NOTE 1:—GENERAL

   

a.Nature of business:

SteadyMed Ltd. (the "Company") was incorporated and is located in Israel, commenced its operations on June 15, 2005 and, together with its wholly-owned subsidiary, SteadyMed Therapeutics, Inc. ("Inc."), and Inc.'s wholly-owned subsidiary, SteadyMed U.S. Holdings, Inc. ("Holdings"), is a specialty pharmaceutical company focused on the development and commercialization of therapeutic product candidates that address the limitations of market-leading products in certain orphan and other well-defined high-margin specialty markets. The Company's primary focus is to obtain approval in the United States for the sale of Trevyent® for the treatment of pulmonary arterial hypertension ("PAH"). The Company is also at an earlier stage of development with two products for the treatment of post-surgical and acute pain in the home setting. Its product candidates are enabled by its proprietary PatchPump®, which is a discreet, water resistant and disposable drug administration technology that is aseptically prefilled with liquid drug at the site of manufacture and pre-programmed to deliver an accurate, steady flow of drug to a patient, either subcutaneously or intravenously.

Inc. and Holdings are located in the United States, and commenced operations on January 1, 2012 and March 25, 2015, respectively. The principal executive officers of the Company are located in the offices of Inc. and Holdings, and Inc.'s and Holdings' principal business activities are to provide executive management, treasury and administrative support functions to the Company.

   

b.Liquidity:

The Company's shareholders' equity is $14,311 and $28,547 as of December 31, 2016 and December 31, 2015, respectively.

For the year ended December 31, 2016, the Company incurred operating losses of $27,398 and negative cash flows from operating activities of $25,850. The Company's current cash and cash equivalents will not be enough to support the Company's future operations for the next 12 months. The future success of the Company depends upon its ability to obtain additional capital in order to obtain FDA approval of Trevyent and to commercialize Trevyent in the U.S.

These factors raise substantial doubt about the Company's ability to continue as a going concern. In 2017, management intends to raise significant additional capital by way of a private placement of debt and/or equity and/or a secondary public offering to allow the Company to continue as a going concern. While the Company believes in its ability to raise additional capital, there can be no assurance that it will be able to do so.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

   

c.Initial Public Offering:

On March 19, 2015, a registration statement covering the public sale of 4,700,000 Ordinary Shares was declared effective by the U.S. Securities and Exchange Commission ("SEC"). Commencing on March 20, 2015, the Company's Ordinary Shares began trading on the NASDAQ Stock Market under the ticker symbol "STDY".

On March 25, 2015, the Company closed its IPO at a price of $8.50 per share and the aggregate net proceeds received by the Company from the offering were $34,696, net of underwriting discounts and commissions and offering expenses.

On April 22, 2015, the Company's underwriters exercised a portion of their overallotment option pursuant to which they purchased 165,452 Ordinary Shares of the Company for $1,308, net of underwriters' fees and commissions.

Upon the closing of the IPO, all shares of the Company's outstanding Convertible Preferred Shares were automatically converted into 7,464,320 Ordinary Shares.

As of December 31, 2014, there were 711,120 outstanding warrants exercisable into Convertible Preferred Shares. Prior to the IPO, all but 10,191 warrants were exercised into Ordinary Shares. Of the exercised warrants, 295,697 were exercised for cash, and 405,232 were exercised on a cashless basis, resulting in the net exercise of 401,746 warrants (and 3,486 warrants were cancelled). Upon the closing of the IPO, the 10,191 warrants outstanding were automatically converted into warrants to purchase Ordinary Shares.

   

d.On June 28, 2015, the Company entered into an Exclusive License and Supply Agreement (the "Agreement") with Cardiome Pharma Corp. and Correvio International Sárl ("hereinafter collectively referred to as "Cardiome") pursuant to which an exclusive royalty bearing license to certain of the Company's patents relating to Trevyent® ("License") was granted to Cardiome in order to develop and commercialize Trevyent, if approved for the treatment of PAH in certain regions outside the US; specifically, Europe, Canada and the Middle East (the "Regions"). The Company is obligated to perform services ("Services") estimated to be through the fourth quarter of 2017. Cardiome is responsible for the regulatory submissions and approvals and commercialization of Trevyent in the Regions. In addition, the Company has agreed to supply Trevyent as finished goods to Cardiome upon commercialization of Trevyent® in the Regions ("Supply Services").

Cardiome made a $3 million upfront payment to the Company and the Agreement provides for future regulatory, third-party payor reimbursement approval and commercialization milestone payments to be achieved by Cardiome of up to $9.25 million and a scaling royalty ranging from the low teens to mid-teens percent on future Trevyent sales by Cardiome in the Regions. In addition, there is a fixed price on finished goods to be supplied by the Company as part of the Supply Services.

   

e.On July 29, 2016, the Company entered into a subscription agreement with investors for a private placement of the Company's Ordinary Shares, pursuant to which the Company agreed to issue and sell to the investors for an aggregate price of up to approximately $32,000 the following securities: (i) in the initial tranche, an aggregate of 6,554,016 Ordinary Shares of the Company, and warrants to purchase up to 6,554,016 Ordinary Shares of the Company, for $3.255 per unit, and (ii) in the second tranche, an aggregate of up to approximately $10,700 of Ordinary Shares of the Company at a purchase price equal to the higher of (i) $3.13 or (ii) the average closing price of Ordinary Shares of the Company on NASDAQ over the 30 trading days immediately preceding the closing date of the second tranche (the "Private Placement") with no warrants. The Second tranche will occur at the election of the Company following achievement by the Company of certain milestones related to its lead drug product candidate Trevyent. The first tranche of the Private Placement closed on August 4, 2016, pursuant to which the Company received gross proceeds of approximately $21,333. Two of the Company's board members, which are also shareholders in the Company, invested a total amount of $5,133. The related issuance costs for the private placement were $1,748.

The warrants issued are exercisable immediately upon issuance and may be exercised at any time prior to August 2021 at an exercise price of $3.5995 per share (see also note 7).