10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

OR

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

For the transition period from _______ to _______

Commission file number: 001-37769

VBI VACCINES INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada	N/A
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

160 Second Street Cambridge, Massachusetts	02142
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 617-830-3031

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value per share	VBIV	Nasdaq Capital Market

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

Yes ☒ No ☐

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

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, no par value per share	258,257,494
(Class)	Outstanding at May 9, 2022

VBI VACCINES INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		5
Item 1.	Condensed Consolidated Financial Statements	5
	Condensed Consolidated Balance Sheets - March 31, 2022 (unaudited) and December 31, 2021	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021 (unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity for three months ended March 31, 2022 and 2021 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II - OTHER INFORMATION		37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosure	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		40

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
CONTAINED IN THIS REPORT

This quarterly report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “will,” “may,” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers, and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations, or projections described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2022. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

● the timing of, and our ability to, obtain and maintain regulatory approvals for our clinical trials, products, and pipeline candidates;

● our ability to achieve and sustain commercial success of PreHevbrio in the U.S and PreHevbri in Europe;

● the timing and results of our ongoing and planned clinical trials for products and pipeline candidates;

● the amount of funds we require for our prophylactic and therapeutic pipeline candidates;

● the potential benefits of strategic partnership agreements and our ability to enter into strategic partnership arrangements;  

● our ability to manufacture, or to have manufactured, our 3-antigen hepatitis B vaccine and our pipeline candidates, at a commercially viable scale to the standards and requirements of regulatory agencies;

● the impact of the ongoing COVID-19 pandemic on our clinical studies, research programs, manufacturing, business plan, regulatory review including site inspections, and the global economy;

● our ability to effectively execute and deliver our plans related to commercialization, marketing, manufacturing capabilities and strategy;

● our ability to retain and maintain a good relationship with our current employees, and our ability to competitively attract new employees with relevant experience and expertise;

● the suitability and adequacy of our office, manufacturing, and research facilities and our ability to secure term extensions or expansions of leased space;

● the ability of our vendors and suppliers to manufacture and deliver materials in a timely manner that meet regulatory agency and our standards and requirements to meet planned timelines and milestones;

● any disruption in the operations of our Rehovot, Israel manufacturing facility where we manufacture all of our clinical and commercial supplies of our 3-antigen hepatitis B vaccine and clinical supplies of our hepatitis B immunotherapeutic, VBI-2601;

● our compliance with all laws, rules, and regulations applicable to our business and products;

● our ability to continue as a going concern;

● our history of losses;

● our ability to generate revenues and achieve profitability;

● emerging competition and rapidly advancing technology in our industry that may outpace our technology;

● customer demand for our 3-antigen hepatitis B vaccine and pipeline candidates;

● the impact of competitive or alternative products, technologies, and pricing;

● general economic conditions and events and the impact they may have on us and our potential customers;

● our ability to obtain adequate financing in the future on reasonable terms, as and when we need it;

● our ability to implement network systems and controls that are effective at preventing cyber-attacks, malware intrusions, malicious viruses, and ransomware threats;

● our ability to secure and maintain protection over our intellectual property;

● our ability to maintain our existing licenses with licensors of intellectual property, or obtain new licenses for intellectual property;

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● changes to legal and regulatory processes for biosimilar approval and marketing that could reduce the duration of market exclusivity for our products;  

● our success at managing the risks involved in the foregoing items;  

● our ability to maintain compliance with the NASDAQ Capital Market’s listing standards; and  

● other factors discussed in this Form 10-Q.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless otherwise stated or the context otherwise requires, the terms “VBI,” “we,” “us,” “our,” and the “Company” refer to VBI Vaccines Inc. and its subsidiaries.

Unless indicated otherwise, all references to the U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America and all references to € mean Euros, the legal currency of the European Union. We may also refer to NIS, which is the New Israeli Shekel, the legal currency of Israel, and the Canadian Dollar or CAD, which is the legal currency of Canada.

Except for share and per share amounts or as otherwise specified to be in millions, amounts presented are stated in thousands.

4

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	March 31, 2022			December 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$	101,337		$	121,694
Accounts receivable, net		102			8
Inventory, net		4,057			2,576
Prepaid expenses		2,167			2,373
Other current assets		4,684			3,633
Total current assets		112,347			130,284
NON-CURRENT ASSETS
Other long-term assets		1,446			1,259
Property and equipment, net		10,846			11,037
Right of use assets		3,846			3,344
Intangible assets, net		63,218			62,091
Goodwill		2,303			2,261
Total non-current assets		81,659			79,992
TOTAL ASSETS	$	194,006		$	210,276
CURRENT LIABILITIES
Accounts payable	$	3,927		$	4,280
Other current liabilities		23,733			26,941
Current portion of deferred revenues		649			526
Current portion of long-term debt		4,744			-
Current portion of lease liability		938			839
Total current liabilities		33,991			32,586
NON-CURRENT LIABILITIES
Deferred revenues, net of current portion		2,168			2,277
Long-term debt, net of debt discount and current portion		24,788			28,441
Lease liability, net of current portion		2,921			2,516
Liabilities for severance pay		574			574
Total non-current liabilities		30,451			33,808
COMMITMENTS AND CONTINGENCIES (NOTE 14)		-			-
STOCKHOLDERS’ EQUITY
Common shares (unlimited authorized; no par value) (March 31, 2022 - issued and outstanding 258,257,494; December 31, 2021 - issued and outstanding 258,250,273)		442,272			442,235
Additional paid-in capital		81,314			81,583
Accumulated other comprehensive (loss) income		3,538			(1,565	)
Accumulated deficit		(397,560	)		(378,371	)
Total stockholders’ equity		129,564			143,882
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	194,006		$	210,276

See accompanying Notes to Condensed Consolidated Financial Statements

5

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended March 31
	2022			2021
Revenues	$	126			301
Operating expenses:
Cost of revenues		2,754			2,412
Research and development		2,362			6,839
General and administrative		10,930			6,747
Total operating expenses		16,046			15,998
Loss from operations		(15,920	)		(15,697	)
Interest expense, net of interest income		(940	)		(1,812	)
Foreign exchange loss		(4,394	)		(138	)
Loss before income taxes		(21,254	)		(17,647	)
Income tax expense		-			-
NET LOSS	$	(21,254	)		(17,647	)
Other comprehensive income		5,103			343
COMPREHENSIVE LOSS	$	(16,151	)		(17,304	)
Net loss per share of common shares, basic and diluted	$	(0.08	)		(0.07	)
Weighted-average number of common shares outstanding, basic and diluted		258,256,692			251,292,761

See accompanying Notes to Condensed Consolidated Financial Statements

6

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

	Number of Common Shares		Share Capital		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
BALANCE AS OF DECEMBER 31, 2021		258,250,273	$	442,235	$	81,583		$	(1,565	)	$	(378,371	)	$	143,882
Adjustments for prior periods from adoption of ASU 2020-06		-		-		(2,746	)		-			2,065			(681	)
Common shares issued upon exercise of options		7,221		12		-			-			-			12
Stock-based compensation		-		25		2,477			-			-			2,502
Net loss		-		-		-			-			(21,254	)		(21,254	)
Currency translation adjustments		-		-		-			5,103			-			5,103
BALANCE AS OF MARCH 31, 2022		258,257,494	$	442,272	$	81,314		$	3,538		$	(397,560	)	$	129,564
BALANCE AS OF DECEMBER 31, 2020		247,039,010	$	403,528	$	75,530		$	1,265		$	(308,618	)	$	171,705
Common shares issued in financing transactions, net of share issuance costs		5,752,068		21,417		-			-			-			21,417
Common shares issued upon exercise of warrants		34,494		52		-			-			-			52
Common shares issued upon of conversion of long-term debt		1,369,863		2,000		-			-			-			2,000
Stock-based compensation		-		51		2,088			-			-			2,139
Net loss		-		-		-			-			(17,647	)		(17,647	)
Unrealized holding loss on short-term investments		-		-		-			(54	)		-			(54	)
Currency translation adjustments		-		-		-			397			-			397
BALANCE AS OF MARCH 31, 2021		254,195,435	$	427,048	$	77,618		$	1,608		$	(326,265	)	$	180,009

See accompanying Notes to Condensed Consolidated Financial Statements

7

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	For the Three Months Ended March 31
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(21,254	)	$	(17,647	)
Adjustments to reconcile net loss to cash and cash equivalents used in operating activities:
Depreciation and amortization		473			446
Stock-based compensation		2,502			2,139
Amortization of debt discount		410			1,611
Inventory reserve		220			122
Interest accrued on short-term investments		-			(111	)
Unrealized foreign exchange loss		4,297			165
Net change in operating working capital items:
Change in accounts receivable		(94	)		(100	)
Change in inventory		(1,744	)		(214	)
Change in prepaid expenses		209			486
Change in other current assets		(928	)		616
Change in other long-term assets		(197	)		(152	)
Change in operating right of use assets		342			270
Change in accounts payable		(459	)		(2,114	)
Change in deferred revenues		(11	)		(103	)
Change in other current liabilities		(3,350	)		8,211
Payments made on operating lease liabilities		(341	)		(269	)
Net cash flows used in operating activities		(19,925	)		(6,644	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(515	)		(556	)
Net cash flows used in investing activities		(515	)		(556	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares for cash		-			22,113
Share issuance costs		-			(541	)
Proceeds from issuance of common shares for cash, upon exercise of options		12			52
Net cash flows provided by financing activities		12			21,624
Effect of exchange rates on cash and cash equivalents		71			(23	)
CHANGE IN CASH AND CASH EQUIVALENTS, FOR THE PERIOD		(20,357	)		14,401
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		121,694			93,825
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	101,337		$	108,226
Supplementary information:
Interest paid	$	604		$	403
Non-cash investing and financing activities:
Adjustments for prior periods from adoption of ASU 2020-06		681			-
Common shares issued upon conversion of debt		-			2,000
Capital expenditures included in accounts payable and other current liabilities		146			119
Share issuance costs included in other current liabilities		67			155
Unrealized holding gains on short term investment		-			(54	)

See accompanying Notes to Condensed Consolidated Financial Statements

8

VBI Vaccines Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(in thousands, except share and per share amounts)

1. NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

Corporate Overview

VBI Vaccines Inc. (the “Company” or “VBI”) was incorporated under the laws of British Columbia, Canada on April 9, 1965.

The Company and its wholly-owned subsidiaries, VBI Vaccines (Delaware) Inc., a Delaware corporation (“VBI DE”); VBI DE’s wholly-owned subsidiary, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI US”); Variation Biotechnologies, Inc. a Canadian company and the wholly-owned subsidiary of VBI US (“VBI Cda”); and SciVac Ltd. an Israeli company (“SciVac”); SciVac Hong Kong Limited (“SciVac HK”) and VBI Vaccines B.V a Netherlands company (“VBI BV”), are collectively referred to as the “Company”, “we”, “us”, “our”, or “VBI”.

The Company’s registered office is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 with its principal office located at 160 Second Street, Floor 3, Cambridge, MA 02142. In addition, the Company has manufacturing facilities located in Rehovot, Israel and research facilities located in Ottawa, Ontario, Canada.

Principal Operations

VBI Vaccines Inc. (“VBI”) is a commercial stage biopharmaceutical company driven by immunology in the pursuit of prevention and treatment of disease. Through its innovative approach to virus-like particles (“VLPs”), including a proprietary enveloped VLP (“eVLP”) platform technology, VBI develops vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. VBI is committed to targeting and overcoming significant infectious diseases, including hepatitis B (“HBV”), COVID-19 and coronaviruses, and cytomegalovirus (“CMV”), as well as aggressive cancers including glioblastoma (“GBM”). VBI is headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel.

The ongoing COVID-19 pandemic has materially negatively affected and continues to affect the global economy, and there is continued severe uncertainty about the duration and intensity of the impacts of the pandemic. As a result, the Company’s business and results of operations have also been adversely affected and could continue to be adversely affected by COVID-19 which has necessitated restricting the number of personnel in the Company’s research laboratories and manufacturing facility at any given point in time, and has slowed recruitment to clinical trials. The extent to which the COVID-19 pandemic will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted. We do not yet know the full extent of potential delays or impacts on our business, our clinical studies, our research programs, the recoverability of our assets, and our manufacturing; however, the COVID-19 pandemic may continue to disrupt or delay our business operations, including with respect to efforts relating to potential business development transactions, and it could continue to disrupt the marketplace which could have an adverse effect on our operations. 

9

Liquidity and Going Concern

The Company has a limited operating history and faces a number of risks, including but not limited to, uncertainties regarding the success of the development and commercialization of its products, demand and market acceptance of the Company’s products, and reliance on major customers. The Company anticipates that it will continue to incur significant operating costs and losses in connection with the development and commercialization of its products.

The Company had an accumulated deficit of $397,560 as of March 31, 2022 and cash outflows from operating activities of $19,925 for the three months ended March 31, 2022.

The Company will require significant additional funds to conduct clinical and non-clinical trials, commercially launch our products, and achieve regulatory approvals. The Company plans to finance near term future operations with existing cash and cash equivalent reserves. Additional financing may be obtained from the issuance of equity securities, the issuance of additional debt, structured asset financings, government or non-governmental organization grants or subsidies, and/or revenues from potential business development transactions, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Financial instruments recognized in the condensed consolidated balance sheet consist of cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, and other current liabilities. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The Company does not hold any derivative financial instruments.

The carrying amounts of the Company’s other long-term assets approximate their respective fair values.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the SEC, for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2021 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”), as filed with the SEC on March 7, 2022.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: VBI DE, VBI US, VBI Cda, SciVac, SciVac HK, and VBI BV. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements. Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

10

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2021 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2022, other than the polices discussed below.

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts on an entity’s own equity. Specifically, the new standard has removed the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It has also removed certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation for convertible instruments.

On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method and recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. Our conversion option that was previously bifurcated and recorded as a debt discount and additional paid-in capital has now been combined as a single instrument classified as a liability. The Company eliminated the beneficial conversion feature from additional paid-in capital; eliminated the interest accretion on the beneficial conversion feature through December 31, 2021 from the opening balance of accumulated deficit; and eliminated the corresponding debt discount. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows:

	Balance as at December 31, 2021			Adjustments from adoption of ASU 2020-06			Balance as at January 1, 2022
Liabilities
Long-term debt, net of debt discount	$	28,441		$	681		$	29,122
Stockholders’ equity
Additional paid-in capital	$	81,583		$	(2,746	)	$	78,837
Accumulated deficit	$	(378,371	)	$	2,065		$	(376,306	)

Recently Issued Accounting Standards, not yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“2016-13”). The amendments in ASU 2016-13, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. ASU 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This ASU will be implemented through a modified retrospective method of transition. The Company is currently evaluating the potential impact of ASU 2016-13 on its condensed consolidated financial statements. 

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4. INVENTORY, NET

Inventory consists of the following:

	March 31, 2022		December 31, 2021
Finished goods	$	305	$	-
Work-in-process		866		645
Raw materials		2,886		1,931
Total	$	4,057	$	2,576

5. OTHER CURRENT ASSETS

Other current assets consisted of the following:

	March 31, 2022		December 31, 2021
Government receivables	$	2,769	$	1,438
Other current assets		1,915		2,195
Total	$	4,684	$	3,633

6. INTANGIBLE ASSETS AND GOODWILL

			March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(678	)	$	-		$	47	$	38
IPR&D assets		61,500		-			(300	)		1,980		63,180
	$	62,169	$	(678	)	$	(300	)	$	2,027	$	63,218

			December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(660	)	$	-		$	47	$	56
IPR&D assets		61,500		-			(300	)		835		62,035
	$	62,169	$	(660	)	$	(300	)	$	882	$	62,091

The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives.

The change in carrying value for IPR&D assets from December 31, 2021 relates to currency translation adjustments which increased by $1,145 for the three months ended March 31, 2022.

			March 31, 2022
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(119	)	$	2,303

			December 31, 2021
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(161	)	$	2,261

The change in carrying value for goodwill from December 31, 2021 relates to currency translation adjustments which increased by $42 for the three months period ended March 31, 2022.

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7. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2022		December 31, 2021
Accrued research and development expenses (including clinical trial accrued expenses)	$	7,334	$	8,196
Accrued professional fees		3,906		2,294
Payroll and employee-related costs		2,495		4,805
Deferred funding		8,657		10,183
Other current liabilities		1,341		1,463
Total	$	23,733	$	26,941

8. LOSS PER SHARE OF COMMON SHARES

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, and stock options, which would result in the issuance of incremental shares of common shares unless such effect is anti-dilutive. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as their effect would be anti-dilutive. These potentially dilutive securities are more fully described in Note 10, Stockholders’ Equity and Additional Paid-in Capital.

The following potentially dilutive securities outstanding at March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2022		March 31, 2021
Warrants		1,384,469		3,163,172
Stock options and restricted stock units		23,390,983		18,139,335
K2 conversion feature		1,369,863		1,369,863
Total		26,145,315		22,672,370

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9. LONG-TERM DEBT

As of March 31, 2022, and December 31, 2021, the long-term debt is as follows:

	March 31, 2022		December 31, 2021
Long-term debt, net of debt discount of $2,692 ($3,783 at December 31, 2021)	$	29,532	$	28,441
Less: current portion, net of debt discount of $396 ($0 at December 31, 2021)		4,744		-
Long-term debt	$	24,788	$	28,441

On May 22, 2020, the Company (along with its subsidiary VBI Cda) entered into the Loan and Guaranty Agreement (the “Loan Agreement”) with K2 HealthVentures LLC and any other lender from time-to-time party thereto (the “Lenders”) pursuant to which we received the first tranche secured term loan of $20,000 (the “First Tranche Term Loan”). The Lenders originally agreed to make available the following additional tranches subject to the following conditions and upon the submission of a loan request by the Company: (1) up to $10,000 available between January 1, 2021 and April 30, 2021 upon achievement of certain milestones (the “Second Tranche Term Loan”), (2) $10,000 available between the closing date and December 31, 2021, subject to achievement of a certain U.S. Food and Drug Administration (“FDA”) approval (the “Third Tranche Term Loan”), and (3) a final tranche of up to $10,000 that could be made available any time prior to June 30, 2022, subject to the advance of the Third Tranche Term Loan, satisfactory review by the administrative agent of our financial and operating plan, and approval by the Lenders’ investment committee. The Company obtained FDA approval on November 30, 2021 but elected not to draw down the Third Tranche Term Loan. As the Third Tranche Term Loan availability period has passed, the final tranche will not be made available. Pursuant to the Loan Agreement, the Lenders originally had the ability to convert, at the Lenders’ option, up to $4,000 of the secured term loan into common shares of the Company at a conversion price of $1.46 per share (“K2 conversion feature”) until the maturity date of June 1, 2024. On February 3, 2021, pursuant to the Loan Agreement, the Lenders, converted $2,000 of the secured term loan into 1,369,863 common shares at a conversion price of $1.46. The Lenders have the ability to convert an additional $2,000 at the Lenders’ option.

On May 17, 2021, the Company entered into the First Amendment with the Lenders to: (1) increase the Second Tranche Term Loan from $10,000 to $12,000; (2) extend the availability period of the Second Tranche Term Loan beyond April 30, 2021, subject to certain conditions; (3) amend the Second Tranche Term Loan interest rate equal to the greater of (a) 7.75% and (b) prime rate plus 4.50%; and (4) extend the date as of which amortization of the loans under the Loan Agreement shall begin from July 1, 2022 to January 1, 2023.

In connection with the Loan Agreement, on May 22, 2020, the Company issued the Lenders a warrant to purchase up to 625,000 common shares (the “Original K2 Warrant”) at an exercise price of $1.12 (the “Warrant Price”). On May 17, 2021, in connection with the First Amendment, the Company issued the Lenders an amended and restated warrant to purchase an additional 312,500 common shares for a total of 937,500 common shares (the “Restated K2 Warrant”) with the same Warrant Price of $1.12. The Restated K2 Warrant may be exercised either for cash or on a cashless “net exercise” basis and expires on May 22, 2030.

The total proceeds attributed to the Original K2 Warrant was $1,181 based on the relative fair value of the Original K2 Warrant as compared to the sum of the fair values of the Original K2 Warrant, K2 conversion feature and debt. The effective conversion price of the K2 conversion feature of $1.52 was determined to be less than the fair value of the underlying common stock at the date of commitment, resulting in a beneficial conversion feature (“BCF”) at that date. The intrinsic value of the BCF was $2,577 and recorded to additional paid-in capital. The Original K2 Warrant and the K2 conversion feature resulted in the debt being issued at a discount. The Company also incurred $1,021 of debt issuance costs and is required to make a final payment equal to 6.95% of the aggregate original secured term loan principal on the maturity date of the term loan, or upon earlier prepayment of the term loans in accordance with the Loan Agreement, resulting in an additional discount of $1,390 related to the First Tranche Term Loan. The total initial debt discount was $6,169. As discussed in Note 3, upon adoption of ASU 2020-06, effective January 1, 2022, the BCF was eliminated from additional paid-in capital and the debt discount.

The Second Tranche Term Loan, issued pursuant to the Loan Agreement as amended by the First Amendment, resulted in the Company incurring an additional $20 of debt issuance costs, $150 of third-party costs and being required to make a final payment of $834, which is equal to 6.95% of the Second Tranche Term Loan.

The Company accounted for the First Amendment as a debt modification and as a result the debt discount was increased by $1,721. This amount represents: (1) the incremental fair value of the Restated K2 Warrant of $867; (2) the increased final payment of $834 related to the Second Tranche Term Loan; and (3) debt issuance costs of $20. The third-party costs were expensed in general and administration in the condensed consolidated statement of operations and comprehensive loss.

The total principal amount of the loan under the Loan Agreement, as amended by the First Amendment, outstanding at March 31, 2022, including the $2,224 final payment discussed above, is $32,224. The principal amount of the loan made under the Loan Agreement prior to the First Amendment accrues interest at an annual rate equal to the greater of (a) 8.25% or (b) prime rate plus 5.00%. The principal amount of the Second Tranche Term Loan made under the Loan Agreement, as amended by the First Amendment, accrues interest at an annual rate equal to the greater of (a) 7.75% or (b) prime rate plus 4.50%. The interest rate as of March 31, 2022 was 8.50% for the First Tranche Term Loan and 8.00% for the Second Tranche Term Loan. The Company is required to pay only interest until January 1, 2023. The effective interest rate on the loan of $30,000, excluding the final payment, is 13.75%.

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Upon the occurrence of an Event of Default, and during the continuance of an Event of Default, the applicable rate of interest, described above, will be increased by 5.00% per annum. The secured term loan maturity date is June 1, 2024, and the Loan Agreement includes both financial and non-financial covenants. The Company was in compliance with these covenants as of March 31, 2022.

The obligations under the Loan Agreement, as amended by the First Amendment, are secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries other than intellectual property. The subsidiaries of the Company, other than VBI Cda and SciVac HK, and VBI BV, are guarantors of the obligations of the Company and VBI Cda under the Loan Agreement. The Loan Agreement also contains customary events of default.

The total debt discount related to the Loan Agreement, as amended by the First Amendment, with K2 HealthVentures LLC is $7,209 (subsequent to adjustments made as a result of the implementation of ASU 2020-06). As of March 31, 2022, and December 31, 2021, the unamortized debt discount was $2,692 and $3,783 respectively. The debt discount is being charged to interest expense, net of interest income in the condensed consolidated statement of operations and comprehensive loss using the effective interest method over the term of the debt.

At March 31, 2022 and December 31, 2021, the fair value of our outstanding debt, which is considered level 3 in the fair value hierarchy, is estimated to be $30,292 and $30,406, respectively.

Interest expense, net of interest income recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022			2021
Interest expense	$	607		$	389
Amortization of debt discount		410			1,611
Interest income		(77	)		(188	)
Total	$	940		$	1,812

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Loan Agreement and final payment
Remaining 2022	$	-
2023		19,573
2024		12,651
Total	$	32,224

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10. STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

Stock option plans

The Company’s stock option plans are approved by and administered by the Board and its Compensation Committee. The Board designates, in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates the number of options, exercise price and vesting period of the new options.

2006 VBI US Stock Option Plan

The 2006 VBI US Stock Option Plan (the “2006 Plan”), was approved by and was previously administered by the VBI US board of directors which designated eligible participants to be included under the 2006 Plan, and designated the number of options, exercise price and vesting period of the new options. The 2006 Plan was not approved by the stockholders of VBI US. The 2006 Plan was superseded by the 2014 Plan (as defined below) following the PLCC Merger and no further options will be issued under the 2006 Plan. As of March 31, 2022, there were 889,763 options outstanding under the 2006 Plan.

2014 Equity Incentive Plan

On May 1, 2014, the VBI DE board of directors adopted the VBI Vaccines Inc. 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by the VBI DE’s shareholders on July 14, 2014. The 2014 Plan was superseded by the 2016 Plan (as defined below) and no further options will be issued under the 2014 Plan. As of March 31, 2022, there were 521,242 options outstanding under the 2014 Plan.

2016 VBI Equity Incentive Plan

The 2016 Plan is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding on a non-diluted basis at the time of any grant under the 2016 Plan. The 2016 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights (“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted stock or other such award as may be permitted under the 2016 Plan. As of March 31, 2022, there were 21,952,188 options outstanding and 27,790 RSUs unvested under the 2016 Plan.

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The aggregate number of common shares remaining available for issuance for awards under the 2016 Plan totaled 996,806 at March 31, 2022.

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2021		18,534,379		$	2.63
Granted		4,990,000			1.53
Exercised		(7,221	)		1.65
Forfeited		(153,965	)		2.80
Balance outstanding at March 31, 2022		23,363,193		$	2.40
Exercisable at March 31, 2022		12,284,144		$	2.54

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2021		39,329		$	1.47
Vested		(11,539	)		1.51
Unvested shares outstanding at March 31, 2022		27,790		$	1.46

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2022			2021
Volatility		93.17	%		97.13	%
Risk free interest rate		1.71	%		0.54	%
Expected term in years		5.83			5.85
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.15		$	2.40

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022		2021
Research and development	$	510	$	428
General and administrative		1,966		1,690
Cost of revenues		26		21
Total	$	2,502	$	2,139

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11. REVENUES AND DEFERRED REVENUE

Revenue comprises the following:

	Three months ended March 31
	2022		2021
Product revenues	$	91	$	167
R&D service revenues		35		134
Total	$	126	$	301

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2022:

	Total		Current portion to March 31, 2023		Remaining portion thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		2,348		649		1,699
Total	$	2,817	$	649	$	2,168

The following table presents changes in the deferred revenue balance for the three months ended March 31, 2022:

Balance at December 31, 2021	$	2,803
Recognition of deferred revenue		(25	)
Currency translation		39
Balance at March 31, 2022	$	2,817
Short Term	$	649
Long Term	$	2,168

Collaboration and License Agreement – Brii Bio

On December 4, 2018, the Company entered into a Collaboration and License Agreement (the “License Agreement”) with Brii Biosciences Limited (“Brii Bio”), amended on April 8, 2021, whereby:

● the Company and Brii Bio agreed to collaborate on the development of a HBV recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan and Macau (collectively, the “Licensed Territory”), and to conduct a Phase Ib/IIa collaboration clinical trial for the purpose of comparing VBI-2601 (BRII-179), which is a recombinant protein-based immunotherapeutic developed by VBI for use in treating chronic HBV, with a novel composition developed jointly with Brii Bio (either being the “Licensed Product”);

● the Company granted Brii Bio an exclusive royalty-bearing license to perform studies, and regulatory and other activities, as may be required to obtain and maintain marketing approval for the Licensed Product, for the treatment of HBV in the Licensed Territory and to commercialize and promote the Licensed Product for the diagnosis and treatment of chronic HBV in the Licensed Territory; and

● Brii Bio granted the Company an exclusive royalty-free license under Brii Bio’s technology and Brii Bio’s interest in any joint technology developed during the collaboration to develop and commercialize the Licensed Product for the diagnosis and treatment of chronic HBV in the countries of the world other than the Licensed Territory.

On December 20, 2021, the Company and Brii Bio further amended the License Agreement (the “Second Amendment”) subject to the following additional terms and conditions:

● the Company and Brii Bio agreed to conduct an additional Phase II combination clinical trial of VBI-2601 (BRII-179), both with and without IFN-α, and BRII-835 (VIR-2218) (“Combo Clinical Trial”); and

● Brii Bio granted the Company a non-exclusive royalty free license under the Brii Bio technology arising from the data generated in the Combo Clinical Trial solely for use in the development, manufacture or commercialization of the Licensed Product in combination with an siRNA in the countries of the world other than the Licensed Territory.

Pursuant to the License Agreement, as amended, the Company is responsible for the R&D Services and Brii Bio is responsible for costs relating to the clinical trials for the Licensed Territory.

The Company and Brii Bio will jointly own all right, title and interest in the joint know-how development and the patents claiming joint inventions made pursuant to the Second Amendment.

As part of the initial consideration of the License Agreement consisted of an $11,000 non-refundable upfront payment. As part of the License Agreement, the Company and Brii Bio entered into a stock purchase agreement. Under the terms of the stock purchase agreement, the Company issued to Brii Bio 2,295,082 shares of its common stock valued at $3,626 (based on the Company’s common stock price on December 4, 2018). The remaining $7,374, deemed to be the initial transaction price, was allocated to two performance obligations: i) the VBI-2601 (BRII-179) license and ii) R&D services. The R&D services were allocated $4,737 of the transaction price using an estimated selling price based on an expected cost plus a margin approach and the remaining transaction price of $2,637 was allocated to the VBI-2601 (BRII-179) license using the residual method.

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There was no additional consideration contemplated in the Second Amendment.

In addition, the Company is also eligible to receive an additional $117,500 in potential regulatory and sales milestone payments, along with royalties on commercial sales in the Licensed Territory. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Therefore, no variable consideration was included in the initial transaction price and no such amounts have been recognized to date.

The R&D Services will be satisfied over time as services are rendered using the “cost-to-cost” input method as this method represents the most accurate depiction of the transfer of services based on the types of costs expected to be incurred. As of March 31, 2022, R&D services related to Brii Bio that remain unsatisfied are $2,148, out of the $2,817 total deferred revenue.

Upon termination of the Collaboration and License Agreement prior to the end of the term, there is no obligation for refund and any amounts in deferred revenue related to unsatisfied performance obligations will be immediately recognized.

12. COLLABORATION ARRANGEMENTS

GlaxoSmithKline Biologicals S.A. (“GSK”)

On September 10, 2019, the Company entered into a Clinical Collaboration Agreement (“Collaboration Agreement”) pursuant to which we will investigate the use of GSK’s proprietary AS01_B adjuvant system in our ongoing study of VBI-1901. As a result of the Collaboration Agreement, a second study arm was added to Part B of the ongoing Phase Ib/IIa clinical study to accommodate the AS01_B adjuvant.

This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the second study arm will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022 and 2021 are $135 and $256, respectively.

National Research Council of Canada (“NRC”)

On March 31, 2020, the Company announced a collaboration with the NRC, Canada’s largest federal research and development organization, to develop a pan-coronavirus vaccine candidate, targeting COVID-19, SARS, and MERS. The NRC and the Company are collaborating to evaluate and select promising coronavirus vaccine candidates. The collaboration combines the Company’s viral vaccine expertise, eVLP technology platform, and modified coronavirus antigens with the NRC’s proprietary SARS-CoV-2 antigens and assay development capabilities to select the most immunogenic vaccine candidate for further development.

On December 21, 2020, the Company signed an amendment to the collaboration agreement with the NRC to broaden the scope of collaboration to include certain pre-clinical evaluations, bioprocess optimization, technology transfer, and the performance of additional scale up work.

On July 8, 2021, the Company signed a second amendment to the collaboration agreement with the NRC to broaden the scope of the collaboration to include developing a vaccine against the Beta variant of SARS-CoV-2.

On August 27, 2021, the Company signed a third amendment to the collaboration agreement with the NRC further broaden the scope to include certain stable cell line work for our vaccine candidate against the Beta variant of SARS-CoV-2.

On November 15, 2021, we signed a fourth amendment to the collaboration agreement with the NRC to further broaden the scope to include additional animal studies and PRNT analysis for our vaccine candidate against the Beta variant of SARS-CoV-2.

On February 8, 2022, we signed a fifth amendment to the collaboration agreement with the NRC to further broaden the scope to include additional assays of new variants against SARS-CoV-2.

On April 28, 2022, we signed a sixth amendment to the collaboration agreement with the NRC to further broaden the scope to include generation and testing of stable pools of cells expressing SARS-CoV-2 spike protein.

The expiry date of the collaboration agreement, as amended, is October 31, 2022.

This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the collaboration will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022 and 2021 are $280 and $158, respectively.

CEPI

On March 9, 2021, the Company and CEPI announced the CEPI Funding Agreement, to develop eVLP vaccine candidates against SARS-COV-2 variants, including the Beta variant, also known as the B.1.351 variant and as 501Y.V2, first identified in South Africa. CEPI agreed to provide up to $33,018 to support the advancement of VBI-2905, a monovalent eVLP candidate expressing the pre-fusion form of the spike protein from the Beta variant strain, through Phase I clinical development. This funding will also support preclinical expansion of additional multivalent vaccine candidates designed to evaluate the potential breadth of our eVLP technology. The preclinical expansion is intended to develop clinic-ready vaccine candidates capable of addressing emerging variants.

Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the WHO, Gavi the Vaccine Alliance, CEPI, and other global non-governmental organizations and governmental leaders in 2021.

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This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606.

Costs associated with the collaboration are expensed as incurred in Research and Development and General and Administrative expenses; costs for the three months ended March 31, 2022 and 2021 are $1,693 and $157, respectively. Such expenses, including administrative expenses, for the three months ended March 31, 2022 and 2021 were reduced by the same amount. Since inception of the CEPI Funding Agreement in 2021, the Company received $18,363 from CEPI and the Company had $8,657 recorded as deferred funding, recorded in other current liabilities on the condensed consolidated balance sheet.

Brii Biosciences Limited

On December 4, 2018, we entered into the Collaboration and License Agreement with Brii Bio, which was amended on April 8, 2021, as described in Note 11.

As described in Note 11, the Company and Brii Bio entered into the Second Amendment on December 20, 2021. The Combo Clinical Trial collaboration is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the Combo Clinical Trial collaboration will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022, were $24.

13. GOVERNMENT GRANTS

Grants recognized in research and development expenses in the condensed consolidated statement of operations and comprehensive loss are as follows:

Industrial Research Assistance Program (“IRAP”)

On July 3, 2020, the Company and the NRC as represented by its IRAP signed a contribution agreement whereby the NRC agreed to contribute up to CAD $1,000 for the transfer and scale-up of the technical production process for our prophylactic coronavirus vaccine program.

For the three months ended March 31, 2022 the Company recognized $0, respectively, as a reduction in expenses. As of March 31, 2022, the Company had $44 recorded as deferred government grants, recorded in other current liabilities on the condensed consolidated balance sheet.

For the three months ended March 31, 2021, the Company recognized $0, respectively as a reduction in expenses.

Strategic Innovation Fund (“SIF”)

On September 16, 2020, the Company and Her Majesty the Queen in Right of Canada as represented by the Minister of Industry (“ISED”) signed a contribution agreement (the “Contribution Agreement”) for a contribution from SIF whereby ISED agreed to contribute up to CAD $55,976 to support the development of the Company’s coronavirus vaccine program, through Phase II clinical studies, for a period commencing on April 15, 2020 and ending on or before the first quarter of 2022 (the “Project Completion Date”). On March 28, 2022, the Company and ISED signed an amendment to the Contribution Agreement, the main purpose of which was to extend the collaboration and move the Project Completion Date from March 31, 2022 to December 31, 2023.

For the three months ended March 31, 2022, the Company recognized $1,453, respectively, as a reduction in expenses. As of March 31, 2022, the Company had $753 recorded as deferred government grants, recorded in other current liabilities on the condensed consolidated balance sheet.

For the three months ended March 31, 2021, the Company recognized $2,688, respectively as a reduction in expenses.

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14. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two civil claims were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege, among other things: defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers; and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April 2011 and seeking damages in a total amount of NIS 1,879,500 ($591,782). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. Preliminary hearings for the trial of the civil action began on January 15, 2020, with subsequent preliminary hearings held on May 13, 2020, December 3, 2020 and September 30, 2021. The next preliminary hearing is scheduled to be held on June 9, 2022.

Operating leases

The Company has entered into various non-cancelable lease agreements for its office, lab, and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on October 31, 2024, with no option to extend. Our manufacturing facility lease agreement in Israel has been extended for 5 years with a term now ending January 31, 2027. A lease for additional office space in Israel has a term ending November 30, 2025 with an option to extend for two additional years. The lease agreement for our research facility in Canada, which comprises office and laboratory space, has a term ending on December 31, 2022 with an option to extend the term for one additional period of three years. A lease for additional office space at our research facility commenced on October 1, 2020 with a term ending April 30, 2023.

During the three months ended March 31, 2022, the Company entered into new lease agreements and recognized a ROU asset of $795.

There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Lease cost:
Operating lease costs:
Three months ended March 31, 2022	$	341
Three months ended March 31, 2021		343

Other information:
Weighted average remaining lease term	3.39 years
Weighted average discount rate	12.0	%

Operating lease costs are included G&A expenses in the statement of operations and comprehensive loss.

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The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Remaining 2022	$	1,027
2023		1,242
2024		1,127
2025		633
2026		633
2027		186
Total	$	4,848
Effect of discounting		989
Total lease liability	$	3,859
Less: current portion		938
Lease liability, net of current portion	$	2,921

15. SEGMENT INFORMATION

The Company’s Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker. The CEO evaluates the performance of the Company and allocates resources based on the information provided by the Company’s internal management system at a consolidated level. The Company has determined that it has only one operating segment.

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2022		2021
Israel	$	95	$	169
China / Hong Kong		25		128
Europe		6		4
Total	$	126	$	301

There was no revenue attributed to our country of domicile, Canada, for the three months ended March 31, 2022 and 2021.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity, and cash flows as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Form 10-K. In addition to historical information, this discussion and analysis here and throughout this Form 10-K contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

VBI Vaccines Inc. (“VBI”) is a commercial stage biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease. Through our innovative approach to virus-like particles (“VLPs”), including a proprietary enveloped VLP (“eVLP”) platform technology, we develop vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. We are committed to targeting and overcoming significant infectious diseases, including hepatitis B (“HBV”), COVID-19 and coronaviruses, and cytomegalovirus (“CMV”), as well as aggressive cancers including glioblastoma. We are headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel.

Product Pipeline

VBI’s pipeline is comprised of vaccine and immunotherapeutic programs developed by virus-like particle technologies to target two distinct, but often related, disease areas – infectious disease and oncology. We prioritize the development of programs for disease targets that are challenging, underserved, and where the human immune system, when powered and stimulated appropriately, can be a formidable opponent.

VLP vaccines are a type of sub-unit vaccine, in which only the portions of viruses critical for eliciting an immune response are presented to the body. Because of their structural similarity to viruses presented in nature, including their particulate nature and repetitive structure, virus-like particles (VLPs) can stimulate potent immune responses. VLPs can be customized to present any protein antigen, including multiple antibody and T cell targets, making them, we believe, ideal technologies for the development of both prophylactic and therapeutic vaccines. However, only a few antigenic proteins self-assemble into VLPs, which limit the number of potential targets. Notably, HBV antigens are among those that are able to spontaneously form orderly VLP structures. Our eVLP platform technology expands the list of potentially-viable target indications for VLPs by providing a stable core (Gag Protein) and lipid bilayer (the “envelope”). It is a flexible platform that enables the synthetic manufacture of an “enveloped” VLP, or “eVLP”, which looks structurally and morphologically similar to the virus, with no infectious material.

Our product pipeline includes an approved vaccine and multiple late- and early-stage investigational programs. The investigational programs are in various stages of clinical development and the scientific information included about these therapeutics is preliminary and investigative. The investigational programs have not been approved by the United States Food and Drug Administration, European Medicines Agency’s, United Kingdom Medicines and Healthcare products Regulatory Agency, Health Canada, or any other health authority and no conclusion can or should be drawn regarding the safety or efficacy of these investigational programs.

In addition to our existing pipeline programs, we may also seek to in-license clinical-stage vaccines or vaccine-related technologies that we believe complement our pipeline, as well as technologies that may supplement our efforts in both immune-oncology and infectious disease. 

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Key Targeted Disease Areas 

Hepatitis B Virus (“HBV”)

HBV infection can cause liver inflammation, fibrosis, and liver injury, resulting in potentially life-threatening conditions through acute illness and chronic disease, including liver failure, cirrhosis, and cancer. HBV remains a significant public health burden with an estimated 2.2 million chronically-infected people in the United States (“U.S.”) alone. Worldwide, this number is estimated to be as high as 350 million, with approximately 800,000 deaths resulting from the consequences of HBV infection each year.

Despite the highly infectious nature of HBV, due to its often asymptomatic nature, it is estimated that as many as 67% of chronically-infected adults in the U.S. are unaware of their infection status. There is not yet a cure available for HBV infection, but while public health initiative name immunization as the most effective strategy for the prevention of HBV infections, the U.S. adult HBV vaccination rates remain persistently low at only about 25% of all adults age 19 years and older.

In November 2021, the Centers for Disease Control and Prevention (CDC) Advisory Committee on Immunization Practices (ACIP) unanimously voted to change the adult HBV vaccine recommendations. As incorporated in the CDC’s 2022 Adult Immunization Schedule, adults age 19 to 59 years are now universally recommended to be vaccinated against HBV infection. No change was made for adults age 60 years and older – those with an additional risk factor or another indication are recommended for HBV vaccination.

COVID-19 and Other Coronaviruses

Coronaviruses are a large family of enveloped viruses that cause respiratory illness of varying severities. Only seven coronaviruses are known to cause disease in humans, four of which most frequently cause symptoms typically associated with the common cold. Three of the seven coronaviruses, however, have more serious outcomes in people. These more pathogenic coronaviruses are (1) SARS-CoV-2, a novel coronavirus identified as the cause of COVID-19; (2) MERS-CoV, identified in 2012 as the cause of Middle East Respiratory Syndrome (“MERS”); and (3) SARS-CoV, identified in 2002 as the cause of Severe Acute Respiratory Syndrome (“SARS”).

The virus that causes COVID-19 continues to evolve and several SARS-CoV-2 variants have emerged and certain of these variants have been identified as having a significant public health impact. To date, notable Variants of Concern (“VOC”) include:

● Alpha (B.1.1.7) – First identified as in the United Kingdom (“UK”), VOC in December 2020

● Beta (B.1.351) – First identified in South Africa, VOC in December 2020

● Gamma (P.1) – First identified in Brazil, VOC in January 2021

● Delta (B.1.617.2) – First identified in India, VOC in May 2021

● Omicron (B.1.1.529) – First identified in South Africa, VOC in November 2021

Glioblastoma (“GBM”)

Glioblastoma (“GBM”) is among the most common and aggressive malignant primary brain tumors in humans. In the U.S. alone, about 12,000 new GBM cases are diagnosed each year. The current standard of care for GBM is surgical resection, followed by radiation and chemotherapy. Even with intensive treatment, GBM progresses rapidly and has a high mortality rate, with median overall survival for primary GBM of about 14 months.

Cytomegalovirus (“CMV”)

CMV is a common virus that is a member of the herpes family. It infects one in every two people in many developed countries. Most CMV infections are “silent”, meaning the majority of people who are infected exhibit no signs or symptoms. Despite its typically asymptomatic nature in older children and adults, CMV may cause severe infections in newborn children (congenital CMV) and may also cause serious infections in people with weakened immune systems, such as solid organ or bone marrow transplant recipients. Congenital CMV infection can be treated – but not cured – and there are currently no approved vaccines available for the prevention of infection in either the congenital or the transplant setting.

Zika

Zika is a mosquito-borne virus that is spread primarily through the bite of an infected Aedes species mosquito, but can also be transmitted sexually, during pregnancy, or during childbirth. Acute infections are typically mild, but Zika has been associated with a number of neurological complications in newborns. The first formal description of Zika virus was published in 1952, but it was not until 2007 that the first Zika outbreak in humans was recorded. Over the past decade, Zika has begun to spread globally, and between January 2014 and February 2016, 33 countries reported circulation of the Zika virus, including in North America. There is currently no vaccine to prevent Zika infection.

Pipeline Programs

The table below is an overview of our commercial vaccine and our investigational programs as of May 2, 2022:

Indication	Program	Technology	Current Status
Approved Vaccine ● Hepatitis B	PreHevbrio1,2,3 Hepatitis B Vaccine	VLP	Registration/Commercial
	(Recombinant)
Prophylactic Candidates
● Cytomegalovirus	VBI-1501	eVLP	Phase I Completed
● COVID-19 (Ancestral)	VBI-2902	eVLP	Ongoing Phase Ia
● COVID-19 (Beta variant)	VBI-2905	eVLP	Ongoing Phase Ib
● Pan-coronavirus (Multivalent)	VBI-2901	eVLP	Pre-Clinical
● Coronaviruses (Multivalent)	Undisclosed	eVLP	Pre-Clinical
● Zika	VBI-2501	eVLP	Pre-Clinical
Therapeutic Candidates
● Hepatitis B	VBI-2601	VLP	Ongoing Phase II
● Glioblastoma	VBI-1901	eVLP	Ongoing Phase I/IIa
● Other CMV-Associated Cancers	Undisclosed	eVLP	Preclinical

¹Approved for use in the U.S. for the prevention of infection caused by all known subtypes of hepatitis B virus in adults 18 years of age and older

²Approved for use in Israel, under the brand name Sci-B-Vac, for active immunization against hepatitis B virus (HBV infection)

³Approved for use in the European Union/European Economic Area, under the brand name PreHevbri, for active immunization against infection caused by all known subtypes of the hepatitis B virus (HBV) in adults.

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A summary of our marketed product, lead pipeline programs and recent developments follows.

Marketed Product

PreHevbrio (Hepatitis B Vaccine [Recombinant])

PreHevbrio (Hepatitis B Vaccine [Recombinant]) was approved by the FDA on November 30, 2021 for the prevention of infection caused by all known subtypes of HBV in adults age 18 years and older. PreHevbrio contains the S, pre-S2, and pre-S1 HBV surface antigens, and is the only approved 3-antigen HBV vaccine for adults in the U.S. On February 23, 2022, following discussion at the CDC’s ACIP meeting, PreHevbrio joined the list of recommended products for prophylactic adult vaccination against HBV infection. The inclusion of PreHevbrio in the ACIP recommendation was reflected in a CDC publication on April 1, 2022, and is a notable milestone as many insurance plans and institutions require an ACIP recommendation before a vaccine is able to be reimbursed or is made available to patients. Additionally, PreHevbrio will be included in the next annual update of the CDC Adult Immunization Schedule in 2023, which will summarize changes throughout the coming year. VBI launched PreHevbrio in the U.S. at the end of the first quarter of 2022, with revenue generation expected to begin in the second quarter of 2022.

Commercial and regulatory activity for VBI’s 3-antigen HBV vaccine outside of the U.S. include: 

● European Union (“EU”): On May 2, 2022, we announced that the European Commission (the “EC”) granted Marketing Authorization for PreHevbri [Hepatitis B vaccine (recombinant, adsorbed)], following the February 2022 positive opinion granted by EMA’s Committee for Medicinal Products for Human Use (“CHMP”). The European Commission’s centralized marketing authorization is valid in all EU Member States as well as in the European Economic Area (EEA) countries (Iceland, Liechtenstein, and Norway). VBI expects to make PreHevbri available in certain European countries beginning at the end of 2022.

● Israel: Approved and commercially available under the brand name Sci-B-Vac^®, for active immunization against HBV infection.

● United Kingdom (“UK”): The MAA for VBI’s 3-antigen HBV vaccine is under review by the MHRA as part of the EC Decision Reliance Procedure (“ECDRP”), the process for which was initiated upon receipt of positive CHMP opinion.

● Canada: On December 9, 2021, we completed the filing of a New Drug Submission (“NDS”) to Health Canada for our 3-antigen hepatitis B vaccine candidate. Discussions are underway with regulatory agencies to determine the brand name for our 3-antigen HBV vaccine in Canada.

Prophylactic Investigational Candidates

VBI-2900: Coronavirus Vaccine Program (VBI-2901, VBI-2902, VBI-2905)

In response to the ongoing SARS-CoV-2 (COVID-19) pandemic, VBI initiated development of a prophylactic coronavirus vaccine program. Coronaviruses are enveloped viruses by nature which make them a prime target for VBI’s flexible eVLP platform technology.

On August 26, 2020, we announced data from three pre-clinical studies conducted to enable selection of optimized clinical candidates for our coronavirus vaccine program. As a result of these studies, VBI selected two vaccine candidates, with the goal of bringing forward candidates that add meaningful clinical and medical benefit to those already approved: (1) VBI-2901, a multivalent pan-coronavirus vaccine candidate expressing the SARS-CoV-2, SARS, and MERS spike proteins; and (2) VBI-2902, a monovalent vaccine candidate expressing an optimized “prefusion” form of the SARS-CoV-2 spike protein.

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In March 2021, a Phase I study of VBI-2902 was initiated and on June 29, 2021 we announced initial positive data from the Phase Ia portion of this study that evaluated one- and two-dose regimens of 5µg of VBI-2902 in 61 healthy adults age 18-54 years. After two doses, VBI-2902 induced neutralization titers in 100% of participants, with 4.3x higher geometric mean titer (“GMT”) than that of the convalescent serum panel (n=25), and peak antibody binding GMT of 1:4,047. The study supports the assessment of a one-dose booster regimen in seropositive individuals and two-dose regimens in seronegative individuals. VBI-2902 was also well tolerated with no safety signals observed.

In response to the increased circulation of SARS-CoV-2 variants, the Phase Ib portion of the ongoing Phase I study was initiated in September 2021 to assess VBI-2905, our eVLP vaccine candidate directed against the SARS-CoV-2 Beta variant. On April 5, 2022, we announced new data from the Phase 1b study (n=53). A single-dose booster of VBI-2905 increased the geometric mean titer (GMT) of neutralizing antibodies directed against the Beta variant 3.8-fold, at day 28, in participants who had previously received two-doses of an mRNA vaccine (ancestral strain) – approximately 2-fold increases were also seen at day 28 in antibody GMTs against both the ancestral and delta variant. New preclinical data announced at the same time showed that against a panel of coronavirus variants in mice, reactivity was seen with VBI-2902 against all variants including the ancestral strain, Delta, Beta, Omicron, Lambda, and RaTG13 (a bat coronavirus that is distant to circulating human strains). In this same panel, VBI-2901 was able to elicit an even stronger response against all variants tested – as the strains became more divergent from the ancestral strain, VBI-2901 elicited a greater difference in GMT from VBI-2902, ranging from 2.5-fold higher against the ancestral strain to 9.0-fold higher against the bat coronavirus. Additionally, a validated pseudoparticle neutralization assay (PNA) benchmarked against the WHO reference standard demonstrated that VBI-2902 elicited neutralizing antibody responses of 176 IU50/mL in its Phase 1a study – this international standard measure would predict a greater than 90% efficacy, with two internationally approved vaccines estimated to have 90% efficacy at 83 and 140 IU50/mL (Gilbert, PB, 2021).

The new clinical and preclinical data for all three candidates continued to support the potential of the eVLP platform against coronaviruses. The first clinical study of VBI’s multivalent candidate, designed to increase breadth of protection against COVID-19 and related coronaviruses, is expected to begin in the summer of 2022.

The VBI-2900 program is supported by a partnership with CEPI (the “CEPI Funding Agreement”), with contributions of up to $33 million; a partnership with the Strategic Innovation Fund (“SIF”), established by the Government of Canada, with an award of up to CAD $56 million; contribution of up to CAD $1 million from the Industrial Research Assistance Program (“IRAP”) of the National Research Council of Canada (“NRC”); and a collaboration with the NRC.

VBI-1501: Prophylactic CMV Vaccine Candidate

Our prophylactic CMV vaccine candidate uses the eVLP platform to express a modified form of the CMV glycoprotein B (“gB”) antigen and is adjuvanted with alum, an adjuvant used in FDA-approved products.

Following the successful completion of the Phase I study in May 2018, and positive discussions with Health Canada, we announced plans for a Phase II clinical study evaluating VBI-1501 on December 20, 2018. We received similarly positive guidance from the FDA in July 2019. The Phase II study is expected to assess the safety and immunogenicity of dosages of VBI-1501 up to 20µg with alum. We are currently evaluating the timing of the Phase II study.

Therapeutic Investigational Candidates

VBI-2601: HBV Immunotherapeutic Candidate

VBI-2601 (BRII-179) is our novel, recombinant, protein-based immunotherapeutic candidate in development for the treatment of chronic HBV infection. VBI-2601 (BRII-179) is formulated to induce broad immunity against HBV, including T-cell immunity which plays an important role in controlling HBV infection.

On April 12, 2021 and June 23, 2021, we announced data from the completed Phase Ib/IIa clinical study in patients with chronic HBV infection, which was conducted by our partner Brii Biosciences Limited (“Brii Bio”). The study was a randomized, controlled study designed to assess the safety, tolerability, antiviral and immunologic activity of VBI-2601. The study was a two-part, dose-escalation study assessing different dose levels of VBI-2601 (BRII-179) with and without an immunomodulatory adjuvant, conducted at multiple study sites in New Zealand, Australia, Thailand, South Korea, Hong Kong SAR, and China.

The data from the Phase Ib/IIa for 33 evaluable patients across all study arms suggest: (1) VBI-2601 (BRII-179) is well tolerated at all dose levels with and without the adjuvant with no significant adverse events identified; (2) VBI-2601 (BRII-179) induced both B cell (antibody) and T cell responses in chronically-infected HBV patients, (3) VBI-2601 (BRII-179) induced restimulation of T cell responses to HBV surface antigens, including S, Pre-S1 and Pre-S2, in greater than 50% of the evaluable patients compared to no detectable response in the control arm; (4) the T cell responses and antibody responses were comparable across the 20µg and 40µg unadjuvanted study arms; and (5) T cell response rates between the adjuvanted and unadjuvanted cohorts were also comparable. Based on the acceptable safety profile and vaccine-induced adaptive immune responses seen in this study, VBI-2601 (BRII-179) has been advanced to Phase II studies.

On April 21, 2021, we announced that the first patient had been dosed in a Phase II clinical study evaluating VBI-2601 (BRII-179) in combination with BRII-835 (VIR-2218), an investigational small interfering ribonucleic acid (siRNA) targeting HBV, for the treatment of chronic HBV infection. To the best of our knowledge, this is the first clinical trial in the field to evaluate the combination of these two HBV mechanisms of action. The multi-center, randomized, open-label study is designed to evaluate the safety and efficacy of this combination with and without interferon-alpha as a co-adjuvant. Brii Bio has led the design and implementation of this functional cure proof-of-concept study with the support of VBI and Vir Biotechnology (“VIR”). The study will be conducted at sites in Australia, China, Taiwan, Hong Kong SAR, South Korea, New Zealand, Singapore, and Thailand. Interim topline clinical data from this study is expected by the end of 2022.

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On January 5, 2022, we announced that the first patient was dosed in a second Phase IIa/IIb clinical study evaluating VBI-2601 (BRII-179). This newly announced Phase II study will assess VBI-2601 as an add-on therapy to the standard-of-care nucleos(t)ide reverse transcriptase inhibitor (nrtl) and pegylated interferon (PEG-IFN-α,) therapy. Interim topline clinical data from this Phase IIa/IIb clinical study is expected in the first half of 2023.

VBI-1901: Glioblastoma (GBM)

Our cancer vaccine immunotherapeutic program, VBI-1901, targets CMV proteins present in tumor cells. CMV is associated with a number of solid tumors including glioblastoma (“GBM”), breast cancer, and pediatric medulloblastoma.

In January 2018, we initiated dosing in a two-part, multi-center, open-label Phase I/IIa clinical study of VBI-1901 in 38 patients with recurrent GBM. Phase I (Part A) of the study was a dose-escalation phase that defined the safety, tolerability, and optimal dose level of VBI-1901 adjuvanted with granulocyte-macrophage colony-stimulating factor (GM-CSF) in recurrent GBM patients with any number of prior recurrences. In December 2018, this phase completed enrollment of 18 patients across three dose cohorts, the highest of which (10 µg) was selected as the optimal dose level to test in the Phase IIa portion (Part B) of the study. Phase IIa of the study, which initiated enrollment in July 2019, is a subsequent extension of the 10 µg doses level cohort. This phase is a two-arm study that enrolled 20 first-recurrent GBM patients to receive 10 µg of VBI-1901 in combination with either GM-CSF or GlaxoSmithKline Biologicals S.A. (“GSK”) proprietary adjuvant system, AS01, as immunomodulatory adjuvants. AS01 is provided pursuant to a Clinical Collaboration and Support Study Agreement (“Collaboration Agreement”) we entered into with GSK on September 10, 2019. Enrollment of the 10 patients in the VBI-1901 with GM-CSF arm was completed in March 2020 and enrollment of the 10 patients in the VBI-1901 with AS01 was completed in October 2020.

Data from the ongoing Phase IIa portion of the study was announced throughout 2020 and 2021, with the latest data presented in December 2021 at the World Vaccine & Immunology Congress. The data from the Phase IIa portion of this study demonstrate: (1) improvement in 6-month, 12-month, and 18-month overall survival (“OS”) data compared to historical controls; (2) 12-month OS of 60% (n=6/10) in the VBI-1901 + GM-CSF study arm and 70% (n=7/10) in the VBI-1901 + AS01 study arm, compared to historical controls of ~30%; (3) 18-month OS of 30% (3/10) in the VBI-1901 + GM-CSF study arm, 18-month OS not yet reached in the VBI-1901 + AS01 study arm; (3) 2 partial tumor responses, one of which remains on protocol past week 86 with a 93% tumor reduction relative to initiation of treatment at the start of the study, and 7 stable disease observations across both study arms; and (4) VBI-1901 continues to be safe and well tolerated at all doses tested, with no safety signals observed.

On June 8, 2021, we announced that the FDA granted Fast-Track Designation for VBI-1901 formulated with GM-CSF for the treatment of recurrent GBM patients with first tumor recurrence. The designation was granted based on data from the Phase I/IIa study.

Based on the data seen to-date, as part of the next phase of development, we anticipate assessing VBI-1901 in randomized, controlled studies in both primary and recurrent GBM patients. In the recurrent setting, we aim to expand the number of patients in the current trial and add a control arm, with the potential for accelerated approval based on tumor response rates and improvement in overall survival. Subject to discussion with the FDA, the amended protocol is expected to initiate enrollment of additional patients in the third quarter of 2022. In the primary setting, we are exploring a randomized, controlled, clinical study with registration potential in patients first diagnosed with GBM, which, subject to approval from regulatory bodies, is expected to begin in the fourth quarter of 2022. 

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Third Party License and Assignment Agreements 

We currently are dependent on licenses from third parties for certain of our key technologies, including the license granted pursuant to an agreement between Savient Pharmaceuticals Inc. and SciGen Ltd dated June 2004, as subsequently amended (the “Ferring License Agreement”) and a license from L’Universite Pierre et Marie Curie, now Sorbonne Université (“UPMC”), Institut National de la Santé et de la Recherche Médicale (“INSERM”) and L’école Normale Supérieure de Lyon. Under the Ferring License Agreement, we are committed to pay Ferring royalties equal to 7% of net sales (as defined therein) of HBsAg “Product” (as defined therein). Under an Assignment Agreement between FDS Pharm LLP and SciGen Ltd., dated February 14, 2012 (the “SciGen Assignment Agreement”), we are required to pay royalties to SciGen Ltd. equal to 5% of net sales (as defined in the Ferring License Agreement) of Product. Under the Ferring License Agreement and the SciGen Assignment Agreement, we originally were to pay royalties on a country-by-country basis until the date 10 years after the date of commencement of the first royalty year in respect of such country. In April 2019, we exercised our option to extend the Ferring License Agreement in respect of all the countries that still make up the territory for an additional 7 years by making a one-time payment to Ferring of $0.1 million. Royalties under the Ferring License Agreement and SciGen Assignment Agreement will continue to be payable for the duration of the extended license periods. Under our license agreement with UPMC and other licensors relating to eVLP technology, we have an exclusive license to a family of patents that is expected to expire in the United States in 2022 and expired in other countries in 2021. Under this agreement, we are required to pay UPMC between 0.75% to 1.75% of net sales and certain lump-sum milestone payments. UPMC is also a co-owner of the patent family covering our VBI-1501 CMV vaccine and we are currently negotiating an agreement with UPMC to cover this patent family. During the three months ended March 31, 2022, we did not make any milestone payments.

Financial Operations Overview

At present, our operations are focused on: 

● commercially launching PreHevbrio in the United States; 

● manufacturing our 3-antigen HBV vaccine at commercial scale to meet demand in the U.S. and Israel, where it is approved, and to prepare for supply in markets where we may obtain marketing authorization;

● preparing for commercialization of our 3-antigen HBV vaccine in Europe, where we have received regulatory approval under the brand name PreHevbri, and in Canada, where we may obtain regulatory approval;

● supporting the ongoing review of the regulatory submissions for our 3-antigen HBV vaccine by the MHRA in UK, and Health Canada in Canada;

● conducting the Phase I/IIa clinical study of our GBM vaccine immunotherapeutic candidate, VBI-1901;

● preparing for the next phase of development for our GBM vaccine immunotherapeutic candidate, VBI-1901;

● conducting the Phase I clinical study of our prophylactic COVID-19 vaccine candidates, VBI-2902 and VBI-2905 (Beta variant);

● preparing for a Phase I/II clinical study of our pan-coronavirus candidate, VBI-2901;

● continuing our development and scaling-up production processes for our prophylactic coronavirus vaccine candidates using a Contract Development and Manufacturing Organization (“CDMO”) located in Canada;

● developing VBI-2601 (BRII-179), our protein-based immunotherapeutic candidate for treatment of chronic HBV, in collaboration with Brii Bio;

● preparation for further development of VBI-1501, our preventative CMV vaccine candidate;

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● continuing the research and development (“R&D”) of our other pipeline candidates, including the exploration and development of new pipeline candidates;

● implementing operational, compliance, financial, and management information systems, including through third party partners, to support our commercialization activities;

● maintaining, expanding, and protecting our intellectual property portfolio; and

● developing our internal systems and processes for regulatory affairs, legal, and compliance.

VBI’s revenue generating activities have been the sale of our 3-antigen HBV vaccine in Israel and through named patient programs in countries where our 3-antigen HBV vaccine is not approved, though those markets have generated a limited number of sales to-date. We have also generated revenue from various business development transactions and R&D services generating fees. To date, we have financed our operations primarily with proceeds from sales of our common stock, our long-term debt agreements, and contribution agreements and partnerships with CEPI and the Government of Canada. 

VBI has incurred significant net losses and negative operating cash flows since inception and expects to continue incurring losses and negative cash flows from operations as we carry out planned clinical, regulatory, R&D, commercial, and manufacturing activities with respect to the advancement of our 3-antigen HBV vaccine and new pipeline candidates. As of March 31, 2022, VBI had an accumulated deficit of approximately $397.6 million and stockholders’ equity of approximately $129.6 million. Our ability to maintain our status as an operating company and to realize our investment in our In Process Research & Development (“IPR&D”) assets, which consist of our CMV and GBM programs, is dependent upon obtaining adequate cash to finance our clinical development, manufacturing, our administrative overhead and our research and development activities, and ultimately to profitably monetize our IPR&D. We plan to finance near term future operations with existing cash reserves. We expect that we will need to secure additional financing to finance our business plans, which may be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings, government or non-governmental organization grants or subsidies, and revenues from potential business development transactions, if any. There is no assurance we will manage to obtain these sources of financing, if required. These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

We have incurred operating losses since inception, have not generated significant product sales revenue and have not achieved profitable operations. We incurred net losses of $21.3 million for three month ended March 31, 2022, and we expect to continue to incur substantial losses in future periods. We anticipate that we will continue to incur substantial operating expenses as we continue our research and development, clinical studies and commercialization of PreHevbrio in the United States in the near term. These include expenses related to the focus of our operations highlighted above.

In addition, we have incurred and will continue to incur significant expenses as a public company, which subject us to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the rules and regulations of the NASDAQ Capital Market, and the Canadian securities regulators.

Overall Performance

The Company had net losses of $21,254 and $17,647 for the three months ended March 31, 2022 and 2021, respectively. We had an accumulated deficit of $397,560 at March 31, 2022. We had $101,337 of cash and net working capital of $78,356 as of March 31, 2022.

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Revenues

Revenues consist of product sales of Sci-B-Vac in Israel, and R&D services revenue recognized as part of the License Agreement with Brii Bio and other R&D services.

In Israel, Sci-B-Vac is sold through procurement requests from four health funds (“HMOs”) (collectively, the “Sci-B-Vac Customers”).

Pursuant to the License Agreement with Brii Bio, we provide R&D services to Brii Bio as part of the development of VBI-2601 (BRII-179).

In addition, pursuant to an agreement with the Israel Innovation Authority (formerly the Office of the Chief Scientist of Israel), we are required to make services available for the biotechnology industry in Israel. These services include relevant activities for development and manufacturing of therapeutic proteins according to international standards and cGMP quality level suitable for toxicological studies in animals. Service activities include analytics/bio analytics methods for development and process development of therapeutic proteins starting with a candidate clone through manufacturing. These R&D services are primarily marketed to the Israeli research community in academia and Israeli biotechnology companies in the life sciences industry lacking the infrastructure or experience in the development and production of therapeutic proteins to the standards and quality required for clinical trials for human use. During the three months ended March 31, 2022, we provided services to biotechnology companies including analytical development.

Cost of Revenues

Cost of revenues consist primarily of costs incurred for manufacturing our 3-antigen HBV vaccine which includes cost of materials, consumables, supplies, contractors, and salaries.

Research and Development (“R&D”) Expenses

R&D expenses, net of government grants and funding arrangements, consist primarily of costs incurred for the development of our 3-antigen HBV vaccine; VBI-1901, our GBM vaccine immunotherapeutic candidate; VBI-1501, our CMV vaccine candidate; VBI-2601 (BRII-179), our hepatitis B immunotherapeutic candidate; and VBI-2900, our coronavirus vaccine program, which include:

● the cost of acquiring, developing, and manufacturing clinical study materials, and other consumables and lab supplies used in our pre-clinical studies;

● expenses incurred under agreements with contractors or CDMOs or Contract Research Organizations to advance the vaccines into and through completion of clinical studies; and

● employee-related expenses, including salaries, benefits, travel, and stock-based compensation expense.

We expense R&D costs when we incur them.

General and Administrative (“G&A”) Expenses

G&A expenses consist principally of commercialization costs, salaries and related costs for executive and other administrative personnel and consultants, including stock-based compensation, and travel expenses. Other general and administrative expenses include professional fees for legal, patent protection, consulting and accounting services, travel and conference fees, board of directors meeting costs, scientific and commercial advisory board meeting costs, rent, maintenance of facilities, depreciation, office supplies, information technology costs and expenses, insurance, and other general expenses. G&A expenses are expensed when incurred.

We expect that our general and administrative expenses will increase in the future as a result of adding employees and scaling our operations commensurate with advancing clinical candidates, commercializing products, and continuing to support a public company infrastructure. These increases will likely include increased costs for insurance, hiring of additional personnel, board committees, outside consultants, investor relations, lawyers and accountants, among other expenses.

Interest Expense, Net of Interest Income

Interest expense is associated with our long-term debt as discussed in Note 9 of the Notes to the Condensed Consolidated Financial Statements.

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Results of Operations

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

All dollar amounts stated below are in thousands, unless otherwise indicated.

	Three months ended March 31
	2022			2021			Change $			Change %
Revenues	$	126		$	301		$	(175	)		(58	)%
Expenses:
Cost of revenues		2,754			2,412			342			14	%
Research and development		2,362			6,839			(4,477	)		(65	)%
General and administrative		10,930			6,747			4,183			62	%
Total operating expenses		16,046			15,998			48			0	%
Loss from operations		(15,920	)		(15,697	)		(223	)		1	%
Interest expense, net of interest income		(940	)		(1,812	)		872			(48	)%
Foreign exchange loss		(4,394	)		(138	)		(4,256	)		3,084	%
Loss before income taxes		(21,254	)		(17,647	)		(3,607	)		20	%
Income tax expense		-			-			-			-	%
NET LOSS	$	(21,254	)	$	(17,647	)	$	(3,607	)		20	%

Revenues

Revenues for the three months ended March 31, 2022 were $126 as compared to $301 for the three months ended March 31, 2021. Revenues for the three months ended March 31, 2022 decreased by $175 or 58% due to a decrease in product revenue as a result of lower sales in the Israeli market and a decrease in R&D services revenue for VBI-2601, our hepatitis B immunotherapeutic candidate, being developed in collaboration with Brii Bio, as fewer manufacturing and non-clinical research services were required in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Revenue Composition

	2022		2021
Product revenue	$	91	$	167
R&D service revenue		35		134
	$	126	$	301

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Revenues by Geographic Region

	Three months ended March 31
	2022		2021		$ Change			% Change
Revenue in Israel	$	95	$	169	$	(74	)		(44	)%
Revenue in China/Hong Kong		25		128		(103	)		(80	)%
Revenue in Europe		6		4		2			50	%
Total Revenue	$	126	$	301	$	(175	)		(58	)%

Cost of Revenues

Cost of revenues for the three months ended March 31, 2022 was $2,754 as compared to $2,412 for the three months ended March 31, 2021. The increase in the cost of revenues of $342 or 14% is due to increased direct labor costs and manufacturing related costs incurred in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Research and Development Expenses

R&D expenses for the three months ended March 31, 2022 were $2,362 as compared to $6,839 for the three months ended March 30, 2021. R&D expenses were offset by $2,838 for the three months ended March 31, 2022 and $2,801 for the three months ended March 31, 2021 due to government grants and funding arrangements. The decrease in R&D expenses of $4,477 or 65%, is mainly a result of the (1) the decrease in regulatory fees related to PreHevbrio that occurred during the three months ended March 31, 2021 with no similar regulatory fees that occurred during the three months ended March 31, 2022, and (2) decrease in the costs related to our coronavirus vaccine program that are not offset by government grants and funding arrangements, specifically VBI-2902, as the clinical trial of VBI-2902 began during the three months ended March 31, 2021, offset by (3) an increase in R&D expenses related to continued development of our other vaccine candidates, specifically GBM our vaccine immunotherapeutic candidate, VBI-1901, as we prepare for the next phase of development.

General and Administrative Expenses

G&A expenses for the three months ended March 31, 2022 were $10,930 as compared to $6,747 for the three months ended March 31, 2021. G&A expenses were offset by $308 for the three months ended March 31, 2022 and $145 for the three months ended March 31, 2021 due to government grants and funding arrangements. The G&A expense increase of $4,183 or 62%, excluding the effect of government grants and funding arrangements, is a result of the increase in pre-commercial and commercial activities related to our 3-antigen HBV vaccine, such as the development of our commercial and distribution infrastructure, as FDA regulatory approval of PreHevbrio occurred in late 2021, increased insurance costs, increased professional costs, and increased labor costs.

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Loss from Operations

The net loss from operations for the three months ended March 31, 2022 was $15,920 as compared to $15,697 for the three months ended March 31, 2021. The $223 increase in the net loss from operations resulted from the items discussed above.

Interest Expense, Net of Interest Income

The interest expense, net of interest income decreased by $872 for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, due to the conversion of $2,000 of the secured term loan to common shares, which resulted in $1,161 of additional interest accretion being recognized in interest expense, net of interest income in the condensed consolidated statement of operations and comprehensive loss during the three months ended March 31, 2021; offset by an increase in long-term debt of $12,000.

Foreign Exchange Loss

The foreign exchange loss for the three months ended March 31, 2022 was $4,394 compared to a foreign exchange loss of $138 for the three months ended March 31, 2021. The change is a result of the changes in the foreign currency exchange rates (NIS and CAD) in which the foreign currency transactions were denominated for each of those periods, including the foreign exchange impact of intercompany loans that are translated at period end. Gain or losses are included in the condensed consolidated statement of operations in 2022.

Net Loss

Net loss for the three months ended March 31, 2022 was $21,254 compared to $17,647 for the three months ended March 31, 2021 was a result of the items discussed above.

Liquidity and Capital Resources

	March 31, 2022			December 31, 2021			$ Change			% Change
Cash	$	101,337		$	121,694		$	(20,357	)		(17	)%
Current Assets		112,347			130,284			(17,937	)		(14	)%
Current Liabilities		33,991			32,586			1,405			4	%
Working Capital		78,356			97,698			(19,342	)		(20	)%
Accumulated Deficit		(397,560	)		(378,371	)		(19,189	)		5	%

As of March 31, 2022, we had cash of $101,337 as compared to $121,694 as of December 31, 2021. As of March 31, 2022, we had working capital of $78,356 as compared to working capital of $97,698 at December 31, 2021. Working capital is calculated by subtracting current liabilities from current assets.

Net Cash Used in Operating Activities

The Company incurred net losses of $21,254 and $17,647 in the three months ended March 31, 2022 and 2021, respectively. The Company used $19,925 and $6,644 in cash for operating activities during the three months ended March 31, 2022 and 2021, respectively. The increase in cash outflows is largely a result of an increase in net loss, offset by a decrease in operating working capital as we received $8,285 of cash in advance from the CEPI Funding Agreement during the three months ended March 31, 2021 compared to no cash received in advance from the CEPI Funding Agreement during the three months ended March 31, 2022.

Net Cash Used in Investing Activities

Net cash flows used by investing activities was $515 for the three months ended March 31, 2022 compared to cash used in investing activities of $556 for the three months ended March 31, 2021.

Net Cash Provided by Financing Activities

Net cash flows provided by financing activities was $12 for the three months ended March 31, 2022 compared to cash flows provided by financing activities of $21,624 during the three months ended March 31, 2021 which was due to common shares issued as part of our ATM Program (as defined below).

Sources of Liquidity

Jefferies Open Market Sale Agreement (“ATM”)

On July 31, 2020, the Company entered into an Open Market Sale Agreement with Jefferies LLC (“Jefferies”), pursuant to which the Company may offer and sell its common shares having an aggregate price of up to $125,000 from time to time through Jefferies, acting as agent or principal (the “ATM Program”). Common shares were offered pursuant to a sales agreement prospectus included in the Company’s automatic shelf registration on Form S-3 (the “S-3ASR”) filed with the United States Securities and Exchange Commission (“SEC”) on July 31, 2020. On September 3, 2021, the Company and Jeffries entered in to a second Open Market Sale Agreement for the sale of common shares having an aggregate price of up to $125,000 from time to time, which the Company could choose to use when no shares remain available for issuance under the ATM Program, and filed a prospectus supplement to the base prospectus included in the S-3ASR. The Company is no longer a well-known seasoned issuer, and accordingly, the Company will not make any sales under the ATM Program or pursuant to the second sales agreement, unless and until a new registration statement and/or a new prospectus is filed. During the year ended December 31, 2021, the Company issued 9,135,632 common shares under the ATM Program, for total gross proceeds of $33,293 at an average price of $3.64. The Company incurred $1,117 of share issuance costs related to the common shares issued resulting in net proceeds of $32,176.

K2 HealthVentures LLC Long Term Debt 

On May 22, 2020, the Company (along with its subsidiary VBI Cda) entered into the Loan and Guaranty Agreement (the “Loan Agreement”) with K2 HealthVentures LLC and any other lender from time-to-time party thereto (the “Lenders”) pursuant to which we received the first tranche secured term loan of $20,000 (the “First Tranche Term Loan”). The Lenders originally agreed to make available the following additional tranches subject to the following conditions and upon the submission of a loan request by the Company: (1) up to $10,000 available between January 1, 2021 and April 30, 2021 upon achievement of certain milestones (the “Second Tranche Term Loan”), (2) $10,000 available between the closing date and December 31, 2021, subject to achievement of a certain U.S. Food and Drug Administration (“FDA”) approval (the “Third Tranche Term Loan”), and (3) a final tranche of up to $10,000 that could be made available any time prior to June 30, 2022, subject to the advance of the Third Tranche Term Loan, satisfactory review by the administrative agent of our financial and operating plan, and approval by the Lenders’ investment committee. The Company obtained FDA approval on November 30, 2021 but elected not to draw down the Third Tranche Term Loan. As the Third Tranche Term Loan availability period has passed, the final tranche will not be made available. Pursuant to the Loan Agreement, the Lenders originally had the ability to convert, at the Lenders’ option, up to $4,000 of the secured term loan into common shares of the Company at a conversion price of $1.46 per share (“K2 conversion feature”) until the maturity date of June 1, 2024. On February 3, 2021, pursuant to the Loan Agreement, the Lenders, converted $2,000 of the secured term loan into 1,369,863 common shares at a conversion price of $1.46. The Lenders have the ability to convert an additional $2,000 at the Lenders’ option.

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On May 17, 2021, the Company entered into the First Amendment with the Lenders to: (1) increase the Second Tranche Term Loan from $10,000 to $12,000; (2) extend the availability period of the Second Tranche Term Loan beyond April 30, 2021, subject to certain conditions; (3) amend the Second Tranche Term Loan interest rate equal to the greater of (a) 7.75% and (b) prime rate plus 4.50%; and (4) extend the date as of which amortization of the loans under the Loan Agreement shall begin from July 1, 2022 to January 1, 2023.

In connection with the Loan Agreement, on May 22, 2020, the Company issued the Lenders a warrant to purchase up to 625,000 common shares (the “Original K2 Warrant”) at an exercise price of $1.12 (the “Warrant Price”). On May 17, 2021, in connection with the First Amendment, the Company issued the Lenders an amended and restated warrant to purchase an additional 312,500 common shares for a total of 937,500 common shares (the “Restated K2 Warrant”) with the same Warrant Price of $1.12. The Restated K2 Warrant may be exercised either for cash or on a cashless “net exercise” basis and expires on May 22, 2030.

As a result of the Original K2 Warrant and K2 conversion feature, the debt was issued at a discount of $3.8 million. We also incurred $1.0 million of debt issuance costs and are required to make a final payment equal to 6.95% of the aggregate original secured term loan principal on the maturity date of the term loan, or upon earlier prepayment of the term loans in accordance with the Loan Agreement, resulting in an additional discount of $1.4 million related to the First Tranche Term Loan. The total initial debt discount was $6.2 million.

The Second Tranche Term Loan, issued pursuant to the Loan Agreement, as amended by the First Amendment, resulted in the Company incurring an additional $0.02 million of debt issuance costs, $0.2 million of third-party costs and being required to make a final payment of $0.8 million, which is equal to 6.95% of the Second Tranche Term Loan.

The total principal amount of the loan under the Loan Agreement, as amended by the First Amendment, outstanding at March 31, 2022, including the $2.2 million final payment discussed above, is $32.2 million. The principal amount of the loan made under the Loan Agreement prior to the First Amendment accrues interest at an annual rate equal to the greater of (a) 8.25% or (b) prime rate plus 5.00%. The principal amount of the Second Tranche Term Loan made under the Loan Agreement, as amended by the First Amendment, accrues interest at an annual rate equal to the greater of (a) 7.75% or (b) prime rate plus 4.50%. The interest rate as of March 31, 2022 was 8.50% for the First Tranche Term Loan and 8.00% for the Second Tranche Term Loan. The Company is required to pay only interest until January 1, 2023.

CEPI Partnership 

On March 9, 2021, the Company and CEPI announced a partnership, the CEPI Funding Agreement, to develop eVLP vaccine candidates against SARS-COV-2 variants, including the Beta variant, also known as the B.1.351 variant and 501Y.V2, first identified in South Africa. CEPI agreed to provide up to $33,018 to support the advancement of VBI-2905, a monovalent eVLP candidate expressing the pre-fusion form of the spike protein from the Beta variant, through Phase I clinical development. This funding will also support preclinical expansion of additional multivalent vaccine candidates designed to evaluate the potential breadth of our eVLP technology. The preclinical expansion is intended to develop clinic-ready vaccine candidates capable of addressing emerging variants. Since inception of the CEPI Funding Agreement in 2021, the Company received $18,363 from CEPI and the Company had $8,657 recorded as deferred funding, recorded in other current liabilities on the condensed consolidated balance sheet.

Plan of Operations and Future Funding Requirements

The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2021 contains an explanatory paragraph regarding our ability to continue as a going concern. VBI has incurred significant net losses and negative operating cash flows since inception and expects to continue incurring losses and negative cash flows from operations as we carry out our planned clinical, regulatory, R&D, sales, and manufacturing activities with respect to the advancement of our 3-antigen HBV vaccine and pipeline candidates. As of March 31, 2022, VBI had an accumulated deficit of $397,560 and stockholders’ equity of $129,564.

Our ability to maintain our status as an operating company and to realize our investment in our IPR&D assets is dependent upon obtaining adequate cash to finance our clinical development, manufacturing, our commercialization activities, our administrative overhead and our research and development activities. We plan to finance near term future operations with existing cash reserves. We expect that we will need to secure additional financing to finance our business plans, which may be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings, government or non-government grants or subsidies, and revenues from potential business development transactions, if any. There is no assurance we will manage to obtain these sources of financing. The accompanying financial statements have been prepared assuming that we will continue as a going concern; however, the above conditions raise substantial doubt about our ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. Our long-term success and ability to continue as a going concern is dependent upon obtaining sufficient capital to fund the research and development of our products, to bring about their successful commercial release, to generate revenue, and, ultimately, to attain profitable operations, or, alternatively, to advance our products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

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We will require additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch our products, and will need to secure additional financing in the future to support our operations and to realize our investment in our IPR&D assets. We base this belief on assumptions that are subject to change, and we may be required to use our available cash and cash equivalent resources sooner than we currently expect. Our actual future capital requirements will depend on many factors, including the progress and results of our ongoing clinical trials, the duration and cost of discovery and preclinical development, laboratory testing and clinical trials for our pipeline candidates, the timing and outcome of regulatory review of our products, product sales outside of Israel, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the number and development requirements of other pipeline candidates that we pursue, and the costs of commercialization activities, including product marketing, sales, and distribution.

We expect to finance our future cash needs through public or private equity offerings, debt financings, government grants or non-government funding, structured asset financings, or business development transactions. Pursuant to the Contribution Agreement, we will receive up to CAD $55,976 as a government grant to support the development of the Company’s coronavirus vaccine program, though Phase II clinical studies, and pursuant to the CEPI Funding Agreement, we will receive up to $33,018 in funding to support the development of the Company’s coronavirus vaccine program, specifically SARS-COV-2 variants. We may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate. We may also decide to raise additional funds even before we need them if the conditions for raising capital are favorable. Additional equity, debt, structured asset financing, government grants or non-government funding, or business development transactions may not be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our R&D programs, reduce our planned commercialization efforts or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain pipeline candidates that we might otherwise seek to develop or commercialize independently.

To the extent we raise additional capital by issuing equity securities or obtaining borrowings convertible into equity, ownership dilution to existing stockholders will result and future investors may be granted rights superior to those of existing stockholders. The incurrence of indebtedness or debt financing would result in increased fixed obligations and could also result in covenants that would restrict our operations. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business, and other factors beyond our control. The ongoing COVID-19 pandemic and the armed conflict between Russia and Ukraine has caused an unstable economic environment globally. Disruptions in the global financial markets may adversely impact the availability and cost of credit, as well as our ability to raise money in the capital markets. Current economic conditions have been, and continue to be, volatile. Continued instability in these market conditions may limit our ability to access the capital necessary to fund and grow our business.

The Company’s long-term success and ability to continue as a going concern are dependent upon obtaining sufficient capital to fund the research and development of its pipeline candidates, to bring about their successful commercial release, to generate revenue and, ultimately, to attain profitable operations or, alternatively, to advance its products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

To date, the Company has been able to obtain financing as and when it was needed; however, there is no assurance that financing will be available in the future, or if it is, that it will be available at acceptable terms.

As of March 31, 2022, we have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

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Known Trends, Events, and Uncertainties

As with other companies that are in the process of commercializing novel pharmaceutical products, we will need to successfully manage normal business and scientific risks. Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. The impact of the ongoing COVID-19 pandemic, including the Omicron variant of COVID-19, which appears to be the most transmissible variant to-date, and the subvariant, BA.2, is currently indeterminable and rapidly evolving, and has adversely affected and may continue to adversely affect our operations and the global economy. In addition, the consequences of the ongoing conflict between Russia and Ukraine, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. Furthermore, other than as discussed in this report, we have no committed source of financing and may not be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies during the three months ended March 31, 2022. Critical accounting policies and the significant accounting estimates made in accordance with such policies are regularly discussed with the Audit Committee of the Company’s board of directors. Those policies are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, as well as in our consolidated financial statements and the footnotes thereto, included in the Annual Report on Form 10-K. 

Recent Accounting Pronouncements

See Note 3 of Notes to the Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer and Head of Business Development (our principal financial and accounting officer), the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer and Head of Business Development have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer and Head of Business Development, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended March 31, 2022, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two civil claims were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege, among other things: defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers; and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April 2011 and seeking damages in a total amount of NIS 1,879,500 ($591,782). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. Preliminary hearings for the trial of the civil action began on January 15, 2020, with subsequent preliminary hearings held on May 13, 2020, December 3, 2020 and September 30, 2021. The next preliminary hearing is scheduled to be held on June 9, 2022.

Item 1A. Risk Factors 

A description of the risks associated with our business, financial condition and results of operations is set forth in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 7, 2012. There have been no material changes to these risks during the three months ended March 31, 2022.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) Sales of Unregistered Securities

There have been no unregistered sales of securities during the period covered by this Form 10-Q that have not been previously reported in a current report on Form 8-K. We have not made any purchases of our own securities during the time period covered by this Form 10-Q.

c) Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index following the signature page to this Form 10-Q for a list of exhibits filed or furnished with this Form 10-Q, which Exhibit Index is incorporated herein by reference.

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EXHIBIT INDEX

Exhibit No.	Description
10.1+*	Amendment to Consulting Agreement with F. Diaz-Mitoma Professional Corporation, effective December 16, 2021.
10.2+	Amendment to Consulting Agreement with F. Diaz-Mitoma Professional Corporation, effective January 1, 2022 (incorporated by reference to Exhibit 10.52 to the annual report on Form 10-K (SEC File No. 001-37769), filed with the SEC on March 7, 2022).
10.3(1)(2)	Fifth Amendment to the Collaborative Research Agreement, signed February 8, 2022, between National Research Council of Canada and Variation Biotechnologies Inc (incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K (SEC File No. 001-37769), filed with the SEC on March 7, 2022).
10.4(1)(2)	Sixth Amendment to the Collaborative Research Agreement, signed April 28, 2022, between National Research Council of Canada and Variation Biotechnologies Inc
10.5*(1)(2)	Amendment to the Contribution Agreement, signed March 28, 2022, by and among VBI Vaccines, Inc., Variation Biotechnologies, Inc. and Her Majesty The Queen in Right of Canada as represented by the Minister of Industry.
31.1*	Certificate of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2*	Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2**	Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS*	Inline XBRL Instance Document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

+ Indicates a management contract or compensatory plan.

* Filed herewith.

** Furnished herewith.

(1) Certain of the schedules (and similar attachments) to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5) of Regulation S-K under the Securities Act of 1933, as amended, because they do not contain information material to an investment or voting decision and that information is not otherwise disclosed in the Exhibit or the disclosure document. The registrant hereby agrees to furnish a copy of all omitted schedules (or similar attachments) to the SEC upon its request.

(2) Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended, because they are both (i) not material and (ii) the type that the registrant treats as private or confidential. A copy of the omitted portions will be furnished to the SEC upon its request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 9, 2022	VBI VACCINES INC.
	By:	/s/ Jeffrey Baxter
		Jeffrey Baxter President & Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Christopher McNulty
		Christopher McNulty
		Chief Financial Officer and Head of Business Development
		(Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

AMENDMENT TO CONSULTING AGREEMENT

This Amendment to Consulting Agreement (the “Amendment”), effective as of December 16^th, 2021 (the “Effective Date”), is by and between Variation Biotechnologies Inc., a corporation incorporated pursuant to the laws of Canada (the “Company”) having an address of 310 Hunt Club Road East, Ottawa, Ontario K1V 1C1 and F. Diaz-Mitoma Professional Corporation (Ontario corporation number 002356634) having an address of 210 Barrow Crescent, Kanata, Ontario K2L 2C7 (“Consultant”). The Consultant and Company are sometimes referred to as a “Party” and are collectively referred to as the “Parties”.

WHEREAS, the Company and Consultant are parties to a certain Consulting Agreement dated July 1, 2016, amended as of January 1, 2017, amended January 1, 2018, amended January 1, 2019, January 1, 2020, and further amended as of January 1, 2021 (the “Consulting Agreement”);

AND WHEREAS, the Consultant and the Company wish to amend the Consulting Agreement on the terms and conditions set out in this Amendment;

NOW THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:

1. Amendment to Appendix C. As of the Effective Date, Appendix C – Performance Incentives of the Consulting Agreement shall be amended to include paragraph 3 in the version of Appendix C attached as Schedule A to this Amendment.

2. Consulting Agreement to Remain in Full Effect. Except as amended by this Amendment, the Consulting Agreement shall continue to be in full force and effect, without amendment, and is hereby ratified and confirmed. The Consulting Agreement shall henceforth be read and construed in conjunction with this Amendment.

3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

4.  Further Assurances. Each Party shall do such further acts and execute such further documents as may be required to give effect to this Amendment and carry out the intent thereof.

5.  Binding Effect. This Amendment shall be binding on and inure to the benefit of the Parties and their respective successors and assigns.

6. Execution and Counterparts. This Amendment may be executed in counterparts, including counterpart signature pages or counterpart facsimile or scanned signature pages (each of which shall be deemed an original), all of which together shall constitute one and the same instrument.

(Signature page follows.)

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the Effective Date.

VARIATION BIOTECHNOLOGIES INC.
	/s/ Jeff Baxter
Name:	Jeff Baxter
Title:	Chief Executive Officer
F. DIAZ-MITOMA PROFESSIONAL CORPORATION
	/s/ Dr. Francisco Diaz-Mitoma
Name:	Dr. Francisco Diaz-Mitoma
Title:	President

Schedule A

Appendix C – Performance Incentives

1.	Bonus payable as of January 31, 2021 – CAD $265,500
2.	The Company shall cause VBI Vaccines Inc., a British Columbia corporation (the “Parent”) to grant to Francisco Diaz-Mitoma, as designee of Consultant, 500,000 stock options (the “Options”), each Option exercisable for one common share of Parent, to be granted effective as of January 27, 2021, which was the date on which the board of directors of Parent approved such grant, and to be subject to the provisions of the Plan. Conditions regarding the Options and their exercise, including the exercise price, the term of the Options and the timing of vesting shall be set out in an Option Agreement between the Parent and Francisco Diaz-Mitoma. The common shares issuable upon exercise of the Options shall bear the appropriate legend to indicate such shares are “control securities” as defined in General Instruction C.1(a) of Form S-8.
3.	Additional bonus, as a result of the successful U.S. FDA approval of PreHevbrio™ on November 30, 2021, payable as of December 16, 2021 – CAD $50,000

EX-10.4

Exhibit 10.4

[***] Certain information has been excluded pursuant to Regulation S-K, Item 601(b)(10)(iv) from this Document because it is both not material and is the type that the registrant treats as private or confidential.

Business Confidential – Protected B

THIS IS AN AMENDING AGREEMENT (referred to herein as “Amendment Six”)

BETWEEN:	NATIONAL RESEARCH COUNCIL OF CANADA
	a departmental corporation forming part of the Government of Canada
	created by the National Research Council Act (R.S.C. 1985, c. N-15), and
	an agent of Her Majesty the Queen in Right of Canada
	whose head office address is:
		1200 Montreal Road
		Ottawa, Ontario K1A 0R6	(called the “NRC”)

AND:	VARIATION BIOTECHNOLOGIES INC.
	a Company incorporated under the Canada Business Corporations Act under number 393728-3 whose Registered Office Address is located in:
	300 Hunt Club Road East, 2nd Floor
		Ottawa, Ontario K1V 1C1	(called the “Collaborator” or “VBI”)

(Collectively known as the “Parties”)

WHEREAS the parties entered into an Agreement signed by the NRC on 30 March 2020 (called the “Original Agreement”) and Amendment One signed by NRC on 21 December 2020 (called “Amendment One”), Amendment Two signed by NRC on July 8, 2021 (called “Amendment Two”), Amendment Three (called “Amendment Three”) signed by NRC on 28 August 2021, Amendment Four (called “Amendment Four”), signed by NRC on 15 November 2021 and Amendment Five (called “Amendment Five”), signed by NRC on 08 February 2022 by which the Parties agreed to collaborate in a “Project”, described as: COVID-19 vaccine evaluation. The Original Agreement, Amendment One, Amendment Two, Amendment Three, Amendment Four, Amendment Five and this Amendment Six are now called “The Agreements”.

WHEREAS this Amendment Six adds further additional tasks to The Agreements.

WHEREAS the Parties wish to amend The Agreements.

IN CONSIDERATION of the mutual covenants hereunder, the Parties agree as follows:

1.	The Agreements shall be read with the amended terms stated below. With respect to all other terms, the Parties confirm the Agreement.
2.	The attached “SCHEDULE OF PAYMENTS” is in addition to the “Schedule of Payments” from The Agreements.
3.	The attached “NEW STATEMENT OF WORK AND DELIVERABLES” is in addition to the “STATEMENT OF WORK AND DELIVERABLES” in The Agreements.
4.	The estimated total value of this Project Amendment Six is: $*** as indicated in the Statement of Work.

5. The Collaborator is a Canadian Small and Medium Enterprise (SME) or a Canadian educational institution, including a community college, CEGEP, polytechnic or university, and benefits from a Fee Reduction of $***. The Collaborator hereby warrants that, at the time of signing this Agreement, it is a SME and has 500 or fewer full-time equivalent employees, or it is a Canadian educational institution.

HHT – Immuno Biology		Page 1 of 5
	NRC Ref. #: A-0043224 (orig. A-0035546)

 

6. The amount that the Collaborator will pay to the NRC for this Amendment Six is: $*** as indicated in the Statement of Work.

7. The expiry date of The Agreements is extended from 30 June, 2022 to 31 October, 2022.

8. This Amendment Six may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one valid and binding agreement. A portable document format (PDF) copy of an executed counterpart signature page will be as valid as an originally executed counterpart for purposes of signing this Amending Agreement.

SIGNED by the Collaborator at Ottawa, Ontario

		VARIATION BIOTECHNOLOGIES INC.
Date:	April 11, 2022	Per:	/s/ Chris McNulty
			Chris McNulty
			CFO
SIGNED by the NRC at Ottawa, Ontario
		NATIONAL RESEARCH COUNCIL OF CANADA
Date:	April 28, 2022	Per:	/s/ Lakshmi Krishnan
			Lakshmi Krishnan
			Acting Vice President, Life Sciences

HHT – Immuno Biology		Page 2 of 5
	NRC Ref. #: A-0043224 (orig. A-0035546)

 

ANNEX SP – SCHEDULE OF PAYMENTS TO NRC

Billing address: See page 1

Billing contact:

Name:	Andrea McRae
Title:	Project Manager
Telephone:	613 749 4200
Email:	***

SP-1 The Collaborator shall be invoiced as follows:

Invoicing Schedule (Estimated Dates)		Amount Due*
Upon signature by both Parties of Amendment 6 Task 2.9.6	$	***
TOTAL MAXIMUM PAYABLE AMOUNT	$	***

*Plus applicable taxes

SP-2	All amounts shall be due 30 days from the date of the invoice.
SP-3	Payments must be made to: “Receiver General - National Research Council of Canada” and addressed to:

Accounts Receivable

National Research Council of Canada

1200 Montreal Road

Ottawa, Ontario, K1A 0R6 CANADA

SP-4	Payments can be made by cheque, MasterCard, Visa or American Express; or by wire transfer. Wire transfer information is available upon request. The Collaborator is responsible for all bank charges associated with wire transfers. Any inquiries may be directed to: AccountsReceivable@nrc-cnrc.gc.ca.
SP-5	The Collaborator shall provide any Invoicing Reference Number at the time of Agreement signature or promptly thereafter. The NRC will not delay or cancel invoicing nor defer accrual of interest due to the Collaborator’s failure to provide an Invoicing Reference Number.
SP-6	The NRC may suspend its performance of any obligations under this Agreement so long as any payment is overdue for any reason.
SP-7	If this Agreement is amended to increase the scope of the Services, the NRC reserves the right to calculate costing for its additional Project activities at its rates that are in effect at that time. Any such cost increases shall be approved, in writing, by both Parties.
SP-8	If the NRC expects that the value of its estimated contribution will be exceeded by more than 10%, it shall promptly notify the other Party. The Parties shall then negotiate a further agreement on costs or payments, and either Party may suspend the performance of any obligations, other than confidentiality, intellectual property and accrued obligations to pay, until a further agreement is reached. If the Parties fail to agree on an amendment within 60 days of the notice, then this Agreement shall terminate on the 60th day after the notice, unless the Parties agree otherwise in writing.

HHT – Immuno Biology		Page 3 of 5
	NRC Ref. #: A-0043224 (orig. A-0035546)

 

SP-9	If a surplus of prepayment remains as a result of premature termination, it will be refunded to Collaborator.
SP-10	If an instrument tendered in payment or settlement of an amount due to the NRC is dishonored for any reason, the NRC will invoice an additional administrative charge of CAD 25 and this amount will be due as invoiced.
SP-11	Interest is payable on all overdue amounts. Interest is calculated and compounded monthly at the average bank rate plus 3% and accrues during the period beginning on the due date and ending on the day before the day on which payment is received by the NRC. For purposes of this paragraph “bank rate” means the rate of interest established periodically by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to members of the Canadian Payments Association, and “average bank rate” means the weighted arithmetic average of the bank rates that are established during the month before the month in respect of which interest is being calculated.

(Rate information may be found at http://www.tpsgc-pwgsc.gc.ca/recgen/txt/tipp-ppir-eng.html. This site provides information on the rate used by departments of the Government of Canada to calculate the interest on overdue accounts payable and is the same rate used by the NRC to charge interest on overdue accounts receivable under the Interest and Administrative Charges Regulations, SOR/96-188. This web site address, and the information set out there, is provided here for convenience. In case of rate discrepancy, the rates quoted by the Bank of Canada shall prevail.)

(The rest of this page was intentionally left blank)

HHT – Immuno Biology		Page 4 of 5
	NRC Ref. #: A-0043224 (orig. A-0035546)

 

STATEMENT OF WORK AND DELIVERABLES

***

HHT – Immuno Biology		Page 5 of 5
	NRC Ref. #: A-0043224 (orig. A-0035546)

EX-10.5

Exhibit 10.5

SIF Project No. 812-815774

Amendment No. 1

[***] Certain information has been excluded pursuant to Regulation S-K, Item 601(b)(10)(iv) from this Document because it is both not material and is the type that the registrant treats as private or confidential.

STRATEGIC INNOVATION FUND

AMENDMENT AGREEMENT NO. 1

This Amendment Agreement made

Between:

HER MAJESTY THE QUEEN IN RIGHT OF CANADA,

as represented by the Minister of Industry

(the “Minister”)

And:

Variation Biotechnologies Inc., a corporation duly incorporated under the laws of Canada, having its head office located at 310 Hunt Club Road Suite 201, Ottawa, Ontario K1V 1C1.

(the “Recipient”).

And:

VBI Vaccines Inc., a corporation duly incorporated under the laws of British Columbia having its head office located at 222 Third Street, Suite 2241 Cambridge, Massachusetts 02142 and an office located at 310 Hunt Club Road Suite 201, Ottawa, Ontario K1V 1C1

(the “Guarantor”)

Each a “Party” to this Amendment Agreement and collectively referred to as the “Parties”.

SIF Project No. 812-815774

Amendment No. 1

RECITALS

WHEREAS

A-	The Minister, the Recipient and the Guarantor entered into a contribution agreement dated September 16, 2020 under the Strategic Innovation Fund for which contribution was issued. The contribution agreement is referred to as the “Contribution Agreement”;
B-	The Minister, the Recipient and the Guarantor have agreed to amend, inter alia, the project completion date, the statement of work, and foreign cost locations under the terms of the Contribution Agreement.

NOW THEREFORE in consideration of their respective obligations set out below, the Parties hereto acknowledge and agree as follows:

Interpretation

1. All capitalized terms not otherwise defined herein have the same meaning ascribed to them in the Contribution Agreement.

Execution

2. This Amendment Agreement must be signed by the Parties and received by the Minister within thirty (30) days of its signature on behalf of the Minister, failing which it shall be null and void.

2

SIF Project No. 812-815774

Amendment No. 1

Amendment

3. Section 2. Interpretation - shall be amended by deleting the definition of “Project Completion Date” in section 2.1. Definitions, and replacing it with the following:

““Project Completion Date” means December 31, 2023.”

4. Section 6. Special Conditions - shall be amended by deleting section 6.4 Work Outside of Canada and replacing it with the following:

“6.4 Work Outside Canada

In consideration of the Minister providing the Contribution, subject to the costs to be incurred as specified below, the Recipient may incur up to *** percent (***%)  of Eligible Supported Costs outside of Canada to *** . Any costs above this threshold will be considered ineligible and will not be subject to claim.

The Recipient will make best efforts to conduct all clinical trials in Canada unless *** 

The Parties acknowledge ***  and the Recipient’s preferred solution is to have the work conducted by Resilience Biopharma, a Canadian manufacturer as outlined in Schedule 1 – Statement of Work. In the event that ***  , the Recipient has developed *** All *** or *** taking place outside of Canada must be clearly identified within Schedule 1 - Statement of Work . Any change to the Statement of Work is subject to Ministerial consent, as per Subsection 6.6, which will not be unreasonably withheld.”

5. Schedule 1 – The Statement of Work (SOW), of the Contribution Agreement, section 2 (Activities), Forms A(Master Schedule), B(Milestones), C1 (Eligible Cost Breakdown), C2 ( Estimated Cost Breakdown by Fiscal Year) and D (Project Locations) are hereby deleted in their entirety and replaced with the new section 2 Activities, and Forms A, B, C1, C2 and D attached hereto as Annex A.

3

SIF Project No. 812-815774

Amendment No. 1

General

6.	Each of the Parties shall, at the request of the other Party to this Amendment Agreement, execute such documents and do such acts as may be reasonably required to carry out the terms of this Amendment Agreement.
7.	This Amendment Agreement may be executed in as many counterparts as are necessary, and when executed by all Parties hereto, such counterparts shall constitute one agreement.
8.	Except as amended by this Amendment Agreement, all of the provisions of the Contribution Agreement shall continue in full force and effect until such time as the Contribution Agreement is terminated.
9.	The Contribution Agreement and this Amendment Agreement will henceforth be read together and will have the effect as if all the provisions of such agreements were contained in one instrument.
10.	No modification, supplement or amendment to this Amendment Agreement shall be binding unless executed in writing by all of the Parties hereto.

[Remainder of this page intentionally left blank]

4

SIF Project No. 812-815774

Amendment No. 1

IN WITNESS WHEREOF the Parties hereto have executed this Amendment Agreement through duly authorized representatives.

HER MAJESTY THE QUEEN IN RIGHT OF CANADA as represented by the Minister of Industry
Per:	/s/ Dina Kalogeropoulos	Date:	March 15, 2022
Name:	Dina Kalogeropoulos
Title:	Director,
	Investment Operations Directorate
Variation Biotechnologies Inc.
Per:	/s/ Adam Buckley	Date:	March 16, 2022
Name:	Adam Buckley
Title:	Senior Vice President, Business Development
I have authority to bind the Corporation.

5

SIF Project No. 812-815774

Amendment No. 1

VBI Vaccines Inc.
Per:	/s/ Jeff Baxter	Date:	March 28, 2022
Name:	Jeff Baxter
Title:	Chief Executive Officer
I have authority to bind the Corporation.

Attachment: Annex A

Annex A

Revised Statement of Work

[Omitted]

6

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey Baxter, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2022
	/s/ Jeffrey Baxter
	Jeffrey Baxter
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Christopher McNulty, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2022
	/s/ Christopher McNulty
	Christopher McNulty
	Chief Financial Officer and Head of Business Development
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission (the “Report”), I, Jeffrey Baxter, Chief Executive Officer (Principal Executive Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 9, 2022
	/s/ Jeffery Baxter
	Jeffrey Baxter
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission (the “Report”), I, Christopher McNulty, Chief Financial Officer and Head of Business Development (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 9, 2022
	/s/ Christopher McNulty
	Christopher McNulty
	Chief Financial Officer and Head of Business Development
	(Principal Financial and Accounting Officer)

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 09, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-37769
Entity Registrant Name	VBI Vaccines Inc/BC
Entity Central Index Key	0000764195
Entity Tax Identification Number	00-0000000
Entity Incorporation, State or Country Code	A1
Entity Address, Address Line One	160 Second Street
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02142
City Area Code	617
Local Phone Number	830-3031
Title of 12(b) Security	Common Shares, no par value per share
Trading Symbol	VBIV
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		258,257,494

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$ 101,337	$ 121,694
Accounts receivable, net	102	8
Inventory, net	4,057	2,576
Prepaid expenses	2,167	2,373
Other current assets	4,684	3,633
Total current assets	112,347	130,284
NON-CURRENT ASSETS
Other long-term assets	1,446	1,259
Property and equipment, net	10,846	11,037
Right of use assets	3,846	3,344
Intangible assets, net	63,218	62,091
Goodwill	2,303	2,261
Total non-current assets	81,659	79,992
TOTAL ASSETS	194,006	210,276
CURRENT LIABILITIES
Accounts payable	3,927	4,280
Other current liabilities	23,733	26,941
Current portion of deferred revenues	649	526
Current portion of long-term debt	4,744
Current portion of lease liability	938	839
Total current liabilities	33,991	32,586
NON-CURRENT LIABILITIES
Deferred revenues, net of current portion	2,168	2,277
Long-term debt, net of debt discount and current portion	24,788	28,441
Lease liability, net of current portion	2,921	2,516
Liabilities for severance pay	574	574
Total non-current liabilities	30,451	33,808
COMMITMENTS AND CONTINGENCIES (NOTE 14)
STOCKHOLDERS’ EQUITY
Common shares (unlimited authorized; no par value) (March 31, 2022 - issued and outstanding 258,257,494; December 31, 2021 - issued and outstanding 258,250,273)	442,272	442,235
Additional paid-in capital	81,314	81,583
Accumulated other comprehensive (loss) income	3,538	(1,565)
Accumulated deficit	(397,560)	(378,371)
Total stockholders’ equity	129,564	143,882
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 194,006	$ 210,276

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common Stock, shares authorized	Unlimited	Unlimited
Common stock, no par value	$ 0	$ 0
Common stock, shares issued	258,257,494	258,250,273
Common stock, shares outstanding	258,257,494	258,250,273

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Revenues	$ 126	$ 301
Operating expenses:
Cost of revenues	2,754	2,412
Research and development	2,362	6,839
General and administrative	10,930	6,747
Total operating expenses	16,046	15,998
Loss from operations	(15,920)	(15,697)
Interest expense, net of interest income	(940)	(1,812)
Foreign exchange loss	(4,394)	(138)
Loss before income taxes	(21,254)	(17,647)
Income tax expense
NET LOSS	(21,254)	(17,647)
Other comprehensive income	5,103	343
COMPREHENSIVE LOSS	$ (16,151)	$ (17,304)
Net loss per share of common shares, basic and diluted	$ (0.08)	$ (0.07)
Weighted-average number of common shares outstanding, basic and diluted	258,256,692	251,292,761

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2020	$ 403,528	$ 75,530	$ 1,265	$ (308,618)	$ 171,705
Beginning balance, shares at Dec. 31, 2020	247,039,010
Stock-based compensation	$ 51	2,088			2,139
Net loss				(17,647)	(17,647)
Currency translation adjustments			397		397
Common shares issued in financing transactions, net of share issuance costs	$ 21,417				21,417
Common shares issued in financing transaction, net of issuance costs, shares	5,752,068
Common shares issued upon exercise of warrants	$ 52				52
Common shares issued upon exercise of warrants, shares	34,494
Common shares issued upon of conversion of long-term debt	$ 2,000				2,000
Common shares issued upon of conversion of long-term debt, shares	1,369,863
Unrealized holding loss on short-term investments			(54)		(54)
Ending balance, value at Mar. 31, 2021	$ 427,048	77,618	1,608	(326,265)	180,009
Ending balance, shares at Mar. 31, 2021	254,195,435
Beginning balance, value at Dec. 31, 2021	$ 442,235	81,583	(1,565)	(378,371)	143,882
Beginning balance, shares at Dec. 31, 2021	258,250,273
Adjustments for prior periods from adoption of ASU 2020-06		(2,746)		2,065	(681)
Common shares issued upon exercise of options	$ 12				12
Common shares issued up on exercise of options, shares	7,221
Stock-based compensation	$ 25	2,477			2,502
Net loss				(21,254)	(21,254)
Currency translation adjustments			5,103		5,103
Common shares issued upon of conversion of long-term debt
Ending balance, value at Mar. 31, 2022	$ 442,272	$ 81,314	$ 3,538	$ (397,560)	$ 129,564
Ending balance, shares at Mar. 31, 2022	258,257,494

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (21,254)	$ (17,647)
Adjustments to reconcile net loss to cash and cash equivalents used in operating activities:
Depreciation and amortization	473	446
Stock-based compensation	2,502	2,139
Amortization of debt discount	410	1,611
Inventory reserve	220	122
Interest accrued on short-term investments		(111)
Unrealized foreign exchange loss	4,297	165
Net change in operating working capital items:
Change in accounts receivable	(94)	(100)
Change in inventory	(1,744)	(214)
Change in prepaid expenses	209	486
Change in other current assets	(928)	616
Change in other long-term assets	(197)	(152)
Change in operating right of use assets	342	270
Change in accounts payable	(459)	(2,114)
Change in deferred revenues	(11)	(103)
Change in other current liabilities	(3,350)	8,211
Payments made on operating lease liabilities	(341)	(269)
Net cash flows used in operating activities	(19,925)	(6,644)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(515)	(556)
Net cash flows used in investing activities	(515)	(556)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares for cash		22,113
Share issuance costs		(541)
Proceeds from issuance of common shares for cash, upon exercise of options	12	52
Net cash flows provided by financing activities	12	21,624
Effect of exchange rates on cash and cash equivalents	71	(23)
CHANGE IN CASH AND CASH EQUIVALENTS, FOR THE PERIOD	(20,357)	14,401
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	121,694	93,825
CASH AND CASH EQUIVALENTS, END OF PERIOD	101,337	108,226
Supplementary information:
Interest paid	604	403
Non-cash investing and financing activities:
Adjustments for prior periods from adoption of ASU 2020-06	681
Common shares issued upon conversion of debt		2,000
Capital expenditures included in accounts payable and other current liabilities	146	119
Share issuance costs included in other current liabilities	67	155
Unrealized holding gains on short term investment		$ (54)

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NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

1. NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

Corporate Overview

VBI Vaccines Inc. (the “Company” or “VBI”) was incorporated under the laws of British Columbia, Canada on April 9, 1965.

The Company and its wholly-owned subsidiaries, VBI Vaccines (Delaware) Inc., a Delaware corporation (“VBI DE”); VBI DE’s wholly-owned subsidiary, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI US”); Variation Biotechnologies, Inc. a Canadian company and the wholly-owned subsidiary of VBI US (“VBI Cda”); and SciVac Ltd. an Israeli company (“SciVac”); SciVac Hong Kong Limited (“SciVac HK”) and VBI Vaccines B.V a Netherlands company (“VBI BV”), are collectively referred to as the “Company”, “we”, “us”, “our”, or “VBI”.

The Company’s registered office is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 with its principal office located at 160 Second Street, Floor 3, Cambridge, MA 02142. In addition, the Company has manufacturing facilities located in Rehovot, Israel and research facilities located in Ottawa, Ontario, Canada.

Principal Operations

VBI Vaccines Inc. (“VBI”) is a commercial stage biopharmaceutical company driven by immunology in the pursuit of prevention and treatment of disease. Through its innovative approach to virus-like particles (“VLPs”), including a proprietary enveloped VLP (“eVLP”) platform technology, VBI develops vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. VBI is committed to targeting and overcoming significant infectious diseases, including hepatitis B (“HBV”), COVID-19 and coronaviruses, and cytomegalovirus (“CMV”), as well as aggressive cancers including glioblastoma (“GBM”). VBI is headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel.

The ongoing COVID-19 pandemic has materially negatively affected and continues to affect the global economy, and there is continued severe uncertainty about the duration and intensity of the impacts of the pandemic. As a result, the Company’s business and results of operations have also been adversely affected and could continue to be adversely affected by COVID-19 which has necessitated restricting the number of personnel in the Company’s research laboratories and manufacturing facility at any given point in time, and has slowed recruitment to clinical trials. The extent to which the COVID-19 pandemic will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted. We do not yet know the full extent of potential delays or impacts on our business, our clinical studies, our research programs, the recoverability of our assets, and our manufacturing; however, the COVID-19 pandemic may continue to disrupt or delay our business operations, including with respect to efforts relating to potential business development transactions, and it could continue to disrupt the marketplace which could have an adverse effect on our operations. 

Liquidity and Going Concern

The Company has a limited operating history and faces a number of risks, including but not limited to, uncertainties regarding the success of the development and commercialization of its products, demand and market acceptance of the Company’s products, and reliance on major customers. The Company anticipates that it will continue to incur significant operating costs and losses in connection with the development and commercialization of its products.

The Company had an accumulated deficit of $397,560 as of March 31, 2022 and cash outflows from operating activities of $19,925 for the three months ended March 31, 2022.

The Company will require significant additional funds to conduct clinical and non-clinical trials, commercially launch our products, and achieve regulatory approvals. The Company plans to finance near term future operations with existing cash and cash equivalent reserves. Additional financing may be obtained from the issuance of equity securities, the issuance of additional debt, structured asset financings, government or non-governmental organization grants or subsidies, and/or revenues from potential business development transactions, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Financial instruments recognized in the condensed consolidated balance sheet consist of cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, and other current liabilities. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The Company does not hold any derivative financial instruments.

The carrying amounts of the Company’s other long-term assets approximate their respective fair values.

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SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the SEC, for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2021 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”), as filed with the SEC on March 7, 2022.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: VBI DE, VBI US, VBI Cda, SciVac, SciVac HK, and VBI BV. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements. Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2021 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2022, other than the polices discussed below.

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NEW ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2022

Accounting Changes and Error Corrections [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including certain convertible instruments and contracts on an entity’s own equity. Specifically, the new standard has removed the separation models required for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. It has also removed certain settlement conditions that are currently required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation for convertible instruments.

On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method and recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. Our conversion option that was previously bifurcated and recorded as a debt discount and additional paid-in capital has now been combined as a single instrument classified as a liability. The Company eliminated the beneficial conversion feature from additional paid-in capital; eliminated the interest accretion on the beneficial conversion feature through December 31, 2021 from the opening balance of accumulated deficit; and eliminated the corresponding debt discount. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows:

	Balance as at December 31, 2021			Adjustments from adoption of ASU 2020-06			Balance as at January 1, 2022
Liabilities
Long-term debt, net of debt discount	$	28,441		$	681		$	29,122
Stockholders’ equity
Additional paid-in capital	$	81,583		$	(2,746	)	$	78,837
Accumulated deficit	$	(378,371	)	$	2,065		$	(376,306	)

Recently Issued Accounting Standards, not yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“2016-13”). The amendments in ASU 2016-13, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. ASU 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This ASU will be implemented through a modified retrospective method of transition. The Company is currently evaluating the potential impact of ASU 2016-13 on its condensed consolidated financial statements. 

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INVENTORY, NET

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

INVENTORY, NET

4. INVENTORY, NET

Inventory consists of the following:

	March 31, 2022		December 31, 2021
Finished goods	$	305	$	-
Work-in-process		866		645
Raw materials		2,886		1,931
Total	$	4,057	$	2,576

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OTHER CURRENT ASSETS

3 Months Ended

Mar. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER CURRENT ASSETS

5. OTHER CURRENT ASSETS

Other current assets consisted of the following:

	March 31, 2022		December 31, 2021
Government receivables	$	2,769	$	1,438
Other current assets		1,915		2,195
Total	$	4,684	$	3,633

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INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

6. INTANGIBLE ASSETS AND GOODWILL

			March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(678	)	$	-		$	47	$	38
IPR&D assets		61,500		-			(300	)		1,980		63,180
	$	62,169	$	(678	)	$	(300	)	$	2,027	$	63,218

			December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(660	)	$	-		$	47	$	56
IPR&D assets		61,500		-			(300	)		835		62,035
	$	62,169	$	(660	)	$	(300	)	$	882	$	62,091

The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives.

The change in carrying value for IPR&D assets from December 31, 2021 relates to currency translation adjustments which increased by $1,145 for the three months ended March 31, 2022.

			March 31, 2022
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(119	)	$	2,303

			December 31, 2021
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(161	)	$	2,261

The change in carrying value for goodwill from December 31, 2021 relates to currency translation adjustments which increased by $42 for the three months period ended March 31, 2022.

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OTHER CURRENT LIABILITIES

3 Months Ended

Mar. 31, 2022

Other Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

7. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2022		December 31, 2021
Accrued research and development expenses (including clinical trial accrued expenses)	$	7,334	$	8,196
Accrued professional fees		3,906		2,294
Payroll and employee-related costs		2,495		4,805
Deferred funding		8,657		10,183
Other current liabilities		1,341		1,463
Total	$	23,733	$	26,941

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LOSS PER SHARE OF COMMON SHARES

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

LOSS PER SHARE OF COMMON SHARES

8. LOSS PER SHARE OF COMMON SHARES

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, and stock options, which would result in the issuance of incremental shares of common shares unless such effect is anti-dilutive. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as their effect would be anti-dilutive. These potentially dilutive securities are more fully described in Note 10, Stockholders’ Equity and Additional Paid-in Capital.

The following potentially dilutive securities outstanding at March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2022		March 31, 2021
Warrants		1,384,469		3,163,172
Stock options and restricted stock units		23,390,983		18,139,335
K2 conversion feature		1,369,863		1,369,863
Total		26,145,315		22,672,370

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LONG-TERM DEBT

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

LONG-TERM DEBT

9. LONG-TERM DEBT

As of March 31, 2022, and December 31, 2021, the long-term debt is as follows:

	March 31, 2022		December 31, 2021
Long-term debt, net of debt discount of $2,692 ($3,783 at December 31, 2021)	$	29,532	$	28,441
Less: current portion, net of debt discount of $396 ($0 at December 31, 2021)		4,744		-
Long-term debt	$	24,788	$	28,441

On May 22, 2020, the Company (along with its subsidiary VBI Cda) entered into the Loan and Guaranty Agreement (the “Loan Agreement”) with K2 HealthVentures LLC and any other lender from time-to-time party thereto (the “Lenders”) pursuant to which we received the first tranche secured term loan of $20,000 (the “First Tranche Term Loan”). The Lenders originally agreed to make available the following additional tranches subject to the following conditions and upon the submission of a loan request by the Company: (1) up to $10,000 available between January 1, 2021 and April 30, 2021 upon achievement of certain milestones (the “Second Tranche Term Loan”), (2) $10,000 available between the closing date and December 31, 2021, subject to achievement of a certain U.S. Food and Drug Administration (“FDA”) approval (the “Third Tranche Term Loan”), and (3) a final tranche of up to $10,000 that could be made available any time prior to June 30, 2022, subject to the advance of the Third Tranche Term Loan, satisfactory review by the administrative agent of our financial and operating plan, and approval by the Lenders’ investment committee. The Company obtained FDA approval on November 30, 2021 but elected not to draw down the Third Tranche Term Loan. As the Third Tranche Term Loan availability period has passed, the final tranche will not be made available. Pursuant to the Loan Agreement, the Lenders originally had the ability to convert, at the Lenders’ option, up to $4,000 of the secured term loan into common shares of the Company at a conversion price of $1.46 per share (“K2 conversion feature”) until the maturity date of June 1, 2024. On February 3, 2021, pursuant to the Loan Agreement, the Lenders, converted $2,000 of the secured term loan into 1,369,863 common shares at a conversion price of $1.46. The Lenders have the ability to convert an additional $2,000 at the Lenders’ option.

On May 17, 2021, the Company entered into the First Amendment with the Lenders to: (1) increase the Second Tranche Term Loan from $10,000 to $12,000; (2) extend the availability period of the Second Tranche Term Loan beyond April 30, 2021, subject to certain conditions; (3) amend the Second Tranche Term Loan interest rate equal to the greater of (a) 7.75% and (b) prime rate plus 4.50%; and (4) extend the date as of which amortization of the loans under the Loan Agreement shall begin from July 1, 2022 to January 1, 2023.

In connection with the Loan Agreement, on May 22, 2020, the Company issued the Lenders a warrant to purchase up to 625,000 common shares (the “Original K2 Warrant”) at an exercise price of $1.12 (the “Warrant Price”). On May 17, 2021, in connection with the First Amendment, the Company issued the Lenders an amended and restated warrant to purchase an additional 312,500 common shares for a total of 937,500 common shares (the “Restated K2 Warrant”) with the same Warrant Price of $1.12. The Restated K2 Warrant may be exercised either for cash or on a cashless “net exercise” basis and expires on May 22, 2030.

The total proceeds attributed to the Original K2 Warrant was $1,181 based on the relative fair value of the Original K2 Warrant as compared to the sum of the fair values of the Original K2 Warrant, K2 conversion feature and debt. The effective conversion price of the K2 conversion feature of $1.52 was determined to be less than the fair value of the underlying common stock at the date of commitment, resulting in a beneficial conversion feature (“BCF”) at that date. The intrinsic value of the BCF was $2,577 and recorded to additional paid-in capital. The Original K2 Warrant and the K2 conversion feature resulted in the debt being issued at a discount. The Company also incurred $1,021 of debt issuance costs and is required to make a final payment equal to 6.95% of the aggregate original secured term loan principal on the maturity date of the term loan, or upon earlier prepayment of the term loans in accordance with the Loan Agreement, resulting in an additional discount of $1,390 related to the First Tranche Term Loan. The total initial debt discount was $6,169. As discussed in Note 3, upon adoption of ASU 2020-06, effective January 1, 2022, the BCF was eliminated from additional paid-in capital and the debt discount.

The Second Tranche Term Loan, issued pursuant to the Loan Agreement as amended by the First Amendment, resulted in the Company incurring an additional $20 of debt issuance costs, $150 of third-party costs and being required to make a final payment of $834, which is equal to 6.95% of the Second Tranche Term Loan.

The Company accounted for the First Amendment as a debt modification and as a result the debt discount was increased by $1,721. This amount represents: (1) the incremental fair value of the Restated K2 Warrant of $867; (2) the increased final payment of $834 related to the Second Tranche Term Loan; and (3) debt issuance costs of $20. The third-party costs were expensed in general and administration in the condensed consolidated statement of operations and comprehensive loss.

The total principal amount of the loan under the Loan Agreement, as amended by the First Amendment, outstanding at March 31, 2022, including the $2,224 final payment discussed above, is $32,224. The principal amount of the loan made under the Loan Agreement prior to the First Amendment accrues interest at an annual rate equal to the greater of (a) 8.25% or (b) prime rate plus 5.00%. The principal amount of the Second Tranche Term Loan made under the Loan Agreement, as amended by the First Amendment, accrues interest at an annual rate equal to the greater of (a) 7.75% or (b) prime rate plus 4.50%. The interest rate as of March 31, 2022 was 8.50% for the First Tranche Term Loan and 8.00% for the Second Tranche Term Loan. The Company is required to pay only interest until January 1, 2023. The effective interest rate on the loan of $30,000, excluding the final payment, is 13.75%.

Upon the occurrence of an Event of Default, and during the continuance of an Event of Default, the applicable rate of interest, described above, will be increased by 5.00% per annum. The secured term loan maturity date is June 1, 2024, and the Loan Agreement includes both financial and non-financial covenants. The Company was in compliance with these covenants as of March 31, 2022.

The obligations under the Loan Agreement, as amended by the First Amendment, are secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries other than intellectual property. The subsidiaries of the Company, other than VBI Cda and SciVac HK, and VBI BV, are guarantors of the obligations of the Company and VBI Cda under the Loan Agreement. The Loan Agreement also contains customary events of default.

The total debt discount related to the Loan Agreement, as amended by the First Amendment, with K2 HealthVentures LLC is $7,209 (subsequent to adjustments made as a result of the implementation of ASU 2020-06). As of March 31, 2022, and December 31, 2021, the unamortized debt discount was $2,692 and $3,783 respectively. The debt discount is being charged to interest expense, net of interest income in the condensed consolidated statement of operations and comprehensive loss using the effective interest method over the term of the debt.

At March 31, 2022 and December 31, 2021, the fair value of our outstanding debt, which is considered level 3 in the fair value hierarchy, is estimated to be $30,292 and $30,406, respectively.

Interest expense, net of interest income recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022			2021
Interest expense	$	607		$	389
Amortization of debt discount		410			1,611
Interest income		(77	)		(188	)
Total	$	940		$	1,812

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Loan Agreement and final payment
Remaining 2022	$	-
2023		19,573
2024		12,651
Total	$	32,224

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STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

10. STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

Stock option plans

The Company’s stock option plans are approved by and administered by the Board and its Compensation Committee. The Board designates, in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates the number of options, exercise price and vesting period of the new options.

2006 VBI US Stock Option Plan

The 2006 VBI US Stock Option Plan (the “2006 Plan”), was approved by and was previously administered by the VBI US board of directors which designated eligible participants to be included under the 2006 Plan, and designated the number of options, exercise price and vesting period of the new options. The 2006 Plan was not approved by the stockholders of VBI US. The 2006 Plan was superseded by the 2014 Plan (as defined below) following the PLCC Merger and no further options will be issued under the 2006 Plan. As of March 31, 2022, there were 889,763 options outstanding under the 2006 Plan.

2014 Equity Incentive Plan

On May 1, 2014, the VBI DE board of directors adopted the VBI Vaccines Inc. 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by the VBI DE’s shareholders on July 14, 2014. The 2014 Plan was superseded by the 2016 Plan (as defined below) and no further options will be issued under the 2014 Plan. As of March 31, 2022, there were 521,242 options outstanding under the 2014 Plan.

2016 VBI Equity Incentive Plan

The 2016 Plan is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding on a non-diluted basis at the time of any grant under the 2016 Plan. The 2016 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights (“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted stock or other such award as may be permitted under the 2016 Plan. As of March 31, 2022, there were 21,952,188 options outstanding and 27,790 RSUs unvested under the 2016 Plan.

The aggregate number of common shares remaining available for issuance for awards under the 2016 Plan totaled 996,806 at March 31, 2022.

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2021		18,534,379		$	2.63
Granted		4,990,000			1.53
Exercised		(7,221	)		1.65
Forfeited		(153,965	)		2.80
Balance outstanding at March 31, 2022		23,363,193		$	2.40
Exercisable at March 31, 2022		12,284,144		$	2.54

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2021		39,329		$	1.47
Vested		(11,539	)		1.51
Unvested shares outstanding at March 31, 2022		27,790		$	1.46

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2022			2021
Volatility		93.17	%		97.13	%
Risk free interest rate		1.71	%		0.54	%
Expected term in years		5.83			5.85
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.15		$	2.40

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022		2021
Research and development	$	510	$	428
General and administrative		1,966		1,690
Cost of revenues		26		21
Total	$	2,502	$	2,139

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REVENUES AND DEFERRED REVENUE

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

REVENUES AND DEFERRED REVENUE

11. REVENUES AND DEFERRED REVENUE

Revenue comprises the following:

	Three months ended March 31
	2022		2021
Product revenues	$	91	$	167
R&D service revenues		35		134
Total	$	126	$	301

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2022:

	Total		Current portion to March 31, 2023		Remaining portion thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		2,348		649		1,699
Total	$	2,817	$	649	$	2,168

The following table presents changes in the deferred revenue balance for the three months ended March 31, 2022:

Balance at December 31, 2021	$	2,803
Recognition of deferred revenue		(25	)
Currency translation		39
Balance at March 31, 2022	$	2,817
Short Term	$	649
Long Term	$	2,168

Collaboration and License Agreement – Brii Bio

On December 4, 2018, the Company entered into a Collaboration and License Agreement (the “License Agreement”) with Brii Biosciences Limited (“Brii Bio”), amended on April 8, 2021, whereby:

● the Company and Brii Bio agreed to collaborate on the development of a HBV recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan and Macau (collectively, the “Licensed Territory”), and to conduct a Phase Ib/IIa collaboration clinical trial for the purpose of comparing VBI-2601 (BRII-179), which is a recombinant protein-based immunotherapeutic developed by VBI for use in treating chronic HBV, with a novel composition developed jointly with Brii Bio (either being the “Licensed Product”);

● the Company granted Brii Bio an exclusive royalty-bearing license to perform studies, and regulatory and other activities, as may be required to obtain and maintain marketing approval for the Licensed Product, for the treatment of HBV in the Licensed Territory and to commercialize and promote the Licensed Product for the diagnosis and treatment of chronic HBV in the Licensed Territory; and

● Brii Bio granted the Company an exclusive royalty-free license under Brii Bio’s technology and Brii Bio’s interest in any joint technology developed during the collaboration to develop and commercialize the Licensed Product for the diagnosis and treatment of chronic HBV in the countries of the world other than the Licensed Territory.

On December 20, 2021, the Company and Brii Bio further amended the License Agreement (the “Second Amendment”) subject to the following additional terms and conditions:

● the Company and Brii Bio agreed to conduct an additional Phase II combination clinical trial of VBI-2601 (BRII-179), both with and without IFN-α, and BRII-835 (VIR-2218) (“Combo Clinical Trial”); and

● Brii Bio granted the Company a non-exclusive royalty free license under the Brii Bio technology arising from the data generated in the Combo Clinical Trial solely for use in the development, manufacture or commercialization of the Licensed Product in combination with an siRNA in the countries of the world other than the Licensed Territory.

Pursuant to the License Agreement, as amended, the Company is responsible for the R&D Services and Brii Bio is responsible for costs relating to the clinical trials for the Licensed Territory.

The Company and Brii Bio will jointly own all right, title and interest in the joint know-how development and the patents claiming joint inventions made pursuant to the Second Amendment.

As part of the initial consideration of the License Agreement consisted of an $11,000 non-refundable upfront payment. As part of the License Agreement, the Company and Brii Bio entered into a stock purchase agreement. Under the terms of the stock purchase agreement, the Company issued to Brii Bio 2,295,082 shares of its common stock valued at $3,626 (based on the Company’s common stock price on December 4, 2018). The remaining $7,374, deemed to be the initial transaction price, was allocated to two performance obligations: i) the VBI-2601 (BRII-179) license and ii) R&D services. The R&D services were allocated $4,737 of the transaction price using an estimated selling price based on an expected cost plus a margin approach and the remaining transaction price of $2,637 was allocated to the VBI-2601 (BRII-179) license using the residual method.

There was no additional consideration contemplated in the Second Amendment.

In addition, the Company is also eligible to receive an additional $117,500 in potential regulatory and sales milestone payments, along with royalties on commercial sales in the Licensed Territory. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Therefore, no variable consideration was included in the initial transaction price and no such amounts have been recognized to date.

The R&D Services will be satisfied over time as services are rendered using the “cost-to-cost” input method as this method represents the most accurate depiction of the transfer of services based on the types of costs expected to be incurred. As of March 31, 2022, R&D services related to Brii Bio that remain unsatisfied are $2,148, out of the $2,817 total deferred revenue.

Upon termination of the Collaboration and License Agreement prior to the end of the term, there is no obligation for refund and any amounts in deferred revenue related to unsatisfied performance obligations will be immediately recognized.

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COLLABORATION ARRANGEMENTS

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COLLABORATION ARRANGEMENTS

12. COLLABORATION ARRANGEMENTS

GlaxoSmithKline Biologicals S.A. (“GSK”)

On September 10, 2019, the Company entered into a Clinical Collaboration Agreement (“Collaboration Agreement”) pursuant to which we will investigate the use of GSK’s proprietary AS01_B adjuvant system in our ongoing study of VBI-1901. As a result of the Collaboration Agreement, a second study arm was added to Part B of the ongoing Phase Ib/IIa clinical study to accommodate the AS01_B adjuvant.

This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the second study arm will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022 and 2021 are $135 and $256, respectively.

National Research Council of Canada (“NRC”)

On March 31, 2020, the Company announced a collaboration with the NRC, Canada’s largest federal research and development organization, to develop a pan-coronavirus vaccine candidate, targeting COVID-19, SARS, and MERS. The NRC and the Company are collaborating to evaluate and select promising coronavirus vaccine candidates. The collaboration combines the Company’s viral vaccine expertise, eVLP technology platform, and modified coronavirus antigens with the NRC’s proprietary SARS-CoV-2 antigens and assay development capabilities to select the most immunogenic vaccine candidate for further development.

On December 21, 2020, the Company signed an amendment to the collaboration agreement with the NRC to broaden the scope of collaboration to include certain pre-clinical evaluations, bioprocess optimization, technology transfer, and the performance of additional scale up work.

On July 8, 2021, the Company signed a second amendment to the collaboration agreement with the NRC to broaden the scope of the collaboration to include developing a vaccine against the Beta variant of SARS-CoV-2.

On August 27, 2021, the Company signed a third amendment to the collaboration agreement with the NRC further broaden the scope to include certain stable cell line work for our vaccine candidate against the Beta variant of SARS-CoV-2.

On November 15, 2021, we signed a fourth amendment to the collaboration agreement with the NRC to further broaden the scope to include additional animal studies and PRNT analysis for our vaccine candidate against the Beta variant of SARS-CoV-2.

On February 8, 2022, we signed a fifth amendment to the collaboration agreement with the NRC to further broaden the scope to include additional assays of new variants against SARS-CoV-2.

On April 28, 2022, we signed a sixth amendment to the collaboration agreement with the NRC to further broaden the scope to include generation and testing of stable pools of cells expressing SARS-CoV-2 spike protein.

The expiry date of the collaboration agreement, as amended, is October 31, 2022.

This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the collaboration will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022 and 2021 are $280 and $158, respectively.

CEPI

On March 9, 2021, the Company and CEPI announced the CEPI Funding Agreement, to develop eVLP vaccine candidates against SARS-COV-2 variants, including the Beta variant, also known as the B.1.351 variant and as 501Y.V2, first identified in South Africa. CEPI agreed to provide up to $33,018 to support the advancement of VBI-2905, a monovalent eVLP candidate expressing the pre-fusion form of the spike protein from the Beta variant strain, through Phase I clinical development. This funding will also support preclinical expansion of additional multivalent vaccine candidates designed to evaluate the potential breadth of our eVLP technology. The preclinical expansion is intended to develop clinic-ready vaccine candidates capable of addressing emerging variants.

Under the terms of the CEPI Funding Agreement, among other things, the Company and CEPI agreed on the importance of global equitable access to any vaccines produced pursuant to the CEPI Funding Agreement. Any such vaccines, if approved, are expected to be procured and allocated through global mechanisms as part of the Access to COVID-19 Tools (ACT) Accelerator, an international initiative launched by the WHO, Gavi the Vaccine Alliance, CEPI, and other global non-governmental organizations and governmental leaders in 2021.

This relationship is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606.

Costs associated with the collaboration are expensed as incurred in Research and Development and General and Administrative expenses; costs for the three months ended March 31, 2022 and 2021 are $1,693 and $157, respectively. Such expenses, including administrative expenses, for the three months ended March 31, 2022 and 2021 were reduced by the same amount. Since inception of the CEPI Funding Agreement in 2021, the Company received $18,363 from CEPI and the Company had $8,657 recorded as deferred funding, recorded in other current liabilities on the condensed consolidated balance sheet.

Brii Biosciences Limited

On December 4, 2018, we entered into the Collaboration and License Agreement with Brii Bio, which was amended on April 8, 2021, as described in Note 11.

As described in Note 11, the Company and Brii Bio entered into the Second Amendment on December 20, 2021. The Combo Clinical Trial collaboration is considered a collaborative relationship and not a customer relationship and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the Combo Clinical Trial collaboration will be expensed as incurred in Research and Development expenses; costs for the three months ended March 31, 2022, were $24.

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GOVERNMENT GRANTS

3 Months Ended

Mar. 31, 2022

Government Grants

GOVERNMENT GRANTS

13. GOVERNMENT GRANTS

Grants recognized in research and development expenses in the condensed consolidated statement of operations and comprehensive loss are as follows:

Industrial Research Assistance Program (“IRAP”)

On July 3, 2020, the Company and the NRC as represented by its IRAP signed a contribution agreement whereby the NRC agreed to contribute up to CAD $1,000 for the transfer and scale-up of the technical production process for our prophylactic coronavirus vaccine program.

For the three months ended March 31, 2022 the Company recognized $0, respectively, as a reduction in expenses. As of March 31, 2022, the Company had $44 recorded as deferred government grants, recorded in other current liabilities on the condensed consolidated balance sheet.

For the three months ended March 31, 2021, the Company recognized $0, respectively as a reduction in expenses.

Strategic Innovation Fund (“SIF”)

On September 16, 2020, the Company and Her Majesty the Queen in Right of Canada as represented by the Minister of Industry (“ISED”) signed a contribution agreement (the “Contribution Agreement”) for a contribution from SIF whereby ISED agreed to contribute up to CAD $55,976 to support the development of the Company’s coronavirus vaccine program, through Phase II clinical studies, for a period commencing on April 15, 2020 and ending on or before the first quarter of 2022 (the “Project Completion Date”). On March 28, 2022, the Company and ISED signed an amendment to the Contribution Agreement, the main purpose of which was to extend the collaboration and move the Project Completion Date from March 31, 2022 to December 31, 2023.

For the three months ended March 31, 2022, the Company recognized $1,453, respectively, as a reduction in expenses. As of March 31, 2022, the Company had $753 recorded as deferred government grants, recorded in other current liabilities on the condensed consolidated balance sheet.

For the three months ended March 31, 2021, the Company recognized $2,688, respectively as a reduction in expenses.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

14. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two civil claims were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege, among other things: defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers; and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April 2011 and seeking damages in a total amount of NIS 1,879,500 ($591,782). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. Preliminary hearings for the trial of the civil action began on January 15, 2020, with subsequent preliminary hearings held on May 13, 2020, December 3, 2020 and September 30, 2021. The next preliminary hearing is scheduled to be held on June 9, 2022.

Operating leases

The Company has entered into various non-cancelable lease agreements for its office, lab, and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on October 31, 2024, with no option to extend. Our manufacturing facility lease agreement in Israel has been extended for 5 years with a term now ending January 31, 2027. A lease for additional office space in Israel has a term ending November 30, 2025 with an option to extend for two additional years. The lease agreement for our research facility in Canada, which comprises office and laboratory space, has a term ending on December 31, 2022 with an option to extend the term for one additional period of three years. A lease for additional office space at our research facility commenced on October 1, 2020 with a term ending April 30, 2023.

During the three months ended March 31, 2022, the Company entered into new lease agreements and recognized a ROU asset of $795.

There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Lease cost:
Operating lease costs:
Three months ended March 31, 2022	$	341
Three months ended March 31, 2021		343

Other information:
Weighted average remaining lease term	3.39 years
Weighted average discount rate	12.0	%

Operating lease costs are included G&A expenses in the statement of operations and comprehensive loss.

The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Remaining 2022	$	1,027
2023		1,242
2024		1,127
2025		633
2026		633
2027		186
Total	$	4,848
Effect of discounting		989
Total lease liability	$	3,859
Less: current portion		938
Lease liability, net of current portion	$	2,921

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

15. SEGMENT INFORMATION

The Company’s Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker. The CEO evaluates the performance of the Company and allocates resources based on the information provided by the Company’s internal management system at a consolidated level. The Company has determined that it has only one operating segment.

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2022		2021
Israel	$	95	$	169
China / Hong Kong		25		128
Europe		6		4
Total	$	126	$	301

There was no revenue attributed to our country of domicile, Canada, for the three months ended March 31, 2022 and 2021.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the SEC, for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2021 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”), as filed with the SEC on March 7, 2022.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: VBI DE, VBI US, VBI Cda, SciVac, SciVac HK, and VBI BV. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements. Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2021 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2022, other than the polices discussed below.

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NEW ACCOUNTING PRONOUNCEMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Changes and Error Corrections [Abstract]

SCHEDULE OF CUMULATIVE EFFECT OF CHANGES ON CONSOLIDATED BALANCE SHEETS

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows:

	Balance as at December 31, 2021			Adjustments from adoption of ASU 2020-06			Balance as at January 1, 2022
Liabilities
Long-term debt, net of debt discount	$	28,441		$	681		$	29,122
Stockholders’ equity
Additional paid-in capital	$	81,583		$	(2,746	)	$	78,837
Accumulated deficit	$	(378,371	)	$	2,065		$	(376,306	)

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INVENTORY, NET (Tables)

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

SCHEDULE OF INVENTORY

Inventory consists of the following:

	March 31, 2022		December 31, 2021
Finished goods	$	305	$	-
Work-in-process		866		645
Raw materials		2,886		1,931
Total	$	4,057	$	2,576

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OTHER CURRENT ASSETS (Tables)

3 Months Ended

Mar. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

SCHEDULE OF OTHER CURRENT ASSETS

Other current assets consisted of the following:

	March 31, 2022		December 31, 2021
Government receivables	$	2,769	$	1,438
Other current assets		1,915		2,195
Total	$	4,684	$	3,633

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INTANGIBLE ASSETS AND GOODWILL (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INDEFINITE LIVED INTANGIBLE ASSETS INCLUDING CUMULATIVE IMPAIRMENT AND CURRENCY TRANSLATION

			March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(678	)	$	-		$	47	$	38
IPR&D assets		61,500		-			(300	)		1,980		63,180
	$	62,169	$	(678	)	$	(300	)	$	2,027	$	63,218

			December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation		Net Book Value
Patents	$	669	$	(660	)	$	-		$	47	$	56
IPR&D assets		61,500		-			(300	)		835		62,035
	$	62,169	$	(660	)	$	(300	)	$	882	$	62,091

SCHEDULE OF GOODWILL

			March 31, 2022
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(119	)	$	2,303

			December 31, 2021
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Goodwill	$	8,714	$	(6,292	)	$	(161	)	$	2,261

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OTHER CURRENT LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

Other Liabilities Disclosure [Abstract]

SCHEDULE OF OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2022		December 31, 2021
Accrued research and development expenses (including clinical trial accrued expenses)	$	7,334	$	8,196
Accrued professional fees		3,906		2,294
Payroll and employee-related costs		2,495		4,805
Deferred funding		8,657		10,183
Other current liabilities		1,341		1,463
Total	$	23,733	$	26,941

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LOSS PER SHARE OF COMMON SHARES (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

SCHEDULE OF ANTI-DILUTIVE WEIGHTED AVERAGE SHARES OUTSTANDING

The following potentially dilutive securities outstanding at March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2022		March 31, 2021
Warrants		1,384,469		3,163,172
Stock options and restricted stock units		23,390,983		18,139,335
K2 conversion feature		1,369,863		1,369,863
Total		26,145,315		22,672,370

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LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

SCHEDULE OF LONG-TERM DEBT

As of March 31, 2022, and December 31, 2021, the long-term debt is as follows:

	March 31, 2022		December 31, 2021
Long-term debt, net of debt discount of $2,692 ($3,783 at December 31, 2021)	$	29,532	$	28,441
Less: current portion, net of debt discount of $396 ($0 at December 31, 2021)		4,744		-
Long-term debt	$	24,788	$	28,441

SCHEDULE OF INTEREST EXPENSE

Interest expense, net of interest income recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022			2021
Interest expense	$	607		$	389
Amortization of debt discount		410			1,611
Interest income		(77	)		(188	)
Total	$	940		$	1,812

SCHEDULE OF FUTURE PRINCIPAL OF LONG-TERM DEBT

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Loan Agreement and final payment
Remaining 2022	$	-
2023		19,573
2024		12,651
Total	$	32,224

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STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

SCHEDULE OF STOCK OPTIONS ACTIVITY

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance outstanding at December 31, 2021		18,534,379		$	2.63
Granted		4,990,000			1.53
Exercised		(7,221	)		1.65
Forfeited		(153,965	)		2.80
Balance outstanding at March 31, 2022		23,363,193		$	2.40
Exercisable at March 31, 2022		12,284,144		$	2.54

SCHEDULE OF RESTRICTED STOCK UNITS

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date
Unvested shares outstanding at December 31, 2021		39,329		$	1.47
Vested		(11,539	)		1.51
Unvested shares outstanding at March 31, 2022		27,790		$	1.46

SCHEDULE OF FAIR VALUE OF OPTIONS GRANTED BY USING BLACK-SCHOLES OPTION PRICING ASSUMPTIONS

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2022			2021
Volatility		93.17	%		97.13	%
Risk free interest rate		1.71	%		0.54	%
Expected term in years		5.83			5.85
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.15		$	2.40

SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2022 and 2021 was as follows:

	Three months ended March 31
	2022		2021
Research and development	$	510	$	428
General and administrative		1,966		1,690
Cost of revenues		26		21
Total	$	2,502	$	2,139

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REVENUES AND DEFERRED REVENUE (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

SCHEDULE OF REVENUE COMPRISED

Revenue comprises the following:

	Three months ended March 31
	2022		2021
Product revenues	$	91	$	167
R&D service revenues		35		134
Total	$	126	$	301

SUMMARY OF REVENUE EXPECTED TO BE RECOGNIZED IN FUTURE RELATED TO PERFORMANCE OBLIGATIONS

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2022:

	Total		Current portion to March 31, 2023		Remaining portion thereafter
Product revenues	$	469	$	-	$	469
R&D service revenues		2,348		649		1,699
Total	$	2,817	$	649	$	2,168

SUMMARY OF CHANGES IN DEFERRED REVENUE

The following table presents changes in the deferred revenue balance for the three months ended March 31, 2022:

Balance at December 31, 2021	$	2,803
Recognition of deferred revenue		(25	)
Currency translation		39
Balance at March 31, 2022	$	2,817
Short Term	$	649
Long Term	$	2,168

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

SUMMARY OF LEASE COST AND OTHER INFORMATION

Lease cost:
Operating lease costs:
Three months ended March 31, 2022	$	341
Three months ended March 31, 2021		343

Other information:
Weighted average remaining lease term	3.39 years
Weighted average discount rate	12.0	%

SCHEDULE OF FUTURE UNDISCOUNTED CASH PAYMENTS RECONCILED TO LEASE LIABILITIES

The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Remaining 2022	$	1,027
2023		1,242
2024		1,127
2025		633
2026		633
2027		186
Total	$	4,848
Effect of discounting		989
Total lease liability	$	3,859
Less: current portion		938
Lease liability, net of current portion	$	2,921

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SCHEDULE OF REVENUES FROM EXTERNAL CUSTOMERS

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31
	2022		2021
Israel	$	95	$	169
China / Hong Kong		25		128
Europe		6		4
Total	$	126	$	301

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NATURE OF BUSINESS AND CONTINUATION OF BUSINESS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Entity incorporation, date of incorporation	Apr. 09, 1965
Accumulated deficit	$ 397,560		$ 378,371
Net cash provided by (used in) operating activities	$ 19,925	$ 6,644

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SCHEDULE OF CUMULATIVE EFFECT OF CHANGES ON CONSOLIDATED BALANCE SHEETS (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Jan. 01, 2022	Dec. 31, 2021
Liabilities
Long-term debt, net of debt discount	$ 24,788		$ 28,441
Stockholders’ equity
Additional paid-in capital	81,314		81,583
Accumulated deficit	$ (397,560)		(378,371)
Accounting Standards Update 2020-06 [Member]
Liabilities
Long-term debt, net of debt discount		$ 29,122
Stockholders’ equity
Additional paid-in capital		78,837
Accumulated deficit		(376,306)
Accounting Standards Update 2020-06 [Member] | Previously Reported [Member]
Liabilities
Long-term debt, net of debt discount			28,441
Stockholders’ equity
Additional paid-in capital			81,583
Accumulated deficit			$ (378,371)
Accounting Standards Update 2020-06 [Member] | Revision of Prior Period, Adjustment [Member]
Liabilities
Long-term debt, net of debt discount		681
Stockholders’ equity
Additional paid-in capital		(2,746)
Accumulated deficit		$ 2,065

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SCHEDULE OF INVENTORY (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Finished goods	$ 305
Work-in-process	866	645
Raw materials	2,886	1,931
Total	$ 4,057	$ 2,576

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SCHEDULE OF OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Government receivables	$ 2,769	$ 1,438
Other current assets	1,915	2,195
Total	$ 4,684	$ 3,633

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SCHEDULE OF INDEFINITE LIVED INTANGIBLE ASSETS INCLUDING CUMULATIVE IMPAIRMENT AND CURRENCY TRANSLATION (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 62,169	$ 62,169
Accumulated Amortization	(678)	(660)
Cumulative Impairment Charge	(300)	(300)
Cumulative Currency Translation	2,027	882
Net Book value	63,218	62,091
Inprocess Research and Development Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	61,500	61,500
Accumulated Amortization
Cumulative Impairment Charge	(300)	(300)
Cumulative Currency Translation	1,980	835
Net Book value	63,180	62,035
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	669	669
Accumulated Amortization	(678)	(660)
Cumulative Impairment Charge
Cumulative Currency Translation	47	47
Net Book value	$ 38	$ 56

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SCHEDULE OF GOODWILL (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, Gross Carrying Amount	$ 8,714	$ 8,714
Goodwill, Cumulative Impairment Charge	(6,292)	(6,292)
Goodwill, Cumulative Currency Translation	(119)	(161)
Goodwill, Net Book value	$ 2,303	$ 2,261

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INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - Inprocess Research and Development Assets [Member]	3 Months Ended
	Mar. 31, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
Increase in intangible assets due to foreign currency translation adjustment	$ 1,145,000
Increase in goodwill due to foreign currency translation adjustment	$ 42

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SCHEDULE OF OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Other Liabilities Disclosure [Abstract]
Accrued research and development expenses (including clinical trial accrued expenses)	$ 7,334	$ 8,196
Accrued professional fees	3,906	2,294
Payroll and employee-related costs	2,495	4,805
Deferred funding	8,657	10,183
Other current liabilities	1,341	1,463
Total	$ 23,733	$ 26,941

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SCHEDULE OF ANTI-DILUTIVE WEIGHTED AVERAGE SHARES OUTSTANDING (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive weighted average shares outstanding	26,145,315	22,672,370
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive weighted average shares outstanding	1,384,469	3,163,172
Stock Options and Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive weighted average shares outstanding	23,390,983	18,139,335
K2 Conversion Feature [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive weighted average shares outstanding	1,369,863	1,369,863

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SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Long-term debt, net of debt discount of $2,692 ($3,783 at December 31, 2021)	$ 29,532	$ 28,441
Less: current portion, net of debt discount of $396 ($0 at December 31, 2021)	4,744
Long-term debt	$ 24,788	$ 28,441

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SCHEDULE OF LONG-TERM DEBT (Details) (Parenthetical) - Long-Term Debt [Member] - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Extinguishment of Debt [Line Items]
Debt Instrument, Unamortized Discount	$ 2,692	$ 3,783
Debt Instrument, Unamortized Discount, Current	$ 396	$ 0

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SCHEDULE OF INTEREST EXPENSE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Debt Disclosure [Abstract]
Interest expense	$ 607	$ 389
Amortization of debt discount	410	1,611
Interest income	(77)	(188)
Total	$ 940	$ 1,812

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SCHEDULE OF FUTURE PRINCIPAL OF LONG-TERM DEBT (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Debt Disclosure [Abstract]
Remaining 2022
2023	19,573
2024	12,651
Total	$ 32,224

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LONG-TERM DEBT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	May 17, 2021	Feb. 03, 2021	May 22, 2020	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Debt Instrument [Line Items]
Debt conversion, converted instrument, amount					$ 2,000
Effective conversion price of the conversion feature			$ 1.52
Intrinsic value of beneficial conversion feature recorded to additional paid in capital			$ 2,577
Final payment				32,224
Fair Value, Inputs, Level 3 [Member]
Debt Instrument [Line Items]
Debt instrument, fair value disclosure				$ 30,292		$ 30,406
Restated K2 Warrant [Member]
Debt Instrument [Line Items]
Debt instrument, unamortized discount	$ 1,721
Fair Value Adjustment of Warrants	867
Second Tranche [Member] | Fair Value, Inputs, Level 3 [Member]
Debt Instrument [Line Items]
Final payment	834
Second Tranche [Member] | Restated K2 Warrant [Member]
Debt Instrument [Line Items]
Debt issuance costs	$ 20
Loan and Guaranty Agreement [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date				Jun. 01, 2024
Debt instrument, interest rate, stated percentage				8.25%
Final payment				$ 2,224
Loans Payable					$ 30,000
Debt increased percentage				5.00%
Loan and Guaranty Agreement [Member] | Final Payment [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, effective percentage				13.75%
Loan and Guaranty Agreement [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage				5.00%
Loan and Guaranty Agreement [Member] | K 2 Healthventures L L C [Member]
Debt Instrument [Line Items]
Debt conversion, converted instrument, amount			$ 4,000
Effective conversion price of the conversion feature			$ 1.46
Debt Instrument, Maturity Date			Jun. 01, 2024
Purchase of warrants	937,500
Debt issuance costs			$ 1,021
Final payment			1,390
Debt instrument, unamortized discount			$ 6,169	$ 2,692		3,783
Loan and Guaranty Agreement [Member] | K 2 Healthventures L L C [Member] | K2 Warrant [Member]
Debt Instrument [Line Items]
Purchase of warrants			625,000
Exercise price of warrants			$ 1.12
Warrant maturity date			May 22, 2030
Proceeds from Warrant Exercises			$ 1,181
Loan and Guaranty Agreement [Member] | K 2 Healthventures L L C [Member] | Restated K2 Warrant [Member]
Debt Instrument [Line Items]
Purchase of warrants	312,500
Loan and Guaranty Agreement [Member] | First Tranche [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage				8.50%
Secured term loan final payment percentage			6.95%
Loan and Guaranty Agreement [Member] | First Tranche [Member] | K 2 Healthventures L L C [Member]
Debt Instrument [Line Items]
Secured debt			$ 20,000
Loan and Guaranty Agreement [Member] | Second Tranche [Member]
Debt Instrument [Line Items]
Secured debt			10,000
Debt instrument, interest rate, stated percentage				8.00%
Debt issuance costs	$ 20
Secured term loan final payment percentage	6.95%
Third party cost	$ 150
Final payment	$ 834
Loan and Guaranty Agreement [Member] | Second Tranche [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	4.50%			4.50%
Loan and Guaranty Agreement [Member] | Second Tranche [Member] | Minimum [Member]
Debt Instrument [Line Items]
Secured debt	$ 10,000
Debt instrument, date of first required payment	Jul. 01, 2022
Loan and Guaranty Agreement [Member] | Second Tranche [Member] | Maximum [Member]
Debt Instrument [Line Items]
Secured debt	$ 12,000
Debt instrument, interest rate, stated percentage	7.75%			7.75%
Debt instrument, date of first required payment	Jan. 01, 2023
Loan and Guaranty Agreement [Member] | Third Tranche [Member]
Debt Instrument [Line Items]
Secured debt						$ 10,000
Debt instrument interest period extended date				Jan. 01, 2023
Loan and Guaranty Agreement [Member] | Final Tranche [Member] | K 2 Healthventures L L C [Member]
Debt Instrument [Line Items]
Secured debt			$ 10,000
Loan Agreement [Member] | K 2 Healthventures L L C [Member]
Debt Instrument [Line Items]
Debt conversion, converted instrument, amount		$ 2,000
Effective conversion price of the conversion feature		$ 1.46
Debt conversion, converted instrument, shares issued		1,369,863
Debt conversion, converted instrument, additional amount		$ 2,000
Debt instrument discount				$ 7,209

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SCHEDULE OF STOCK OPTIONS ACTIVITY (Details) - Equity Option [Member]	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Offsetting Assets [Line Items]
Number of Stock Options Outstanding, Beginning Balance | shares	18,534,379
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 2.63
Number of Stock Options, Granted | shares	4,990,000
Weighted Average Exercise Price, Granted | $ / shares	$ 1.53
Number of Stock Options, Exercised | shares	(7,221)
Weighted Average Exercise Price, Exercised | $ / shares	$ 1.65
Number of Stock Options, Forfeited | shares	(153,965)
Weighted Average Exercise Price, Forfeited | $ / shares	$ 2.80
Number of Stock Options Outstanding, Ending Balance | shares	23,363,193
Weighted Average Exercise Price, Ending Balance | $ / shares	$ 2.40
Number of Stock Options, Exercisable | shares	12,284,144
Weighted Average Exercise Price, Exercisable | $ / shares	$ 2.54

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SCHEDULE OF RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Class of Stock [Line Items]
Number of Stock Awards, Unvested shares outstanding beginning balance | shares	39,329
Weighted Average Fair Value at Grant Date, Unvested shares outstanding beginning balance | $ / shares	$ 1.47
Number of Stock Awards, Vested | shares	(11,539)
Weighted Average Fair Value at Grant Date, Vested | $ / shares	$ 1.51
Number of Stock Awards, Unvested shares outstanding ending balance | shares	27,790
Weighted Average Fair Value at Grant Date, Unvested shares outstanding ending balance | $ / shares	$ 1.46

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SCHEDULE OF FAIR VALUE OF OPTIONS GRANTED BY USING BLACK-SCHOLES OPTION PRICING ASSUMPTIONS (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Equity [Abstract]
Volatility	93.17%	97.13%
Risk free interest rate	1.71%	0.54%
Expected term in years	5 years 9 months 29 days	5 years 10 months 6 days
Expected dividend yield	0.00%	0.00%
Weighted average fair value per option	$ 0.0115	$ 0.0240

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SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Total stock-based compensation expense	$ 2,502	$ 2,139
Research and Development [Member]
Total stock-based compensation expense	510	428
General and Administrative [Member]
Total stock-based compensation expense	1,966	1,690
Cost of Revenues [Member]
Total stock-based compensation expense	$ 26	$ 21

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STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL (Details Narrative)	3 Months Ended
	Mar. 31, 2022 shares
2006 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, number	889,763
2014 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, number	521,242
2016 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, outstanding, number	21,952,188
Share-based compensation arrangement by share-based, percentage	10.00%
Share-based compensation arrangement by share-based payment award, number of shares available for grant	996,806
2016 VBI Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment equity options, non vested, number	27,790

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SCHEDULE OF REVENUE COMPRISED (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Revenues	$ 126	$ 301
Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	91	167
Service [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 35	$ 134

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SUMMARY OF REVENUE EXPECTED TO BE RECOGNIZED IN FUTURE RELATED TO PERFORMANCE OBLIGATIONS (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Disaggregation of Revenue [Line Items]
Revenues	$ 2,817
Current Portion To March Thirty One Two Thousand Twenty Three [Member]
Disaggregation of Revenue [Line Items]
Revenues	649
Remaining Portion Thereafter [Member]
Disaggregation of Revenue [Line Items]
Revenues	2,168
Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	469
Product [Member] | Current Portion To March Thirty One Two Thousand Twenty Three [Member]
Disaggregation of Revenue [Line Items]
Revenues
Product [Member] | Remaining Portion Thereafter [Member]
Disaggregation of Revenue [Line Items]
Revenues	469
Service [Member]
Disaggregation of Revenue [Line Items]
Revenues	2,348
Service [Member] | Current Portion To March Thirty One Two Thousand Twenty Three [Member]
Disaggregation of Revenue [Line Items]
Revenues	649
Service [Member] | Remaining Portion Thereafter [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 1,699

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SUMMARY OF CHANGES IN DEFERRED REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Contract with Customer, Liability	$ 2,803
Contract with Customer, Liability, Revenue Recognized	(25)
Currency translation	39
Contract with Customer, Liability	2,817
Contract with Customer, Liability, Current	649	$ 526
Contract with Customer, Liability, Noncurrent	$ 2,168	$ 2,277

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REVENUES AND DEFERRED REVENUE (Details Narrative) - USD ($) $ in Thousands	Dec. 04, 2018	Mar. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Revenue, remaining performance obligation, amount		$ 2,817
Additional potential regulatory and sales milestone payments	$ 117,500
Contract with customer, liability		2,817	$ 2,803
License Agreement [Member] | Brii Bio [Member]
Disaggregation of Revenue [Line Items]
Non-refundable upfront payment	$ 11,000
Stock issued during period, shares	2,295,082
Stock issued during period, value	$ 3,626
Revenue, remaining performance obligation, amount	7,374
License Agreement [Member] | Brii Bio [Member] | Research and Services [Member]
Disaggregation of Revenue [Line Items]
Revenue, remaining performance obligation, amount	4,737
License Agreement [Member] | Brii Bio [Member] | VBI-2601 [Member]
Disaggregation of Revenue [Line Items]
Revenue, remaining performance obligation, amount	$ 2,637
Collaboration and License Agreement [Member]
Disaggregation of Revenue [Line Items]
Unsatisfied amount of research and development services		2,148
Contract with customer, liability		$ 2,817

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COLLABORATION ARRANGEMENTS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development expense	$ 2,362	$ 6,839
Description of vaccine development	On March 9, 2021, the Company and CEPI announced the CEPI Funding Agreement, to develop eVLP vaccine candidates against SARS-COV-2 variants, including the Beta variant, also known as the B.1.351 variant and as 501Y.V2, first identified in South Africa. CEPI agreed to provide up to $33,018 to support the advancement of VBI-2905, a monovalent eVLP candidate expressing the pre-fusion form of the spike protein from the Beta variant strain, through Phase I clinical development. This funding will also support preclinical expansion of additional multivalent vaccine candidates designed to evaluate the potential breadth of our eVLP technology. The preclinical expansion is intended to develop clinic-ready vaccine candidates capable of addressing emerging variants.
Funding received			$ 18,363
Deferred funding	$ 8,657		$ 10,183
Collaboration Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development expense	24
Collaboration Agreement [Member] | Glaxo Smith Kline Biologicals S. A. [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development expense	135	256
Collaboration Agreement [Member] | National Research Council of Canada [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development expense	280	158
CEPI Funding Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development expense	$ 1,693	$ 157

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GOVERNMENT GRANTS (Details Narrative) $ in Thousands, $ in Thousands			3 Months Ended
	Sep. 16, 2020 CAD ($)	Jul. 03, 2020 CAD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)
Industrial Research Assistance Program [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Estimated contribution on transfer and scaleup of technical production process		$ 1,000
Reduction expenses			$ 0
Deferred government grants			44
Strategic Innovation Fund [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Reduction expenses			1,453	$ 2,688
Deferred government grants			$ 753
Estimated contribution on development of uncertain event program	$ 55,976

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SUMMARY OF LEASE COST AND OTHER INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Operating lease costs	$ 341	$ 343
Operating Lease, Weighted Average Remaining Lease Term	3 years 4 months 20 days
Operating Lease, Weighted Average Discount Rate, Percent	12.00%

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SCHEDULE OF FUTURE UNDISCOUNTED CASH PAYMENTS RECONCILED TO LEASE LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Remaining 2022	$ 1,027
2023	1,242
2024	1,127
2025	633
2026	633
2027	186
Total	4,848
Effect of discounting	989
Total lease liability	3,859
Less: current portion	938	$ 839
Lease liability, net of current portion	$ 2,921	$ 2,516

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COMMITMENTS AND CONTINGENCIES (Details Narrative) ₪ in Thousands, $ in Thousands			3 Months Ended
	Sep. 13, 2018 USD ($)	Sep. 13, 2018 ILS (₪)	Mar. 31, 2022 USD ($)
Lease Agreement [Member]
Product Liability Contingency [Line Items]
Recognized right of use asset			$ 795
UNITED STATES | Office Facility Lease Agreement [Member]
Product Liability Contingency [Line Items]
Lease Expiration Date			Oct. 31, 2024
ISRAEL | Manufacturing Facility Lease Agreement [Member]
Product Liability Contingency [Line Items]
Lessee, Operating Lease, Option to Extend			Our manufacturing facility lease agreement in Israel has been extended for 5 years with a term now ending January 31, 2027
CANADA | Lease Agreement [Member]
Product Liability Contingency [Line Items]
Lessee, Operating Lease, Option to Extend			The lease agreement for our research facility in Canada, which comprises office and laboratory space, has a term ending on December 31, 2022 with an option to extend the term for one additional period of three years. A lease for additional office space at our research facility commenced on October 1, 2020 with a term ending April 30, 2023.
Sci B Vac [Member]
Product Liability Contingency [Line Items]
Damages total amount	$ 591,782	₪ 1,879,500

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SCHEDULE OF REVENUES FROM EXTERNAL CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 126	$ 301
ISRAEL
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	95	169
China / Hong Kong [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	25	128
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 6	$ 4

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SEGMENT INFORMATION (Details Narrative) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) Segment	Mar. 31, 2021 USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of operating segments | Segment	1
Revenue	$ 126	$ 301
CANADA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 0	$ 0