction involving Th2 lymphocytes and M2 macrophages that were shown to be
present in skin lesions of SSc patients. Accordingly, CCL24 was found to play a dominant role in inducing profibrotic effects and to be
overexpressed in fibrotic lungs and bronchoalveolar lavage fluid from patients with idiopathic pulmonary fibrosis, a disease sharing similar
lung dysfunction features with SSc. Furthermore, CCL24 was shown to promote collagen production in human lung fibroblasts and to be constitutively
expressed by dermal fibroblasts.

Prior studies support
the role of CCL24/CCR3 signaling in the pathogenesis of SSc and these findings have been further explored by Chemomab in SSc and for the
first time, in PSC.

CCL24 is a critical mediator
promoting inflammation and fibrosis

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Challenges
to drug development in fibrosis and inflammation

Successful treatment
of fibrotic disorders has in large part remained elusive, primarily due to incomplete understanding of the complexity and multi-mechanism
contributions to disease progression. This has complicated preclinical investigations for new products and new targets, with animal models
having limited resemblance to human disease. Additionally, preclinical animal data is often of short treatment duration and does not capture
the effects of treating chronic fibrotic indications. This is particularly applicable to complex, orphan indications like SSc, where there
is still no approved standard of care or proven target mechanism. Most drug approvals in this space have been focused on fibrosis of the
lungs i.e., idiopathic pulmonary fibrosis, or IPF, interstitial lung disease, or ILD, and pulmonary arterial hypertension, or PAH.

Most approved anti-fibrotic
products target extracellular components, given their biological accessibility, and inhibition of receptors and ligands preventing downstream
signaling is considered to be a potentially effective option for alleviating fibrosis. PDGF and TGF-β are commonly studied targets
in fibrosis and there are two approved products that target these pathways, pirfenidone and nintedanib. Both pirfenidone and nintedanib
are approved for the treatment of IPF, with nintedanib also recently approved for treatment of systemic sclerosis associated interstitial
lung disease and chronic fibrosing interstitial lung diseases. Due to the strong associations between inflammation and fibrosis, companies
have devoted efforts to anti-inflammatory drugs with the hope that reduction in inflammation will attenuate fibrosis. For example, companies
have targeted TNF-α, a commonly explored anti-inflammatory mechanism in fibrotic indications. Despite the success of targeting cytokines,
inflammatory factors and immune cells in pure inflammatory autoimmune diseases, such as blocking TNF-α, these results have generally
not been reproduced in studies targeting inflammatory fibrotic indications. Nonetheless, tocilizumab, a monoclonal antibody targeting
IL-6R, was recently approved for the treatment of ILD associated with systemic sclerosis. Treatments that inhibit certain pure anti-fibrotic
pathways, such as nintedanib and pirfenidone, have resulted in limited clinical benefit. Chemomab believes that these results highlight
the importance of a dual mechanism that, with adequate selectivity, is designed to target inflammatory processes and also directly prevent
fibrosis resulting in blockage of multiple disease-contributing mechanisms.

Notwithstanding challenges in the field
of fibrosis and inflammation, there is significant and growing industry interest given the associated unmet medical need and the continuing
opportunity to identify better therapeutic targets. For example, in 2019 Novartis completed two transactions related to the treatment
of NASH, a liver metabolic fibrotic disease. It acquired IFM Tre for NLRP3 antagonists for a $310 million upfront payment and total potential
consideration of $1.5 billion and licensed an integrin inhibitor from Pliant Therapeutics for an $80 million upfront payment. Additionally,
Gilead Sciences licensed two preclinical programs, one in NASH for a $15 million upfront payment (total potential consideration of $785
million) and the other for TGF-β inhibitors in fibrosis for an $80 million upfront payment and total potential consideration of $1.4
billion. In 2020, Roche acquired Promedior for a $390 million upfront payment and total potential consideration of $1 billion in milestones
for its Phase 2 product in pulmonary fibrosis, and Bayer partnered with Recursion Pharmaceuticals to develop and commercialize preclinical-stage
small molecule treatments for fibrotic conditions for a $30 million upfront payment and total potential consideration of $1 billion. Boehringer
Ingelheim also acquired Enleofen Bio in a deal potentially worth $1 billion for its NASH and ILD anti-IL11 platform. More recently, Mediar,
a high-profile start-up targeting novel mechanisms for fibrotic diseases, reported a $105 million Series A financing.

Targeting
chemokines as a treatment for fibrotic indications

Chemomab believes that
its approach, selectively targeting fibrotic conditions by attenuating both inflammation and fibrosis, may be an optimal approach for
both effectiveness and reduction of toxicity. As central regulators of initiation and progression of fibrotic disorders, chemokines are
an ideal target to impact both inflammation and fibrosis. Some chemokines are also disease-specific, allowing for potential selectivity.

Chemokine receptors,
or CCRs, have been more extensively studied as drug targets in fibrotic conditions compared to chemokine ligands, however, the therapeutic
effects of CCR inhibitors have generally fallen short in the clinic. Pharmaceutical companies have previously explored the CCL24 ligand
receptor, CCR3, and its other ligands CCL7 and CCL11, with small or large molecule inhibitors. These programs were directed at inhibiting
eosinophilic trafficking in respiratory and allergic inflammation, however, despite promising preclinical data, most programs were discontinued
largely due to poor safety profiles and limited efficacy of the antagonist used. To Chemomab’s knowledge, only Alkahest has an active
program that explores CCR3 inhibition, which is under license from Boehringer Ingelheim and is being developed as a treatment for wet
AMD. In contrast, Chemomab believes CCL24 presents a more promising opportunity. Unlike other CCR3 ligands, CCL24 binds only to the CCR3
receptor and is also organ/disease-specific, which together could provide enhanced selectivity and tolerability. For example, in PSC,
CCL24 is elevated in the liver and cholangiocytes (bile duct epithelia) and immune cells that play a key role in the progression of the
disease. Likewise, elevation of CCL24 has been shown in fibrotic lungs and bronchoalveolar lavage fluid from patients with idiopathic
pulmonary fibrosis, a disease sharing similar lung dysfunction features with SSc and which recently was correlated, by Chemomab, with
disease severity and lung involvement in a cohort of SSc patients from the United Kingdom. Furthermore, CCL24 is constitutively expressed
by skin and dermal fibroblasts. The use of an antibody in targeting this chemokine is a novel approach to targeting fibrosis.

12

Chemomab’s expertise
and approach to drug discovery

Chemomab is a clinical
stage biotechnology company focused on the discovery and development of novel drugs to address fibrotic indications with unmet medical
needs. CCL24 is a key target promoting fibrosis as it regulates the two main processes that drive fibrosis: fibroblast activation and
immune cell migration and activation. Using Chemomab’s expertise in monoclonal antibody, or mAb, development and deep knowledge
of chemokine biology, Chemomab is developing CM-101, a proprietary, first-in-class, fully humanized mAb that through research and studies
to date, has been shown to neutralize CCL24 and by so doing inhibits its disease-related functions in both inflammation and fibrosis.
This represents an innovative approach to anti-fibrotic drug discovery and is a key differentiator for Chemomab. The ability of CM-101
to directly attenuate fibroblast activation and concurrently attenuate recruitment of immune cells is novel and could address a wide range
of hard-to-treat fibrotic diseases.

Chemomab’s ongoing
collaborations are complementary to both preclinical and clinical aspects of research and development. Chemomab has created an extensive
panel of in vitro, ex vivo and in vivo assays which it has used to further the understanding of fibrotic processes together with the role
of CCL24 in various diseases and the effects of its neutralization by CM-101. These assays have allowed Chemomab to sequentially explore
target validation and proof of mechanism in disease relevant human and animal samples that continues to de-risk the translation of CM-101
into the clinic.

Target
expression and engagement

Chemomab regularly collaborates
with leading academic centers around the world to investigate the role of CCL24 and CM-101 in various indications. For example, Chemomab
works with The Royal Free Hospital, or RFH, in London, and Birmingham University in Birmingham, United Kingdom to access liver biopsy
and serum samples from patients with PSC. Using immunohistochemistry and florescence microscopy to stain CCL24 and CCR3, it explores the
expression patterns of these targets in disease relevant human samples and compares them to healthy volunteers. Similarly, Chemomab has
tested biopsies of SSc patients through a collaboration with the University of Florence in Italy and serum samples of SSc patients through
a collaboration with Leeds University in the UK.

Proof
of mechanism

Chemomab explores fibroblast
activation and immune cell recruitment in response to CM-101 treatment through inhouse ex vivo and in vitro assays. Chemomab has executed
multiple validated genetic and treatment-based disease models in fibrotic and inflammatory indications in which it has investigated CM-101’s
effects. Additionally, as part of a collaboration with Nordic Biosciences, Copenhagen, Denmark, Chemomab has gained access to proprietary
tools and expertise to explore the effects of CM-101 on key fibrogenesis and fibrolysis biomarkers. Nordic Biosciences is a world-leading
extracellular matrix specialist and continues to contribute additional analyses to Chemomab’s clinical samples.

13

Chemomab
has created a broad array of biological assays to explore CCL24 and CM-101

Chemomab may explore
next-generation biologic products, and, based on its wide database of patient samples and extensive knowledge and experience in fibrosis,
may identify targets that could complement CCL24 inhibition. Next-generation assets may therefore be dual targeting and would be screened
through the panel of assays available at Chemomab that evaluate target expression in fibrotic tissues as well as the anti-fibrotic activity
of potential candidates. Similar to CM-101, this process would establish proof-of-biological-mechanism in both animal models and human
tissue prior to commencing product development and initiating clinical studies.

The Chemomab pipeline

CM-101
in PSC and SSc

Chemomab’s lead
product, CM-101, is a first-in-class humanized monoclonal antibody targeting CCL24 that is being developed initially for the treatment
of PSC and SSc, with potential future opportunities in other fibrotic-inflammatory indications. Chemomab has completed two Phase 1a studies
of CM-101 in healthy volunteers as well as a Phase 1b safety, tolerability and proof-of-mechanism study in NAFLD patients and a Phase
2a liver fibrosis biomarker study in NASH patients with liver fibrosis, which was recently reported. Topline results showed favorable
safety and tolerability profiles for CM-101 in patients with serious liver disease, confirmed early signs of biomarker activity that are
also relevant for a number of fibro-inflammatory disorders, and reinforced tolerability and pharmacokinetic data relevant to the development
of our current subcutaneous formulation.

A Phase 2 study in PSC is now ongoing in
Europe, the United States and Israel and is currently expanding to include an additional dose level cohort as well as an open label extension.
A global Phase 2 study in SSc that will assess the clinical and biological effects of CM-101 in this patient population is expected to
begin enrolling patients around midyear of 2023.

Primary
Sclerosing Cholangitis

PSC is a progressive,
rare, and chronic cholestatic liver disorder that is characterized by thickening, inflammation, and fibrosis of the intra- and extra-hepatic
bile ducts. This generally leads to cholestasis, liver damage, cirrhosis, and eventually liver failure. The exact cause of PSC remains
mostly unknown; however, immune system dysregulation, genes, viruses, and bacteria may be involved. PSC is commonly associated with inflammatory
bowel disease, or IBD. Approximately three in every four individuals with PSC also have ulcerative colitis. Most individuals affected
with PSC are adults with an average age of 40 years at diagnosis; however, it may also occur in children. Disease progression, symptoms,
and severity may vary greatly between individuals. Patients in the initial stages of PSC are generally asymptomatic or have only mild
symptoms.

14

Abdominal discomfort,
fatigue, and pruritus, or itching, are common initial symptoms of PSC that can be severe and debilitating. The initial step in diagnosing
PSC is to evaluate liver enzyme levels through blood tests. Physicians will then confirm a diagnosis with cholangiography ultrasound and,
in rare cases, a liver biopsy. As the disease progresses, bile flow from the liver is obstructed and is subsequently absorbed into the
bloodstream leading to the yellowing of the mucous membranes, whites of the eyes, and skin. Furthermore, individuals may also experience
abdominal pain, malaise, light-colored stools, nausea, dark urine, weight loss, and/or hepatomegaly or splenomegaly. PSC patients have
a 40-fold increased risk of liver cancer and a 400-fold increased risk of cholangiocarcinoma, and the disease may lead to other conditions
including osteoporosis, bacterial cholangitis, portal hypertension, bleeding, as well as vitamin deficiencies.

There are currently no
specific medical therapies that can alter or cure the course of the disease; instead, available treatments are directed towards slowing
the progression of PSC and treating symptoms. In certain individuals, endoscopic surgery may be performed to enlarge the narrowed bile
ducts and to remove blockages. Complications due to vitamin deficiencies can be prevented with the help of vitamin supplements, while
infections and inflammation can be controlled by using antibiotics. Cholestyramine and UCDA can be effective in managing itching and can
be used with or without antihistamines. Patients with advanced symptoms such as end-stage liver disease, recurrent bacterial cholangitis
and intractable pruritus, will often undergo liver transplantation, however, in 30% of cases, PSC will recur even after liver transplantation.
The median survival is 10-12 years without intervention.

Systemic
Sclerosis

SSc is an autoimmune
inflammatory condition that results in widespread fibrosis and vascular abnormalities affecting the skin, lungs, gastrointestinal tract,
heart and kidneys. Other key features of SSc include thickening and hardening of the skin, autoantibody production and abnormal nail fold
capillaries. The underlying mechanisms that cause SSc are complex and for the most part unknown but most likely involve a combination
of factors including the immune system, genetics, and environmental triggers. Various pathways are involved in the pathogenesis of SSc
including cytokines that injure blood vessels, growth factors that stimulate collagen, integrin signaling, morphogen pathways, and co-stimulatory
pathways. SSc is generally diagnosed between the age of 30 and 50 years and is more prevalent in women.

Given that SSc can affect
many different parts of the body there are a multitude of different symptoms of the disease. The most widely observed symptoms include
fatigue, arthralgia, and myalgia. However, the earliest sign is often the Raynaud phenomenon in which the body’s normal response
to cold or emotional stress is exaggerated, resulting in abnormal spasms in arterioles. Cutaneous features include sclerosis of the skin,
particularly the face and hands. Gastrointestinal symptoms of the upper tract include acid reflux and of the lower tract include bloating,
nausea and incontinence. Cardiopulmonary presentations include interstitial lung disease, pulmonary arterial hypertension and cardiac
scleroderma. Renal and ocular symptoms can also present and 20% of SSc patients have an overlapping diagnosis with other connective tissue
diseases and can develop arthritis, lupus or myositis. SSc is subdivided into two main types related to the distribution of skin involvement:
diffuse cutaneous (two-thirds of cases) and limited cutaneous. Diffuse SSc, or dcSSc, is rapidly progressive with more significant organ
involvement.

There is no cure for
SSc. Established treatments can help with symptoms and may modify the disease outcome only if given early in the disease course. Prescribed
medications, used off-label, primarily focus on suppressing inflammation with NSAIDs and dilating abnormal or constricted blood vessels
with losartan, sildenafil, iloprost and SSRIs, or selective serotonin reuptake inhibitors, as well as treatments to manage individual
organ involvement. The only three drugs that are approved for the treatment of SSc symptoms are bosentan by Actelion Pharmaceuticals,
approved in Europe for the prevention of digital ulcer development, nintedanib by Boehringer Ingelheim, and tocilizumab by Roche, approved
in the United States, Europe and Japan for the treatment of SSc associated interstitial lung disease. The clinical course of SSc is determined
by the extent of vascular and fibrosis complications and has the highest mortality rate among the systemic rheumatic diseases. Forty percent
of patients die within 10 years of disease onset, with pulmonary involvement being the leading cause of death.

15

Chemomab’s
CM-101may have disease-modifying potential

The dual anti-fibrotic
and anti-inflammatory activity of CM-101 enables the targeting of a wide range of pathogenic mechanisms and may afford patients a new
treatment that may have a more impactful effect on disease progression.

Targeting
CCL24 offers a dual activity approach

In order to understand
CCL24’s role in disease pathophysiology, Chemomab has collected data on CCL24 levels from patients with multiple fibrotic-inflammatory
indications, including those with PSC, SSc and NASH. PSC patients’ liver biopsies and SSc skin samples were stained for CCL24 and
its receptor, CCR3. Blood samples taken from PSC and SSc patients were used to further evaluate the role of the CCL24-CCR3 axis exploring
levels of circulating CCL24 and CCR3. To explore the influence of CCL24 on disease status, CCL24 serum levels were correlated with fibrotic
biomarkers and disease severity markers.

CCL24
levels in liver biopsies from PSC patients

PSC pathology generally
initiates with bile duct damage leading to cholestasis, bile duct inflammation and fibrosis and finally to substantial liver damage. Chemomab
assessed the accumulation and cellular localization of CCL24 in livers of PSC patients focusing on CCL24 levels in the periductal damaged
zone that is most relevant to disease pathology. CCL24 was mainly found in inflammatory cells in the liver of PSC patients. Due to the
robust liver inflammatory insult in PSC, reflected by massive accumulation of resident and recruited immune cells in the periductal space,
CCL24 positive staining was extensive. Specific and robust CCL24 staining was also shown in cholangiocytes, the epithelial cells of the
bile ducts. Activated myofibroblasts that surround the bile ducts, whether they originate from hepatic stellate cells or portal fibroblasts,
are the main drivers of the excess extracellular matrix accumulation in this area, comprising the unique “onion ring” shape
seen in PSC liver sections. The collective expression pattern shows high CCL24 levels in areas that are most affected in PSC and highlights
its central role in PSC related liver pathology.

16

Elevated
CCL24 staining in liver biopsies from PSC patients

CCR3
levels in liver biopsies from PSC patients

To evaluate the levels
of CCR3, the receptor of CCL24, and identify the cells that can potentially respond to CCL24 secretion, biopsies were stained for CCR3.
As was seen for similar studies with CCL24, specific CCR3 staining was evident in cholangiocytes, surrounding immune cells and fibroblasts.

CCL24
levels in serum and correlation to a fibrotic biomarker in PSC patients

Together with the Royal
Free Hospital (RFH), Chemomab analyzed serum levels of CCL24 in PSC patients at various stages of disease. CCL24 levels showed a positive
correlation to the liver fibrosis biomarker ELF score, which is a commercially available test that reflects liver fibrosis stage based
on serum concentrations of several fibrosis-related proteins. When dividing this cohort of PSC serum samples by ALP levels, a circulating
parameter used for monitoring PSC activity, there was a stronger relation of the fibrotic biomarker and CCL24 with increased ALP.

CCL24
levels correlate with ELF score

CCR3
levels in circulating PBMCs in PSC patients

Chronic liver inflammation
is driven in most hepatic injuries by several different immune cell populations originating from either resident hepatic immune cells
or recruited cells from the circulation to the damaged site. In collaboration with the Kaplan Medical Center, Israel, Chemomab explored
systemic changes of CCR3, given that this could impact cell recruitment to the PSC damaged liver. PBMCs from ten PSC patients and healthy
controls were stained for expression of CCR3 and demonstrated that levels were significantly higher in PSC patient samples compared to
healthy donors.

17

PSC
patients showed significantly higher expression of CCR3 on PBMCs

CCL24
and CCR3 levels in skin biopsies from SSc patients

Chemomab analyzed skin
samples from diffuse SSc patients and healthy volunteers and the SSc samples showed elevations in CCL24 and CCR3. Specifically, higher
accumulation of CCL24 on immune cells skin infiltration was shown in the SSc samples and CCR3 was evident in skin fibroblasts, immune
cells and endothelial cells. These elevations led to a CCL24-mediated robust activation of CCR3 expressing cells, which enhances the recruitment
of immune cells and fibroblasts to the diseased organ.

SSc
patients showed elevated levels of CCL24 in skin tissue

SSc
patients showed elevated levels of CCR3 in skin tissue

CCL24
levels in serum samples from SSc patients and correlation with fibrotic biomarkers

Chemomab researchers
analyzed SSc serum samples that showed that CCL24 levels were significantly increased in SSc patients compared with healthy individuals.
Notably, in diffuse SSc patients, CCL24 levels were fourfold higher than in healthy control patients. Additionally, the levels of
CCL24 were correlated with a biomarker of SSc severity, anti-topoisomerase, an autoantibody seen in diffuse SSc patients.

18

Preclinical
Efficacy of CM-101 in models of PSC

Preclinical experiments
in models of PSC

•

Human hepatic stellate cells demonstrated reduced transition to myofibroblasts following incubation of CM-101 with CCL24.

•

Human hepatic stellate cells showed reduced motility towards CCL24 following treatment with CM-101.

•

CM-101 demonstrated in vivo activity on liver fibrosis and cholangiocyte proliferation induced by bile duct ligation in the Sprague
Dawley rat model.

•

CM-101 (D8-a murine surrogate of CM-101) inhibits the progression of liver fibrosis and bile duct damage in a chronic cholangitis
cholestasis model using the hepatobiliary toxin ANIT.

•

CM-101 (D8) reduces bile duct epithelial cell (cholangiocyte) proliferation, collagen deposition, macrophage infiltration, liver
enzymes, bile acid and circulating inflammatory monocytes in an experimental cholangitis model in MDR2 knockout mice.

•

CM-101 reduces liver enzymes, fibrosis, collagen, and fibrotic gene expression in a TAA-induced liver fibrosis model in rats.

•

CM-101 (D8) prevented fibrosis and inflammation in a TAA-induced liver fibrosis model in mice.

Results from the multi-drug
resistant 2, or MDR2, knock out mouse model that reflects sclerosing cholangitis and the thioacetamide (TAA) rat model reflecting liver
fibrosis are described below.

CM-101 demonstrates
anti-cholestatic, anti-inflammatory, and anti-fibrotic activity in MDR2 knock out mouse model in vivo

Mice with targeted disruption
of the MDR2, transporter gene develop chronic and progressive hepatic sclerosing cholangitis that closely resembles PSC and therefore
this model has been extensively used to study the pathogenesis and progression of PSC. Using MDR2 knockout mice (six weeks of age), the
Company tested the ability of CM-101 (D8) to attenuate PSC related symptoms. Mice (n=15/group) received either vehicle control, or CM-101
10 mg/kg SC twice weekly during weeks 6-12 following established disease and were sacrificed at the end of week 12. In this study mice
were tested for changes in alkaline phosphatase, or ALP, bile acid levels, collagen deposition (histology, Sirius red), macrophage presence
in the liver and cholangiocyte proliferation. The Company observed a significant decrease in all three core pathologies that play a role
in PSC: inflammation, fibrosis and cholangiocyte proliferation after CM-101 (D8) treatment compared to non-active treatment. Reduction
in the serum markers that represent the cholestatic state, ALP and bile acid, was also observed.

19

CM-101
reduces liver fibrosis, inflammation and bile duct epithelial proliferation in MDR2 knockout model

CM-101 demonstrates
in vivo activity in a thioacetamide induced liver fibrosis model in rats using a therapeutic model

To assess potential efficacy
of CM-101 on liver fibrosis, the Company used the TAA-induced liver fibrosis model. Liver fibrosis was induced by intraperitoneal administration
of TAA at a dose of 250 mg/kg twice weekly for eight weeks. Rats (n=10/group) received either vehicle control or CM-101 2.5 mg/kg IV twice
weekly during weeks four to eight following established fibrosis and were sacrificed at week eight. After eight weeks of TAA treatment,
all vehicle-treated animals had developed liver fibrosis, as confirmed by Sirius-red-stained liver histology.

CM-101
reduces fibrosis in rat livers

Plasma ALP, ALT, and
AST levels decreased in the CM-101 study arm. Liver collagen content and fibrotic areas were significantly reduced in the CM-101 treated
group compared to non-active treatment. CM-101 was also shown to reduce fibrotic markers in the TAA treated rats.

20

Efficacy of CM-101 in models of SSc

Preclinical experiments in
models of SSc

•

CM-101 reduces SSc serum-induced dermal fibroblast activation and transition to myofibroblasts and interferes with endothelial cell
activation.

•

CM-101 treatment attenuated skin fibrotic remodeling in the bleomycin (BLM)-induced dermal fibrosis mouse model.

•

CM-101 attenuated lung fibrosis and inflammation in the bleomycin (BLM)-induced pulmonary fibrosis mouse model.

Results from the bleomycin (BLM)-induced
dermal and lung fibrosis mouse models are discussed below in more detail.

CM-101 treatment attenuates
skin fibrotic remodeling in the bleomycin (BLM)-induced dermal fibrosis mouse model

The activity of CM-101
(D8) in SSc was tested in the dermal bleomycin model. Treatment started after the onset of fibrotic signs, eight days following the first
BLM injection. Histological assessment of skin lesions stained with H&E and Masson’s trichrome revealed significant elevation
of dermal thickness and collagen deposition following 21 days of BLM administration. This elevation was significantly reduced when mice
were treated with 2.5 mg/kg CM-101 with significant reductions in both skin thickness and collagen deposition compared with the mouse
group treated with BLM alone.

CM-101
treatment attenuates skin fibrotic remodeling in the bleomycin-induced dermal fibrosis mouse model

Another feature that
characterizes the BLM model and is representative of human SSc is the development of bronchoalveolar inflammation. To evaluate the effect
of CM-101 on lung inflammation, the Company collected bronchoalveolar lavage, or, BAL, fluid, and assessed the number of white blood cells,
or WBC, and mononuclear cells. Treatment with BLM for 21 days significantly increased WBC and mononuclear cells in BAL fluid and the number
of WBC and mononuclear cells was decreased significantly following CM-101 treatment compared with the group that was administered only
BLM. This data supports the anti-inflammatory effect of CM-101 in SSc.

CM-101 inhibits lung
fibrosis in the BLM-induced pulmonary fibrosis mouse model

The Company also tested
CM-101 in the experimental lung SSc model where mice were given a single intratracheal administration of BLM followed by either CM-101,
non-active treatments (PBS or control immunoglobulin G (IgG)) or the approved anti-fibrosis drugs, pirfenidone and nintedanib. CM-101
had a significant anti-fibrotic and anti-inflammatory effect in the experimental BLM-induced lung fibrosis model as compared with non-active
treatment-treated animals. BLM animals treated with non-active treatments showed massive immune cell infiltration, extensive fibrosis
and severe tissue injury. CM-101-treated mice exhibited significantly reduced levels of lung fibrosis similar to levels in healthy animals
and showed superior effects compared to the approved fibrosis drugs pirfenidone and nintedanib.

21

CM-101
attenuates lung fibrosis and collagen deposition in the bleomycin (BLM)-induced pulmonary fibrosis mouse model

Preclinical safety and
toxicology of CM-101

Preclinical safety evaluation
of CM-101 included tissue cross reactivity, assessment of the effect of CM-101 on pro-inflammatory cytokine secretion ex-vivo, and in
vivo GLP toxicology studies in mice and non-human primates. No safety concerns were observed in these preclinical assessments.

Immunogenicity may be
triggered following administration of humanized monoclonal antibodies, an effect that is frequently seen with approved mAbs. To date,
no meaningful ADA were identified in three completed clinical studies, which supports a preliminary conclusion that CM-101 may have low
immunogenic potential.

As summarized below,
there were no safety concerns related to CM-101 in any of the other preclinical safety experiments.

22

Summary of key preclinical safety experiments

Preclinical
findings

Observation

Ex
vivo

​

Antibody dependent
cell-cytotoxic (ADCC) and complement dependent cell-cytotoxic (CDC) activity was tested in PBMCs from healthy volunteers

​

CM-101 did not have
Fc-related effector functions such as ADCC and CDC

Cytokine release was
assessed in human whole blood from healthy volunteers.

​

CM-101 did not induce pro-inflammatory cytokine
secretion

Tissue cross reactivity
was evaluated from healthy human tissues.

​

CM-101 does not bind
non-specifically to healthy tissues, and therefore is expected to only bind to its target, circulating CCL24

In
vivo

​

​

GLP repeated dose 4-week
toxicity study of CM-101 (IV) in mice

​

1. No obvious treatment related
adverse reactions

2. No gross or microscopic pathological
findings

3. No cases of treatment
related mortality were observed

4.
No significant elevation was seen in IL1β, IL2, IL4, IL5, IL10, GM-CSF, IFN and TNFα

23

GLP repeated dose (up
to 50 mg/kg) 6-month toxicity study of CM-101 (SC) in Cynomolgus Monkey

​

1. No obvious treatment
related adverse reactions

2. No clinical signs
or injection site reactions

3. No cases of treatment
related mortality were observed

4. Blood and urine tests were
found to be within normal ranges for monkeys

5. No treatment-related organ
weight changes and no treatment-related necropsy findings

6. No treatment-related histopathology findings

7. Three samples from
treated animals were confirmed ADA positive but there was no obvious correlation between positive ADA results and CM-101 serum concentrations
or systemic exposure

Preclinical
proof of mechanism studies for CM-101

The Company conducted
a series of in vitro and in vivo studies to demonstrate the proposed mechanism of action and provide proof-of-concept for administering
CM-101 in the clinic for target indications.

Affinity,
selectivity, and binding kinetics

The Company evaluated
the kinetic binding parameters of CM-101 to human CCL24, as well as the specificity of CM-101 binding to other chemokines using commercial
binding assays. CM-101 demonstrated a strong and stable, high affinity, binding to CCL24.

CM-101 reduced CCL24
dependent CCR3 activation

In an in
vitro assay, CM-101 was shown to robustly attenuate the ability of CCL24 to induce activation of the CCR3 receptor following pre-incubation
of CCL24 with CM-101.

24

Clinical
Development of CM-101

Completed studies

The CM-101 Phase 1 program
included two Phase 1a single administration, or SAD, studies, using IV and SC administration with doses ranging from 0.75-10 mg/kg, in
healthy volunteers and a Phase 1b multiple administration (MAD) study (5 administrations) in NAFLD patients with normal liver function,
testing 2.5 mg/kg IV and 5 mg/kg SC. In the Phase 1 studies 42 subjects have received at least one CM-101 dose, the majority by IV infusion
(12/42 subjects received SC).

Safety

The first Phase 1a study,
which was a single-center, randomized double-blind, placebo-controlled, single-dose, dose-escalation study, included four escalating dose
groups of eight subjects each. In each dose group subjects were randomized in a 3:1 ratio to receive a single IV infusion of either CM-101
(n=6) or placebo (n=2). A total of 24 subjects were enrolled into the study and randomized to the treatment groups (0.75 mg/ kg, 2.5 mg/kg,
5.0 mg/kg, 10 mg/kg) and eight subjects received a placebo. All 32 subjects completed the study as planned. Single, IV doses of CM-101
were safe and well tolerated up to the highest dose level (10 mg/ kg) in healthy subjects. No severe or serious adverse events, or AEs,
occurred during the study and all CM-101 related AEs were mild, with one moderate AE reported in the placebo group (myalgia).

The second Phase 1a study
was also a single-center, randomized double-blind, placebo-controlled, single-dose study, but evaluated only one dose group. Subjects
were randomized in a 3:1 ratio to receive a single SC injection of either CM-101 5 mg/kg (n=6) or matching placebo (n=2). A total of eight
subjects were enrolled into the study and randomized; all eight subjects completed the study as planned. Single, SC administration of
5 mg/kg of CM-101 was safe and well tolerated with no severe or serious AEs occurring during the study. A total of 6 AEs were reported
in two subjects treated with CM-101; only one AE was classified as related to CM-101 (change in diastolic blood pressure) and that AE
was classified as mild in intensity.

In both Phase 1a studies,
all AEs reported were resolved; no subjects discontinued the study prematurely due to AEs, and no concomitant medications were required
for treatment of any drug-related AEs. No clinically significant changes in laboratory tests (hematology, chemistry or urinalysis), vital
signs, ECG, physical examination or infusion site examination were observed. In the first Phase 1a study with CM-101 delivered by IV administration,
the effect on cytokine secretion was tested pre-treatment and one hour, eight hours and 24 hours post drug administration. Serum levels
of a panel of cytokines including IL-6, IFNγ, GM-CSF, TNF-α, IL-2, IL-4, IL-8 and IL-10 showed no significant change at all
tested CM-101 doses and timepoints. These findings suggest that single CM-101 administration does not cause immune activation nor cytokine
secretion. Additionally, none of the subjects in either of the Phase 1a studies tested positive for anti-drug antibodies (ADA).

The multiple administration
randomized, placebo-controlled, Phase 1b study in NAFLD patients with normal liver function tests evaluated two dose levels. The first
dose level of 2.5 mg/kg CM-101 was administered as an IV infusion and the second dose level of 5 mg/kg was administered as an SC injection.
Both dose levels involved five drug administrations over 12 weeks (Q3W), providing 15 weeks of treatment coverage. At both dose levels,
subjects were randomized in a 3:1 ratio to receive either CM-101 (n=6 per cohort) (2.5 mg/kg IV or 5 mg/kg SC) or matching placebo (n=2
per cohort). Five repeated IV and SC CM-101 administrations were safe and well tolerated and there were no deaths, or severe or serious
drug related AEs reported throughout the study. Only mild to moderate AEs were reported in the CM-101 treatment groups of which only two
AEs were classified as possibly related to CM-101. No injection site reactions or clinically significant trends in laboratory tests (hematology,
chemistry, or urinalysis), vital signs, ECG or physical examination were observed. One patient experienced a non-drug-related SAE. This
patient was a 61-year-old female that was subsequently diagnosed with a non-treatment related meningioma. The tumor was treated surgically,
and the patient was discontinued from the study.

25

Pharmacokinetics with
single-dose administration

PK analysis was conducted
for the Phase 1 studies and the quantification of CM-101 in plasma samples was performed using a validated ELISA-based assay by Eurofins
(UK). Following IV infusion in healthy volunteers, CM-101 exhibited a biphasic serum concentration vs. time curve (rapid distribution
phase and slow elimination phase) which is typical for monoclonal antibodies. Target-mediated drug disposition (TMDD), or presence of
ADAs, was not evident in the analyzed concentration vs. time curves of CM-101, which exhibited linear terminal slope without apparent
TMDD kinetics or other concentration-dependent changes of the elimination kinetics. Comparison of the PK data of 5 mg/kg CM-101 using
IV administration against SC administration indicates consistent distribution and elimination behavior of CM-101.

At either IV or SC administration,
the values of the PK parameters obtained in the non-compartmental and compartmental analysis of CM-101 concentration vs. time data appear
to be typical for monoclonal antibodies that undergo FcRn-mediated recycling. The terminal half-life of CM-101 was long for both SC and
IV formulations, which supports administration of CM-101 at a frequency of once every 2-4 weeks.

Pharmacokinetics with
multiple-dose administration

PK analysis of the data
from the Phase 1b study was conducted to evaluate CM-101 following multiple IV infusion of 2.5 mg/kg or 5 mg/kg SC injections of CM-101
in NAFLD patients. Following repeated IV infusions (2.5 mg/kg Q3W) and SC injection (5 mg/kg Q3W), CM-101 exhibited a long terminal half-life,
similar to the terminal half-life seen in the single dose studies. CM-101 accumulated over time, resulting in significant systemic exposure
over time and potentially reaching a steady state.

Overall, CM-101 reached
steady state conditions more slowly following SC injection, as compared to IV infusion. The inter-patient variability in CM-101 serum
concentrations was higher for SC dosing injection, as compared to IV. The trough CM-101 serum concentrations after repeated 5 mg/kg SC
injections were proportionally higher than those after 2.5 mg/kg IV infusions, considering the difference in administration modes. Comparison
of the PK data of CM-101 in the Phase 1b to the Phase 1a studies indicates a consistency in PK behavior of CM-101.

Pharmacodynamics and
target engagement of CM-101

Serum was taken from
patients in all three Phase 1 studies at different times and the levels of both CCL24 and CM-101 were measured. Total CCL24 levels represent
CM-101’s engagement to its target. Total CCL24 levels were increased following administration of the drug, which indicates that
CM-101 is effective in target engagement, as the higher levels of CCL24 correlated significantly with greater doses of CM-101, and such
levels decreased gradually from the peak of CM-101 administration. These findings demonstrate that CM-101 effectively binds to CCL24 in
the circulation, which reflects a strong drug-target interaction.

In the Phase 1b study,
CM-101 treatment of 2.5mg/kg IV attained the highest levels of total CCL24 by the third administration, maintaining these levels until
the end of treatment. CM-101 5mg/kg administered by SC injection reached the highest levels of CCL24 by the fourth treatment and maintained
these levels until the end of treatment. The matching placebo did not have any effect on CCL24 levels.

As exemplified in the
in-vitro studies, binding of CCL24 by CM-101 attenuates the binding of CCL24 to its cognate CCR3 receptor, thereby reducing its downstream
activation. Altogether, CCL24 levels following treatment with CM-101 provide strong evidence for target engagement and pharmacodynamic
response of CM-101 in healthy volunteers and patients.

Phase 1b exploratory
endpoints

Fibrotic biomarkers were
analyzed as part of the Phase 1b study in NAFLD patients with normal liver function. Circulating fibrotic biomarkers were tested in serum
pre- and post-treatment. The analysis included data from patients that presented with more active disease, reflected by baseline elastography
(FibroScan) score >4 kPa. Tissue inhibitor of metalloproteinases-1 (TIMP-1) and tissue inhibitor of metalloproteinases-2 (TIMP-2),
considered well established fibrotic biomarkers, were evaluated, and showed that CM-101 treatment led to reductions of both markers by
week 15. The growth factor PDGF-AA, known as a pro-fibrotic secreted factor, was also reduced in CM-101 treated patients. Conversely,
in the placebo group TIMP-1, TIMP-2 and PDGF-AA all increased.

26

Evaluation of the fibrogenesis
and fibrolysis/inflammatory biomarkers, Pro-C3, Pro-C4 and C3M measured in serum, conducted by Nordic Bioscience, Copenhagen, Denmark,
were also used as sensitive indicators of the liver’s fibrotic state. In accordance with reduced liver stiffness, Pro-C3, Pro-C4
and C3M were all reduced in the CM-101 treated groups. No reductions were identified in the placebo control group.

Changes in liver stiffness,
a measurement of liver fibrosis, were also evaluated using FibroScan measurements taken at screening and end of treatment (EoT) following
15 weeks of treatment coverage. 80% of CM-101 treated patients had significant decreases in FibroScan measurements, unlike placebo patients
where there was no significant change from baseline

Results of investigator-initiated
clinical study of CM-101 in patients with COVID-19-derived lung damage

On November 9, 2022, encouraging clinical
data from an investigator-initiated clinical study assessing CM-101 activity and safety in hospitalized patients with severe lung injury
derived from COVID-19 infection was presented at the 2022 Union Conference, an international conference on lung health. A key rationale
for the study is that some of the mechanisms underlying lung inflammation resulting from COVID-19 infection are similar to those seen
in systemic sclerosis and other chronic diseases involving lung inflammation and fibrosis.

The objective was to evaluate the safety
and activity of CM-101 in hospitalized COVID-19 patients with severe pneumonia, including its impact on biomarkers related to lung inflammation
that are also relevant in SSc. The open label, single arm trial enrolled 16 hospitalized adult
COVID-19 patients with severe respiratory involvement. All patients were receiving standard of care therapy. All were treated with a single
10mg/kg intravenous dose of CM-101 on the first day of the study and followed for 30 days.

Administration of CM-101 to this acutely
ill patient population appeared safe and was well tolerated. CM-101 exposures and target engagement profiles were similar to what our
researchers have seen in previous clinical studies of CM-101.

Importantly, rapid reductions in serum biomarkers
of lung inflammation, fibrogenesis and neutrophil activity were observed post-treatment with CM-101. Overall,
this study confirmed and extended the safety and tolerability profile of CM-101 and demonstrated clinically relevant changes in biomarkers
associated with lung inflammation and fibrogenesis, further supporting CM-101’s anti-inflammatory and anti-fibrotic effects.

Moreover, we believe that these results
add to the data suggesting that CM-101 has the potential to attenuate lung inflammation and fibrosis, further strengthening the rationale
for treating SSc patients with this drug. These new clinical data also contribute to a growing body of evidence demonstrating CM-101’s
anti-fibrotic and anti-inflammatory effects in varied organs including the lung, liver and skin.

Topline results of Phase
2a study in patients with liver fibrosis derived from NASH

Primary endpoints for
the study were safety and tolerability. Secondary endpoints included the evaluation of the pharmacokinetic and target engagement profile
of the SC formulation as well as changes in relevant biomarkers that may provide further mechanistic understanding of CM-101 effects on
liver fibrosis. This trial was primarily designed to assess a subcutaneous formulation of CM-101 and to evaluate the drug’s impact
on liver fibrosis biomarkers relevant to both NASH and fibro-inflammatory conditions that represent the focus for the company, such as
PSC and SSc.

The randomized, placebo-controlled
trial enrolled 23 NASH patients with stage F1c, F2 and F3 disease who were randomized to receive either CM-101 or placebo. Patients received
eight doses of 5 mg/kg of study drug administered by subcutaneous injection once every two weeks, for a treatment period of 16 weeks.
Key findings of the CM-101 Phase 2a trial included the following.

• CM-101 appeared to be safe and
was well tolerated when administered subcutaneously. Most reported adverse events observed were mild, with one unrelated serious adverse
event reported. No significant injection site reactions were reported and no anti-drug antibodies were detected.

• CM-101
administered subcutaneously demonstrated favorable pharmacokinetics and target engagement profiles as expected and were similar to what
the company has previously reported.

• CM-101-treated
patients showed greater improvements than the placebo group in a number of liver fibrosis-related biomarkers, including ProC-3, ProC-4,
ProC-18, TIMP-1 and ELF.

• A
majority of CM-101-treated patients showed improvements in more than one liver fibrosis-related biomarker—almost 60% of CM-101 patients
responded in at least three biomarkers at week 20, compared to no patients in the placebo group.

•
A higher proportion of patients in the CM-101-treated group showed improvement in a physiologic measure of liver stiffness as compared
to placebo (reduction of at least one grade of fibrosis score as assessed by the non-invasive elastography method known as FibroScan®).

• CM-101-treated
patients with higher CCL24 levels at baseline showed greater reductions in fibrosis-related biomarkers than patients with lower levels.
Multiple fibrosis-related biomarkers showed more pronounced reductions in CM-101-treated patients who had higher CCL24 levels at baseline
than in patients with lower CCL24 levels at baseline, adding to the growing body of evidence validating the role of CCL24 in the pathophysiology
of fibrotic liver disease.

27

• After
completion of the study, the unblinded data showed that patients in the CM-101-treated group had higher baseline levels of fibrosis compared
to placebo patients. The impact of this difference on the results, if any, is unknown.

We believe that
the data from this trial provide important insights in support of the CM-101 development program, including the favorable safety and tolerability
of CM-101 in patients with serious liver disease, confirmation of early signs of biomarker activity that are relevant for a number of
fibro-inflammatory disorders, and support of the tolerability and pharmacokinetic data needed to assess next steps in the development
of our current subcutaneous formulation.

Other
clinical development activities for CM-101

Recently, Chemomab also
reported positive clinical data from an investigator-initiated clinical study assessing CM-101 activity and safety in hospitalized patients
with severe lung injury derived from COVID-19. The objective of the study was to evaluate the drug’s safety and activity in hospitalized
COVID-19 patients with severe pneumonia, including its impact on biomarkers related to lung inflammation that are also relevant in systemic
sclerosis. The open label, single arm trial enrolled 16 hospitalized adult COVID-19 patients with severe respiratory involvement. All
patients were receiving standard of care therapy. All were treated with a single 10mg/kg intravenous dose of CM-101 on the first day of
the study and followed for 30 days. Administration of CM-101 to this acutely ill patient population appeared to be safe and was well tolerated.
CM-101 exposures and target engagement profiles were similar to what our researchers have seen in previous clinical studies of CM-101.
Importantly, rapid reductions in serum biomarkers of lung inflammation, fibrogenesis and neutrophil activity were observed post-treatment
with CM-101. Overall, this study confirmed and extended the safety and tolerability profile of CM-101 and demonstrated clinically relevant
changes in biomarkers associated with lung inflammation and fibrogenesis, further supporting CM-101’s anti-inflammatory and anti-fibrotic
effects.

Together, these promising
results provide initial support for CM-101’s anti-fibrotic and anti-inflammatory mechanisms in humans and support further testing
of CM-101 in PSC and SSc patients.

Current and planned
clinical studies for PSC and SSc

The Company is currently recruiting and
treating PSC patients in a Phase 2 study at multiple sites in Israel, the United States and Europe and expanding the trial to include
an additional dose level and an open label extension. The Company is also planning to initiate a Phase 2 study in SSc around midyear of
2023 that will enroll patients across multiple sites in Israel, the United States and Europe.

The ongoing Phase 2 trial
in PSC is a randomized, double-blind, placebo-controlled, study designed to evaluate the safety and efficacy of CM-101 in adult subjects
with PSC. Participants must have a serum alkaline phosphatase, or ALP, level of at least 1.5 times the upper limit of normal (x 1.5 ULN).
Subjects with concomitant IBD are eligible for recruitment if their disease is stable and there is an absence of high-grade dysplasia
in colonic biopsies within 18 months of randomization. To date, subjects are randomized to receive 10 mg/kg CM-101 IV, or placebo, in
a 2:1 ratio. Chemomab has amended the study to include a higher dose level (20mg/kg) of CM-101. Patients will receive a dose of investigational
product once every three weeks for a total of five administrations resulting in a total coverage of 15 weeks during the double-blind portion
of the study. Chemomab is adding a 33-week long open-label extension to the study.

The primary endpoint
for the study is safety and tolerability. Secondary endpoints include evaluations of changes from baseline in serum alkaline phosphatase,
or ALP, levels and the fibrotic marker enhanced liver function, or ELF, score at week 15. ALP is a liver enzyme that is elevated in cholestasis
and the ELF score is a biochemical test panel made up of serum markers that are indicators of the extracellular matrix. Additional secondary
endpoints include evaluations of changes from baseline in other liver enzymes and additional fibrotic markers, to include AST, ALT, Pro-C3
and Pro-C5. PK, PD and ADA parameters.

28

The planned Phase 2 study in SSc will enable
an expedited path to proof-of-concept data and further elucidation of different CM-101 mechanisms of actions in treating SSc skin, lung
and vascular damage. To that end, we will slightly enrich the study with SSc patients who have higher levels of CCL24 and may therefore
be more likely to respond to neutralization of this critical chemokine Chemomab is currently finalizing the design. The U.S. FDA recently
cleared the Company’s IND application to commence the Phase 2 SSc trial and we plan to initiate the study around midyear of 2023.
Key design elements include the following.

•

The trial is a randomized, double-blind, placebo-controlled study that will enroll 45 SSc patients.

•

To be eligible for the study, patients must manifest two key characteristics: the presence of clinically active disease, either dermatologic
or pulmonary, and higher serum levels of circulating CCL24.

•

Thirty patients will be randomized to treatment with CM-101 and 15 will be randomized to placebo.

•

Of the patients on active treatment, approximately half will have limited SSc, and half will have diffuse cutaneous disease.

•

The study includes a 24-week double blind period during which patients assigned to active treatment will receive CM-101 at a dose
of 10 mg/kg, via intravenous infusion, every three weeks.

•

Following the double-blind period, patients will enter a 24-week open label treatment period, where all patients will receive CM-101
at a dose of 10 mg/kg via intravenous infusion every three weeks.

•

All patients enrolled will undergo a skin biopsy at baseline and again after the double-blind treatment period, along with multiple
clinical assessments of skin, vascular and pulmonary function.

•

The primary outcome measure for the trial will be demonstration of the safety and tolerability of treatment with CM-101.

•

All other outcome measures will be principally assessed as changes from baseline to the end of the double-blind treatment period.

The secondary outcome
measures of the trial are focused on highly relevant and informative biological read-outs. Key secondary outcomes include: evaluation
of multiple serum-based biological markers that are known to be associated with different manifestations of SSc including:

•

Inflammatory cytokines (such a CCL2, IL6 and CXCL10), vascular and growth factor-related biomarkers (such as VEGF and PDGF), pulmonary-related
biomarkers (such as KL-6, SPD and CCL18), and fibrogenesis and extracellular matrix biomarkers (collagens, MMPs and ELF score).

•

Inflammatory, fibrotic and target expression markers in skin biopsies, including but not limited to CCL24 and CCR3 expression levels.

•

Pharmacokinetics and target engagement of CM-101.

•

Monitoring for the presence of any potential anti-drug antibodies during the study.

Exploratory biological
outcomes assessments will include immune cell phenotyping, assessments of neutrophil function, and ex-vivo biological assays. Exploratory
clinical outcomes will include evaluation of: vascular involvement, using nail fold capillaroscopy; vascular imaging and digital ulcer
burden; skin involvement using modified Rodnan scoring; pulmonary disease involvement using pulmonary function tests; and multiple patient-reported
outcome measures. The data collected should also enable evaluation of global effects of intervention with CM-101 using the American
College of Rheumatology CRISS scale (ACR-CRISS) and the revised CRISS scale (rCRISS). We intend to conduct this study at multiple sites
in Israel, the United States and Europe.

Competition

The development and commercialization
of new drug products is highly competitive across major pharmaceutical companies, specialty pharmaceutical companies and biotechnology
companies worldwide. The Company faces competition with respect to its current product and expects to face competition with respect to
any product candidates that it may develop or commercialize in the future. Specifically, there are a number of companies developing treatments
for fibrotic/inflammatory diseases, including multiple major pharmaceutical and biotechnology companies with substantially greater resources
than the Company. The Company is a small biotech company with limited resources compared to the major pharmaceutical companies, however,
the Company believes that the unique CM-101 platform together with its knowledge and experience in inflammatory-fibrotic research provides
it with competitive advantages.

29

Therapeutic options for
PSC and SSc are limited and despite significant biopharmaceutical industry investment, the FDA has not approved any disease modifying
therapies for the treatment of PSC or SSc. Liver transplant is currently the only treatment shown to improve clinical outcomes for PSC
patients while SSc patients are being treated with drugs that were approved for different manifestations of the disease like interstitial
lung disease (nintedanib, Boehringer Ingelheim and tocilizumab, Hoffmann-La Roche).

The Company is advancing
CM-101, a first-in-class monoclonal antibody that interferes directly with both inflammation and fibrosis, into clinical development for
the treatment of PSC and SSc. There are a number of large biopharmaceutical and biotechnology companies that are currently pursuing the
development of products for the treatment of fibrotic indications like PSC and SSc, such as, Mitsubishi Tanabe Pharma, Horizon Therapeutics,
Pliant Therapeutics, Prometheus Biosciences and others. However, the Company knows of no other companies currently in clinical development
with a monoclonal antibody that targets CCL24.

Although the approach
is novel with respect to targeting both inflammation and fibrosis, the Company will need to compete with products further advanced in
the pipeline towards market approval. Investigational products, include:

•

PSC

There are currently no
FDA-approved therapies for the treatment of PSC. Companies currently developing product candidates in Phase 3 clinical studies include
Gilead and Dr. Falk Pharma, targeting cholestasis and liver metabolism (Gilead; Cilofexor, Dr. Falk; norUrso). Additional companies with
clinical candidates in earlier stages of development include HighTide Biopharmaceutical, Mirum Pharmaceuticals and Pliant Inc.

•

SSc

There are currently two
FDA approved products for the treatment of clinical manifestations of SSc--nintedanib, marketed by Boehringer Ingelheim GmbH and tocilizumab,
marketed by Hoffmann-La Roche for the treatment of interstitial lung disease. Companies currently developing product candidates in SSc
in early clinical stage include Horizon, Mitsubishi Tanabe, GS Johnson & Johnson, Vicore, Sanofi, Prometheos Biosciences and others.

The availability of reimbursement
from government and other third-party payors will affect the pricing and competitiveness of CM-101 and any future products. More advanced
competitors also may obtain regulatory approval for their products more rapidly than the Company, which could result in competitors establishing
a strong market position.

Intellectual Property

Overview

The Company strives to
protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of its
business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. The
Company also relies on trade secrets relating to its proprietary technology platform and know-how, continuing technological innovation
and in-licensing opportunities to develop, strengthen, and maintain its proprietary position in the field of inflammation and fibrosis
that may present areas of opportunity for the development of its business. The Company may also rely on regulatory protection afforded
through data exclusivity, market exclusivity, and patent term extensions, where available.

The Company’s commercial
success may depend in part on its ability to: obtain and maintain patent and other proprietary protection for commercially important technology,
inventions and know-how related to its business; defend and enforce its patents; preserve the confidentiality of its trade secrets; and
operate without infringing the valid enforceable patents and proprietary rights of third parties. The Company’s ability to prevent
third parties from making, using, selling, offering to sell, or importing the Company’s products may depend on the extent to which
it has rights under valid and enforceable licenses, patents, or trade secrets that cover these activities. In certain cases, enforcement
of these rights may depend on third party licensors. With respect to both licensed and company-owned intellectual property rights, the
Company cannot be sure that patents will be granted with respect to any of its pending patent applications or with respect to any patent
applications that may be filed by the Company in the future, nor can the Company be sure that any of its existing patents or any patents
that may be granted to it in the future will be commercially useful in protecting its commercial products and methods of manufacturing
the same.

30

As of the date of this
Annual Report on Form 10-K, the Company owned or licensed seven pending or issued US patents and patent applications as well as patents
and patent applications in other jurisdictions. The first patent family has been issued in each of the United States, Europe (validated
in France, Germany and the United Kingdom) and Israel to the Tel Aviv Souraski Medical Center, whose rights have been licensed to the
Company on an exclusive basis. A composition of matter patent was issued in United States and certain corresponding foreign jurisdictions.
To date, three additional patent families were filed by the Company concerning the use of anti CCL24 antibodies in specific indications,
dosing regimens, and routes of administration. The Company will seek United States and foreign patent protection for a variety of additional
technologies, including: research compounds and methods, candidate compounds and antibodies for modulating the activity of CCL24, methods
for treating diseases of interest, and methods for treating its products. The Company will seek additional protection, in part, through
confidentiality and proprietary information agreements.

Company
Owned Intellectual Property

The Company owns multiple
families of patent applications that pertain to anti-CCL24 monoclonal antibody compositions capable of blocking CCL24 activity and methods
for treating or preventing diseases associated with inflammation and fibrosis. Certain applications in these families relate to the Company’s
CM-101 antibody, backup variants, various unit dosages, dosing regimens, and other routes of administration. Patents that are or will
be issued from these submissions will expire between the years 2035 to 2041, subject to possible patent term adjustments and/or extensions.

In addition to the above,
the Company has established expertise and development capabilities focused in the areas of preclinical research and development, manufacturing
and manufacturing process development, quality control, quality assurance, regulatory affairs, and clinical study design and implementation.
The Company believes that its focus and expertise will help the Company develop products based on its proprietary intellectual property.

Licensed
IP

As mentioned above, the
Company has obtained an exclusive license from the Tel Aviv Souraski Medical Center for one patent, which is expected to expire in 2029.
This patent was issued in each of the United States, Europe and Israel, and pertains to anti CCL24 inhibitors (specifically, anti CCL24
antibodies) and methods of using such inhibitors for treating inflammatory, autoimmune and cardiovascular diseases.

Trade
Secret Protection

The Company may rely,
in some circumstances, on trade secrets to protect its technology. The Company seeks to protect its proprietary technology and processes,
in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors, and contractors. The Company
also seeks to preserve the integrity and confidentiality of its data and trade secrets by maintaining physical security of its premises
and physical and electronic security of its information technology systems.

31

Material
Agreements

Tel-Aviv Souraski Medical
Center (TASMC) License Agreement

In December 2011, the
Company entered into a license agreement, or the TASMC Agreement, with the Medical Research, Infrastructure, Health Services Fund of the
Tel Aviv Souraski Medical Center., or TASMC, for the research, development and commercialization of the CCL24 platform and CCR3 blockade
platform (CM-101), which license includes patent rights covering the foregoing platforms and related know how and products. Under the
terms of the TASMC Agreement, the Company is responsible for the research, development, manufacturing and commercialization of CM-101.
This license was granted on an exclusive basis and the Company was also granted rights to sublicense the instant license to third parties
pursuant to certain terms described therein.

In accordance with the
TASMC Agreement, the Company paid TASMC a non-refundable and non-creditable payment in four milestone installments, related to TASMC’s
past patent maintenance and prosecution costs.

Certain additional terms
of the TASMC Agreement include:

•

The Company will be required to pay TASMC non-refundable and non-creditable milestone payments of up
to (i) $300,000 upon the submission of an NDA, BLA or equivalent for each of the licensed products to the FDA and to equivalent European
and Asian foreign regulatory agencies, and (ii) $600,000 upon the grant by the FDA or equivalent European and/or Asian regulatory agencies
of their marketing approval for each licensed product;

•

In the event of an “exit,” as such term is defined therein, the Company must pay TASMC an
exit fee of 1% of the transaction consideration (which shall be capped at $3 million);

•

In the event the Company sublicenses a licensed product, the Company must pay TASMC a sublicense fee
of 10% of all attributed income, in addition to a low-single digit percentage tiered royalty payment of our earned royalties.

Unless terminated earlier,
the TASMC Agreement will expire upon the later of the expiration of the last-to-expire valid patent claim and any extension granted prior
thereto. The termination of the TASMC Agreement will not preclude TASMC from receiving sublicense payments or royalties. In addition to
the foregoing, the TASMC Agreement includes customary termination provisions.

CMC Collaboration Agreement

In June 2015, the Company
entered into a collaboration agreement, or the CMC Agreement, with CMC ICOS Biologics, Inc. (acquired by AGC Biologics in 2018), or CMC,
which, under the terms thereof, granted the Company certain licenses to use proprietary rights, materials and know-how of CMC for purposes
of research and development of CM-101 as well as commercialization thereof. Pursuant to the terms of the CMC Agreement, the Company received
(i) a worldwide, non-exclusive, non-transferable, non-sublicensable license for research purposes, or the Research License, and (ii) an
option, or the Option License, to a worldwide, non-exclusive, non-transferable, sublicensable license for commercialization purposes,
subject to a fee schedule in addition to that described below.

In accordance with the
terms of the CMC Agreement, the Company agreed to pay in exchange for the foregoing license payments to CMC upon the achievement of certain
pre-determined clinical and regulatory events, an amount stipulated in the CMC Agreement, aggregating a six-digit number. Additionally,
for any product that is commercialized pursuant to the CMC Agreement, the Company is required to pay CMC a royalty payment based on annual
aggregate worldwide net sales thresholds for such products. In the event CMC exclusively manufactures the Company’s products, CMC
agrees to waive the foregoing royalty.

Unless terminated earlier
pursuant to the customary termination provisions set forth in the CMC Agreement, the Research License will expire upon the conclusion
of the term as defined therein, and the Option License will expire upon the later of (a) the tenth anniversary following the Company’s
obtainment of regulatory approval, or (b) the last to expire of the patent rights and country-by-country basis.

32

Manufacturing

The Company’s product
candidate, CM-101, is a monoclonal antibody amenable to standard formulation technologies. The Company has developed the biological process
and manufactured kilogram quantities through processes similar to the manufacturing processes that will be required to provide drug product
for the Phase 2 clinical studies. The manufacturing process of the drug substance used for such product candidates is robust, well established
and requires the use of readily available starting materials. The biological route is amenable to large-scale production and does not
require unconventional equipment or handling during the manufacturing process. The Company has obtained an adequate supply chain of the
drug substance for CM-101 from the Company’s contract manufacturing organization, or CMO, to satisfy both the Company’s clinical
and preclinical requirements for this year. The Company relies on a sole supplier for the manufacture of CM-101. The Company’s manufacturer
has the capabilities to support late stage clinical studies as well as product launch and marketing.

The Company does not
own or operate facilities for clinical drug manufacturing, storage, distribution or quality testing. Currently, all of the Company’s
clinical manufacturing is outsourced to third-party manufacturers. As the Company’s development programs expand and it builds new
process efficiencies, the Company expects to continually evaluate this strategy with the objective of satisfying demand for its clinical
studies and, if approved, the manufacture, sale and distribution of commercial products.

Commercialization

The Company intends to
develop and, if approved by the FDA, to commercialize its product candidates alone or in collaboration with others. The Company may work
in combination with one or more large pharmaceutical partners for certain indications, where specialist capabilities are needed. The Company
intends to enter into distribution or licensing arrangements for global or regional commercialization rights. The Company will, however,
continuously review its partnering strategy in the light of new clinical data and market understanding.

Regulatory Matters

The Food and Drug Administration,
or FDA, and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome
requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those the
Company is developing. These agencies and other federal, state and local entities regulate, among other things, the research and development,
testing, manufacture, quality control, safety, effectiveness, labelling, storage, record keeping, approval, advertising and promotion,
distribution, post-approval monitoring and reporting, sampling and export and import of the Company’s product candidates.

United
States government regulation of drug products

Drugs in the United States
are subject to rigorous regulation under the Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The FDA also regulates
biological products under the FDCA and the Public Health Service Act, or PHSA. If the Company advances clinical development of a biologic
candidate in the future, these development activities will be subject to additional regulatory requirements specific to biologics. The
process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and
regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable United States
requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety
of administrative or judicial sanctions, such as the FDA’s refusal to approve a pending New Drug Application, or NDA, withdrawal
of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension
of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

33

The process required
by the FDA before a drug or biologic may be marketed in the United States generally involves the following:

•

Completion of preclinical
laboratory tests, animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice, or GLP, regulations;

•

Submission to the FDA of an Investigational
New Drug application, or IND, which must become effective before human clinical studies may begin;

•

Approval by an Institutional
Review Board, or IRB, at each clinical site before each study may be initiated;

•

Performance of adequate and well-controlled
human clinical studies in accordance with Good Clinical Practice, or GCP requirements to establish the safety and efficacy of the proposed
drug product for each indication;

•

Completion of all manufacturing
requirements to ensure robust manufacturing process, and product quality and safety as per Good Manufacturing Practice, or cGMP guidelines;

•

Completion of non-clinical reproductive
studies, as applicable, prior to late stage clinical studies and NDA or Biologics License Application, or BLA, submission;

•

Development of an appropriate
pediatric plan for clinical testing or exclusion, pre- or post-approval, as applicable;

•

Submission to the FDA of an NDA
or BLA;

•

Satisfactory completion of an
FDA advisory committee review, if applicable;

•

Satisfactory completion of an
FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements
and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

•

Satisfactory completion of FDA
audits of clinical study sites to assure compliance with GCPs and the integrity of the clinical data;

•

Payment of user fees and securing
FDA approval of the NDA;

•

FDA review and approval of an
NDA or BLA; and

•

Compliance with any post-approval
requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategies, or REMS, and the potential
requirement to conduct post-approval studies.

Preclinical
studies

Preclinical studies include
laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy.
An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available
clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND
is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns
or questions related to one or more proposed clinical studies and places the clinical study on a clinical hold. In such a case, the IND
sponsor and the FDA must resolve any outstanding concerns before the clinical study can begin. As a result, submission of an IND may not
result in the FDA allowing clinical studies to initiate.

34

Clinical
studies

Clinical studies involve
the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with
GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation
in any clinical study. Clinical studies are conducted under protocols detailing, among other things, the objectives of the study, the
parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical study and any
subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating
in the clinical study must review and approve the plan for any clinical study before it initiates at that institution. Information about
certain clinical studies must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination
on their www.clinicaltrials.gov website.

Human clinical studies
are typically conducted in three sequential phases, which may overlap or be combined. A fourth, or post-approval, phase may include additional
clinical studies. These phases generally include the following:

•

Phase
1: The drug or biologic is initially introduced into healthy human subjects
or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion
and, if possible, to gain an early indication of its effectiveness. For some products for severe or life-threatening diseases, especially
if the product may be too toxic to administer to healthy humans, the initial clinical trials may be conducted in individuals having a
specific disease for which use the tested product is indicated.

•

Phase
2: The drug or biologic is administered is administered to a limited patient
population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted
diseases and to determine dosage tolerance and optimal dosage.

•

Phase
3: The drug or biologic is administered to an expanded patient population,
generally at geographically dispersed clinical study sites, in well-controlled clinical studies to generate enough data to statistically
evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide
adequate information for the labeling of the product.

•

Phase
4: Phase 4 clinical trials are studies required of, or agreed to by, a sponsor
that are conducted after the FDA has approved a product for marketing. These studies are used to gain additional experience from the treatment
of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs approved under accelerated
approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval,
a company may be able to use the data from these clinical trials to meet all or part of any Phase 4 clinical trial requirement. Failure
to promptly conduct Phase 4 clinical trials where necessary could result in withdrawal of approval for products approved under accelerated
approval regulations.

Progress reports detailing
the results of the clinical studies must be submitted at least annually to the FDA and more frequently if serious adverse events occur.
Phase 1, Phase 2 and Phase 3 studies may not be completed successfully within any specified period, or at all. Furthermore, the FDA or
the sponsor may suspend or terminate a clinical study at any time on various grounds, including a finding that the research subjects are
being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical study at its institution
if the clinical study is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected
serious harm to patients.

35

Marketing
approval

Assuming successful completion
of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to
the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an
NDA or BLA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA or BLA is subject
to a substantial application user fee. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the
FDA has a goal of ten months from the date of “filing” of a standard NDA, for a new molecular entity to review and act on
the submission. This review typically takes twelve months from the date the NDA or BLA is submitted to FDA because the FDA has approximately
two months to make a “filing” decision.

In addition, under the
Pediatric Research Equity Act of 2003, or PREA, as amended and reauthorized, certain NDAs/BLAs or supplements thereof must contain data
that are adequate to assess the safety and effectiveness of the drug 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. 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 approval
of the product for use in adults, or full or partial waivers from the pediatric data requirements. An Agreed Initial Pediatric Study Plan
requesting a waiver from the requirement to conduct clinical studies may be submitted to the FDA.

The FDA also may require
submission of a REMS plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician
communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries,
or other risk minimization tools.

The FDA conducts a preliminary
review of all NDAs/BLAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently
complete to permit substantive review. The FDA may request additional information rather than accept an NDA/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 substantive review. The FDA reviews
an NDA/BLA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured,
processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.

The FDA may refer an
application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and
other scientific experts, which reviews, evaluates and provides a recommendation as to whether the application should be approved and
under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully
when making decisions.

Before approving an NDA,
the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless
it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent
production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical
study sites to assure compliance with GCP requirements.

After evaluating the
NDA/BLA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing
facilities and clinical study sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response
letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA/BLA and may
require additional clinical or preclinical testing in order for the FDA to reconsider the application. Even with submission of this additional
information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those
conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes
commercial marketing of the drug with specific prescribing information for specific indications.

36

Even if the FDA approves
a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included
in the product labeling, require that post-approval studies, including Phase 4 clinical studies, be conducted to further assess a drug’s
safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions,
including distribution and use restrictions or other risk management mechanisms under a 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-marketing
studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing
changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.

FDA
Expedited Development and Review Programs

The FDA has various programs,
including fast track designation, priority review, accelerated approval, and breakthrough
therapy designation, which are intended to expedite or simplify the process for the development and FDA review of drugs that are intended
for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.
The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures.

The FDA has a fast track
designation program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria.
Specifically, new drugs are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or
condition and demonstrate the potential to address unmet medical needs for the disease or condition. With regard to a fast track product,
the FDA may consider for review sections of the NDA/BLA on a rolling basis before the complete application is submitted, if the sponsor
provides a schedule for the submission of the sections of the NDA/BLA, the FDA agrees to accept sections of the NDA/BLA and determines
that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA/BLA.

Any product submitted
to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended
to expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if it
has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement
in the treatment, diagnosis, or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources
to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review.

In addition, a product
may be eligible for accelerated approval. Drug products intended to treat serious or life-threatening diseases or conditions may be eligible
for accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict
clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably
likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity,
or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require
a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible
morbidity or mortality, or other clinical endpoint and to submit promotional materials for preapproval and pre-use review, which could
adversely impact the timing of the commercial launch of the product. In addition, the drug may be subject to accelerated withdrawal procedures.
On December 29, 2022, the Consolidated Appropriations Act, 2023, including the Food and Drug Omnibus Reform Act (FDORA), was signed into
law. FDORA made several changes to the FDA’s authorities and its regulatory framework, including, among other changes, reforms to
the accelerated approval pathway, such as requiring the FDA to specify conditions for post-approval study requirements and setting forth
procedures for the FDA to withdraw a product on an expedited basis for non-compliance with post-approval requirements.

The Food and Drug Administration
Safety and Innovation Act established a category of drugs referred to as “breakthrough therapies” that may be eligible to
receive breakthrough therapy designation. A sponsor may seek FDA designation of a product candidate as a “breakthrough therapy”
if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or
condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies
on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation
includes all of the fast track program features, as well as more intensive FDA interaction and guidance. The breakthrough therapy designation
is a distinct status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria
are met. If a product is designated as breakthrough therapy, the FDA will work to expedite the development and review of such drug.

37

In addition, the FDA
may review new drug applications under the Oncology Center of Excellence Real-Time Oncology Review (“RTOR”), which, according
to the FDA, aims to explore a more efficient review process to ensure that safe and effective treatments are available to patients as
early as possible, while maintaining and improving review quality. Drugs considered for review under RTOR must be likely to demonstrate
substantial improvements over available therapy, which may include drugs previously granted breakthrough therapy designation for the same
or other indications, and must have straight-forward study designs and endpoints that can be easily interpreted. RTOR allows the FDA to
review much of the data in an NDA/BLA earlier, before the applicant formally submits the complete application. This analysis of the pre-submission
package gives the FDA and applicants an early opportunity to address data quality and potential review issues and allows the FDA to provide
early feedback regarding the most effective way to analyze data to properly address key regulatory questions.

Fast track designation,
priority review, accelerated approval, and breakthrough therapy designation do not change the standards for approval, but may expedite
the development or approval process. Even if a product qualifies for one or more of these programs, the FDA may later decide that the
product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Orphan
drug designation and exclusivity

Under the Orphan Drug
Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition (generally
meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation
that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be
recovered from sales of the product). A company must request orphan product designation before submitting an NDA. If the request is granted,
the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan product designation does not convey any advantage
in or shorten the duration of the regulatory review and approval process. As of the current date, the Company has obtained orphan drug
designation for three indications, PSC, SSc and IPF.

If a product with orphan
status receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use
within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity.
Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same indication for
seven years, except in certain limited circumstances. If a drug or drug product designated as an orphan product ultimately receives marketing
approval for an indication broader than what was designated in its orphan product application, it may not be entitled to exclusivity.
Orphan exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same
active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy
or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market
demand. Further, the FDA may approve more than one product for the same orphan indication or disease as long as the products contain different
active ingredients. Moreover, competitors may receive approval of different products for the indication for which the orphan product has
exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

38

In Catalyst
Pharms., Inc. v. Becerra, 14 F.4th 1299 (11th Cir. 2021), the court disagreed with the FDA’s longstanding position that the
orphan drug exclusivity only applies to the approved use or indication within an eligible disease. This decision created uncertainty in
the application of the orphan drug exclusivity. On January 24, 2023, the FDA published a notice in the Federal Register to clarify that
while the agency complies with the court’s order in Catalyst, FDA intends to continue to
apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst
order – that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug
is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease
or condition that have not yet been approved. It is unclear how future litigation, legislation, agency decisions, and administrative actions
will impact the scope of the orphan drug exclusivity.

United
States marketing exclusivity

Market exclusivity provisions
under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent
marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is
a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule
or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an Abbreviated
New Drug Application, or ANDA, or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does
not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four
years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity
for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were
conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, new indications,
dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use associated with the new clinical
investigations and does not prohibit the FDA from approving ANDAs for the original non-modified version of the drug. Five-year and three-year
exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to
conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical studies necessary to
demonstrate safety and effectiveness.

Abbreviated Licensure
Pathway of Biological Products as Biosimilars or Interchangeable Biosimilars

The Patient Protection and Affordable Care
Act (Affordable Care Act or ACA), signed into law in 2010, includes the Biologics Price Competition and Innovation Act of 2009 (BPCIA),
which created an abbreviated approval pathway for biological products shown to be highly similar to an FDA-licensed reference biological
product. The BPCIA attempts to minimize duplicative testing, and thereby lower development costs and increase patient access to affordable
treatments. An application for licensure of a biosimilar product must include information demonstrating biosimilarity based upon the following,
unless the FDA determines otherwise:

•

Analytical studies demonstrating that the proposed biosimilar product is highly similar to the approved product notwithstanding minor
differences in clinically inactive components;

•

Animal studies (including the assessment of toxicity); and

•

A clinical trial or trials (including the assessment of immunogenicity and pharmacokinetic or pharmacodynamic) sufficient to demonstrate
safety, purity and potency in one or more conditions for which the reference product is licensed and intended to be used.

In addition, an application must include information
demonstrating that:

•

The proposed biosimilar product and reference product utilize the same mechanism of action for the condition(s) of use prescribed,
recommended or suggested in the proposed labeling, but only to the extent the mechanism(s) of action are known for the reference product;

39

•

The condition or conditions of use prescribed, recommended or suggested in the labeling for the proposed biosimilar product have
been previously approved for the reference product;

•

The route of administration, the dosage form and the strength of the proposed biosimilar product are the same as those for the reference
product; and

•

The facility in which the biological product is manufactured, processed, packed or held meets standards designed to assure that the
biological product continues to be safe, pure and potent.

Biosimilarity means that the biological product
is highly similar to the reference product notwithstanding minor differences in clinically inactive components, and that there are no
clinically meaningful differences between the biological product and the reference product in terms of the safety, purity and potency
of the product. In addition, the law provides for a designation of “interchangeability” between the reference and biosimilar
products, whereby the biosimilar may be substituted for the reference product without the intervention of the healthcare provider who
prescribed the reference product. The higher standard of interchangeability must be demonstrated by information sufficient to show that:

•

The proposed product is biosimilar to the reference product;

•

The proposed product is expected to produce the same clinical result as the reference product in any given patient; and

•

For a product that is administered more than once to an individual, the risk to the patient in terms of safety or diminished efficacy
of alternating or switching between the biosimilar and the reference product is no greater than the risk of using the reference product
without such alternation or switch.

FDA approval is required before a biosimilar
may be marketed in the United States. However, complexities associated with the large and intricate structures of biological products
and the process by which such products are manufactured pose significant hurdles to the FDA’s implementation of the law that are
still being worked out by the FDA. For example, the FDA has discretion over the kind and amount of scientific evidence—laboratory,
preclinical and/or clinical—required to demonstrate biosimilarity to a licensed biological product.

The FDA intends to consider the totality of
the evidence provided by a sponsor to support a demonstration of biosimilarity and recommends that sponsors use a stepwise approach in
the development of their biosimilar products. Biosimilar product applications thus may not be required to duplicate the entirety of preclinical
and clinical testing used to establish the underlying safety and effectiveness of the reference product. However, the FDA may refuse to
approve a biosimilar application if there is insufficient information to show that the active ingredients are the same or to demonstrate
that any impurities or differences in active ingredients do not affect the safety, purity or potency of the biosimilar product. In addition,
as with BLAs, biosimilar product applications will not be approved unless the product is manufactured in facilities designed to assure
and preserve the biological product’s safety, purity and potency.

The submission of a biosimilar application
does not guarantee that the FDA will accept the application for filing and review, as the FDA may refuse to accept applications that it
finds are insufficiently complete. The FDA will treat a biosimilar application or supplement as incomplete if, among other reasons, any
applicable user fees assessed under the Biosimilar User Fee Act of 2012 have not been paid. In addition, the FDA may accept an application
for filing but deny approval on the basis that the sponsor has not demonstrated biosimilarity, in which case the sponsor may choose to
conduct further analytical, preclinical or clinical studies and submit a BLA for licensure as a new biological product.

The timing of final FDA approval of a biosimilar
for commercial distribution depends on a variety of factors, including whether the manufacturer of the branded product is entitled to
one or more statutory exclusivity periods, during which time the FDA is prohibited from approving any products that are biosimilar to
the branded product. The FDA cannot approve a biosimilar application for twelve years from the date of first licensure of the reference
product.

Additionally, a
biosimilar product sponsor may not submit an application for four years from the date of first licensure of the reference product. A reference
product may also be entitled to exclusivity under other statutory provisions. For example, a reference product designated for a rare disease
or condition (an orphan drug) may be entitled to seven years of exclusivity, in which case no product that is biosimilar to the reference
product may be approved until either the end of the twelve-year period provided under the biosimilarity statute or the end of the seven-year
orphan drug exclusivity period, whichever occurs later. In certain circumstances, a regulatory exclusivity period can extend beyond the
life of a patent, and thus block biosimilarity applications from being approved on or after the patent expiration date. In addition, the
FDA may under certain circumstances extend the exclusivity period for the reference product by an additional six months if the FDA requests,
and the manufacturer undertakes, studies on the effect of its product in children, a so-called pediatric extension.

40

Pediatric exclusivity
is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing
regulatory exclusivity periods. This six-month exclusivity may be granted based on the voluntary completion of a pediatric study in accordance
with an FDA-issued “Written Request” for such a study.

Post-approval
requirements

Drugs and biologics manufactured
or distributed pursuant to FDA approvals 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 and reporting
of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other
labeling claims are subject to prior FDA review and approval. There are continuing, annual user fee requirements for any marketed products
and the establishments where such products are manufactured, as well as new application fees for supplemental applications with clinical
data.

The FDA may impose a
number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including
Phase 4 clinical studies, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

In addition, drug and
biologic manufacturers and other entities involved in the manufacture and distribution of approved drugs and biologics 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. 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 requirements
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.

Once an approval of a
drug or biologic is granted, the FDA may withdraw the approval 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 mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies
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, complete withdrawal of the product from the market or product recalls;

•

Fines, warning
letters or holds on post-approval clinical studies;

•

Refusal of
the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product approvals;

•

Product seizure
or detention, or refusal to permit the import or export of products; and

•

Injunctions
or the imposition of civil or criminal penalties.

41

The FDA strictly regulates
marketing, labeling, advertising and promotion of products that are placed on the market. Drugs and biologics may be promoted by a manufacturer
and any third parties acting on behalf of a manufacturer only for the approved indications and in a manner consistent with the approved
label for the product. 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.

Other
healthcare laws

Healthcare providers,
physicians, and third party payors play a primary role in the recommendation and prescription of drug products for which the Company obtains
marketing approval. Arrangements with third party payors, healthcare providers and physicians, in connection with the clinical research,
sales, marketing and promotion of products, once approved, and related activities, may expose a pharmaceutical manufacturer to broadly
applicable fraud and abuse and other healthcare laws and regulations. In the United States, these laws include, without limitation, state
and federal anti-kickback, physician self-referral prohibitions, false claims, physician transparency, and patient data privacy and security
laws and regulations, including but not limited to those described below:

•

The federal Anti-Kickback Statute, or AKS, which makes it illegal for any person, including a prescription
drug manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer or pay any remuneration (including
any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, that is intended to induce or reward,
referrals including the purchase recommendation, order or prescription of a particular drug for which payment may be made under a federal
healthcare program, such as the Medicare and Medicaid programs. 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. In addition, the government may assert that a claim including
items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes
of the federal False Claims Act, or FCA;

•

The federal
civil and criminal false claims laws, including the FCA, which can be enforced through “qui tam” or “whistleblower”
actions, and civil monetary penalty laws, which impose criminal and civil penalties against individuals or entities for, among other things,
knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal health care
programs that are false or fraudulent; knowingly making or causing a false statement material to a false or fraudulent claim or an obligation
to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing
such an obligation. Similar to the AKS and Stark Law, a person or entity does not need to have actual knowledge of these statutes or specific
intent to violate them in order to have committed a violation;

•

The federal
Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit
knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program 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, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or
covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment
for, healthcare benefits, items or services relating to healthcare matters;

•

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009,
or HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans,
and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the creation,
use, receipt, maintenance or disclosure of individually identifiable health information, relating to the privacy, security and transmission
of individually identifiable health information;

42

•

The federal
Physician Payments Sunshine Act, created under Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010, or collectively, the ACA, and its implementing regulations, which require manufacturers of drugs, devices,
biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program
to report annually to the Centers for Medicare and Medicaid Services, or CMS, under the Open Payments Program, information related to
payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors),
certain non-physician healthcare professionals (such as physician assistants and nurse practitioners, among others), and teaching
hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
and

•

Analogous
state and foreign laws and regulations, such as state and foreign anti-kickback, physician self-referral prohibitions, false claims, consumer
protection and unfair competition laws which may apply to pharmaceutical business practices, including but not limited to, research, distribution,
sales and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payor,
including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that
may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to file reports with
states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration
and items of value provided to healthcare professionals and entities; state and local laws requiring the registration of pharmaceutical
sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many
of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the
narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of a pharmaceutical manufacturer’s
business activities could be subject to challenge under one or more of such laws. Efforts to ensure that business arrangements comply
with applicable healthcare laws involve substantial costs. It is possible that governmental and enforcement authorities will conclude
that a pharmaceutical manufacturer’s business practices do not comply with current or future statutes, regulations or case law interpreting
applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against a pharmaceutical manufacturer,
and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, including
the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, imprisonment, monetary fines, possible
exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reporting obligations and oversight if the Company
becomes subject to integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm,
diminished profits and future earnings, and curtailment of operations, any of which could adversely affect a pharmaceutical manufacturer’s
ability to operate its business and the results of operations. In addition, commercialization of any drug product outside the United States
will also likely be subject to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

Prescription drug advertising is subject to
federal, state and foreign regulations. In the United States, the FDA regulates prescription drug promotion, including direct-to-consumer
advertising. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution
of prescription drug products and pharmaceutical samples must comply with the United States Prescription Drug Marketing Act, or PDMA,
a part of the FDCA. In addition, Title II of the Federal Drug Quality and Security Act of 2013, known as the Drug Supply Chain Security
Act, or DSCSA, has imposed new “track and trace” requirements on the distribution of prescription drug products by manufacturers,
distributors, and other entities in the drug supply chain. The DSCSA requires product identifiers (i.e., serialization) on prescription
drug products in order to eventually establish an electronic interoperable prescription product system to identify and trace certain prescription
drugs distributed in the United States and preempts existing state drug pedigree laws and regulations on this topic. The DSCSA also establishes
new requirements for the licensing of wholesale distributors and third-party logistic providers. The FDA is in the process of finalizing
regulations addressing national standards for the licensure of wholesale distributors and third-party logistics providers.

43

In the United States, numerous federal and
state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state
consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information. For
example, in June 2018, the State of California enacted the California Consumer Privacy Act of 2018, or the CCPA, which came into
effect on January 1, 2020 and provides new data privacy rights for consumers and new operational requirements for companies, which
may increase the Company’s compliance costs and potential liability. The CCPA gives California residents expanded rights to access
and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their
personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches
that is expected to increase data breach litigation. While there is currently an exception for protected health information that is subject
to HIPAA and clinical study regulations, as currently written, the CCPA may impact certain of the Company’s business activities.
The CCPA could mark the beginning of a trend toward more stringent state privacy legislation in the United States, which could increase
the Company’s potential liability and adversely affect its business.

In the event the Company decides to conduct
clinical studies or continue to enroll subjects in its ongoing or future clinical studies, the Company may be subject to additional privacy
restrictions. The collection, use, storage, disclosure, transfer, or other processing of personal data regarding individuals in the European
Economic Area, or EEA, including personal health data, is subject to the EU General Data Protection Regulation, or GDPR, which became
effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal
data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the
personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the
security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party
processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the United
States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up
to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data
subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for
damages resulting from violations of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers. The GDPR may
increase the Company’s responsibility and liability with respect to personal data that the Company processes where such processing
is subject to the GDPR, and it may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as
implemented by individual countries. Compliance with the GDPR will be a rigorous and time-intensive process that may increase the Company’s
cost of doing business or require it to change its business practices, and despite those efforts, there is a risk that the Company may
be subject to fines and penalties, litigation, and reputational harm in connection with its European activities. Further, the United Kingdom’s
decision to leave the EU, often referred to as Brexit, has created uncertainty with regard to data protection regulation in the United
Kingdom and transfers of personal data to the UK and from the UK to both the EEA and countries outside the UK/EEA. For the time being,
transfers of personal data from the EU to the UK are covered by an adequacy decision of the EU Commission, and the UK has recently implemented
its own regime for safeguarding transfers from the UK to countries outside the UK/EEA which sit alongside the new EU safeguards which
were brought in during 2021. However, both the adequacy decision and the UK regime remain vulnerable to withdrawal or legal challenge.
Further both the new UK and EU personal data transfer regimes remain relatively untested and therefore impose risk that a transfer of
personal data and/or its subsequent processing would be held unlawful and give rise to liabilities from administrative fines and/or damages
claims from data subjects.

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Current
and future healthcare reform legislation

In both the United States and certain foreign
jurisdictions, there have been a number of legislative and regulatory changes to the health care system. In particular, in 2010 the ACA
was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate
Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations,
subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that
increase the federal government’s comparative effectiveness research.

In
addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011,
the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on
Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021,
was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This
includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in 2013, and, due to subsequent
legislative amendments, will remain in effect through 2031, with
the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020, through March 31, 2022.
Under current legislation, the actual reduction in Medicare payments can vary from 1% in 2022 to up to 4% in the final fiscal year of
this sequester. The American Taxpayer Relief Act of
2012 further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute
of limitations period for the government to recover overpayments to providers from three to five years. The Bipartisan Budget Act
of 2018, also amended the ACA, effective January 1, 2019, by increasing the point-of-sale discount that is owed by pharmaceutical
manufacturers who participate in Medicare Part D and closing the coverage gap in most Medicare drug plans, commonly referred to as
the “donut hole”.

Additionally, there has been heightened governmental
scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. In
August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications
for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price
for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the
drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if
their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for
beneficiaries, among other changes. The impact of these legislative, executive, and administrative actions and any future healthcare measures
and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear. The implementation
of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or
commercialize any of the product candidates for which we receive approval. At the state level, legislatures have increasingly passed legislation
and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, designed
to encourage importation from other countries and bulk purchasing.

Legislative and regulatory proposals, and
enactment of laws, at the foreign, federal and state levels, directed at containing or lowering the cost of healthcare, will continue
into the future.

Rest
of World Regulation

For other countries outside of the European
Union and the United States, such as countries in Eastern Europe, Latin America or Asia, the requirements governing product development,
the conduct of clinical studies, manufacturing, distribution, marketing approval, product licensing, pricing and reimbursement vary from
country to country. Additionally, clinical studies must be conducted in accordance with GCP requirements and the applicable regulatory
requirements and the ethical principles that have their origin in the Declaration of Helsinki.

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If the Company fails to comply with applicable
foreign regulatory requirements, the Company may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals,
product recalls, seizure of products, operating restrictions and criminal prosecution.

Additionally, to the extent that any of the
Company’s product candidates, once approved, are sold in a foreign country, it may be subject to applicable post-marketing requirements,
including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments
or other transfers of value to healthcare professionals.

Coverage
and reimbursement

Successful commercialization of new drug products
depends in part on the extent to which reimbursement for those drug products will be available from government health administration authorities,
private health insurers, and other organizations. Government authorities and third-party payors, such as private health insurers and health
maintenance organizations, decide which drug products they will pay for and establish reimbursement levels. The availability and extent
of reimbursement by governmental and private payors is essential for most patients to be able to afford a drug product. Sales of drug
products depend substantially, both domestically and abroad, on the extent to which the costs of drugs products are paid for by health
maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration
authorities, private health coverage insurers and other third-party payors.

A primary trend in the United States healthcare
industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting
coverage and the amount of reimbursement for particular drug products. In many countries, the prices of drug products are subject to varying
price control mechanisms as part of national health systems. In general, the prices of drug products under such systems are substantially
lower than in the United States. Other countries allow companies to fix their own prices for drug products, but monitor and control company
profits. Accordingly, in markets outside the United States, the reimbursement for drug products may be reduced compared with the United
States.

In the United States, the principal decisions
about reimbursement for new drug products are typically made by CMS, an agency within the U.S. Department of Health and Human Services.
CMS decides whether and to what extent a new drug product will be covered and reimbursed under Medicare, and private payors tend to follow
CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors
and coverage and reimbursement levels for drug products can differ significantly from payor to payor.

The Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, or the MMA, established the Medicare Part D program to provide a voluntary prescription drug benefit
to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities
that provide coverage of outpatient prescription drugs. While all Medicare drug plans must give at least a standard level of coverage
set by Medicare, Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each Part D
prescription drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However,
Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs,
though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed
and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand
for drugs for which the Company obtains marketing approval. Any negotiated prices for any of the Company’s products covered by a
Part D prescription drug plan will likely be lower than the prices it might otherwise obtain. Moreover, while the MMA applies only
to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their
own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental
payors.

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For a drug product to receive federal reimbursement
under the Medicaid or Medicare Part B programs or to be sold directly to United States government agencies, the manufacturer must
extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is
calculated based on the average manufacturer price, or AMP, and Medicaid rebate amounts reported by the manufacturer. As of 2010, the
ACA expanded the types of entities eligible to receive discounted 340B pricing, although under the current state of the law these newly
eligible entities (with the exception of children’s hospitals) will not be eligible to receive discounted 340B pricing on orphan
drugs. As 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP
definition described above could cause the required 340B discount to increase. If third-party payors do not consider the Company’s
drugs to be cost-effective compared to other available therapies, they may not cover the Company’s drugs after approval as a benefit
under their plans or, if they do, the level of payment may not be sufficient to allow the Company to sell its drugs on a profitable basis.

These laws, and state and federal healthcare
reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding and otherwise
affect the prices the Company may obtain for any product candidates for which it may obtain regulatory approval or the frequency with
which any such product candidate is prescribed or used.

Outside of the United States, the pricing
of pharmaceutical products and medical devices is subject to governmental control in many countries. For example, in the European Union,
pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after
a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost effectiveness
of a particular therapy to currently available therapies or so-called health technology assessments, in order to obtain reimbursement
or pricing approval. Other countries may allow companies to fix their own prices for products, but monitor and control product volumes
and issue guidance to physicians to limit prescriptions. Efforts to control prices and utilization of pharmaceutical products and medical
devices will likely continue as countries attempt to manage healthcare expenditures.

Employees
and Human Capital Resources

As
of December 31, 2022, the Company had 37 full-time employees/consultants, including 10 with Ph.D. or M.D. degrees and 13 who are engaged
in research and development activities. The Company is dependent on its management and scientific personnel, and it is crucial that it
continues to attract and retain valuable employees. To facilitate attraction and retention, the Company strives to make itself an inclusive
and safe workplace, with opportunities for its employees to grow and develop in their careers, supported by strong compensation and benefits
programs. None of the Company’s employees are represented by labor unions or covered by collective bargaining agreements.

Corporate
Information and History

We
were incorporated on September 22, 2011, under the laws of the State of Israel. In March 2021, in connection with the Merger, we changed
our name from Anchiano Therapeutics Ltd. to Chemomab Therapeutics Ltd. Our principal executive offices are located at Kiryat Atidim, Building
7, Tel Aviv, Israel 6158002, and our phone number is +972-77-331-0156. Our website is: www.chemomab.com. The
information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report.

Available Information

Our investor relations
website is https://investors.chemomab.com/. We promptly make available on our investor relations
website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business
Conduct and Ethics) and all press releases. We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, proxy and information statements and amendments to reports filed or furnished pursuant to the Exchange Act. The SEC maintains a website
at www.sec.gov that contains reports, proxy and information statements and other information regarding Chemomab and other issuers that
file electronically with the SEC.

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