Nuvectis Pharma Inc

Notes to the Unaudited Condensed Financial Statements

NOTE 1 – GENERAL:

The Company is a biopharmaceutical company focused on the development of innovative precision medicines for the treatment of serious conditions of unmet medical need in oncology.

The Company has incurred net operating losses since its inception and had an accumulated deficit of $67.0 million as of September 30, 2024. The Company had cash and cash equivalents of $17.2 million as of September 30, 2024 and has not generated positive cash flows from operations. To date, the Company has been able to fund its operations primarily through the issuance and sale of common stock.

During the three months ended September 30, 2024, the Company sold a total of 216,573 common shares under its At-the-Market Program for aggregate total gross proceeds of approximately $1.5 million at an average selling price of $6.96 per share, resulting in net proceeds of approximately $1.5 million after deducting issuance costs.

During the nine months ended September 30, 2024, the Company sold a total of 965,911 common shares under its At-the-Market Program for aggregate total gross proceeds of approximately $8.1 million at an average selling price of $8.36 per share, resulting in net proceeds of approximately $7.8 million after deducting issuance costs.

Management believes that its existing cash and cash equivalents as of September 30, 2024 enable the Company to fund planned operations for at least 12 months following the issuance date of these condensed financial statements.

The Company will need to raise additional capital in order to complete the clinical trials aimed at developing the product candidates until obtaining its regulatory and marketing approvals. There can be no assurances that the Company will be able to secure such additional financing, or at terms that are satisfactory to the Company, and that it will be sufficient to meet its needs. In the event the Company is not successful in obtaining sufficient funding, this could force the Company to delay, limit, or reduce its products’ development, clinical trials, commercialization efforts or other operations, or even close down or liquidate.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES:

The accompanying condensed financial statements are unaudited. The unaudited condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), are stated in U.S. dollars and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. The unaudited condensed financial statements include the accounts of the Company. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the unaudited condensed financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the period ended September 30, 2024 are not necessarily indicative of those expected for the year ending December 31, 2024 or for any future period. The condensed balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date but does not include all disclosures required by U.S. GAAP. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the related notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2024.

The significant accounting policies adopted and used in the preparation of the financial statements are consistent with those of the previous financial year.

The preparation of the Company’s financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses, valuation of equity awards, and valuation allowances for deferred tax assets. These estimates and assumptions are based on current facts, future expectations, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates.

The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (at exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three levels of inputs that may be used to measure fair value include:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. The Company’s Level 1 assets consist of money market funds.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The money market accounts included in cash and cash equivalents are considered Level 1.

During the three and nine months ended September 30, 2024 and 2023, there were no transfers between fair value measure levels. Other financial instruments consist mainly of cash and cash equivalents, other current assets, accounts payable and accrued liabilities. The fair value of these financial instruments approximates their carrying values.

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial position or results of operations. No new accounting standards were adopted during the period.

NOTE 3 – COMMITMENTS AND CONTINGENCIES:

CRT Pioneer Fund License Agreement

There have been no material changes to the CRT Pioneer Fund License Agreement, as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024 (see Note 5a in the Notes to the Financial Statements in our Annual Report).

Any potential milestone or royalty payment amounts have not been accrued as of September 30, 2024 and December 31, 2023 due to the uncertainty related to the achievement of these events or milestones.

University of Edinburgh License Agreement

There have been no material changes to the University of Edinburgh (“UoE”) License Agreement as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024 (see Note 5a in the Notes to the Financial Statements in our Annual Report).

Any potential future research support, milestone or royalty payment amounts have not been accrued as of September 30, 2024 and December 31, 2023, due to the uncertainty related to the achievement of these events, milestones or commitments to additional research. As of September 30, 2024, the Company has paid UoE $0.8 million of the total of up to $3.0 million related to the fund-raising commitment.

There have been no related party transactions except for in the normal course of business as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024 (see Note 10 in the Notes to the Financial Statements in our Annual Report on Form 10-K).

As of September 30, 2024, and December 31, 2023, there areno contingent liabilities, therefore, no provision was made.

NOTE 4 – STOCKHOLDERS’ EQUITY:

On July 29, 2022, the Company closed a private placement offering (the “July 2022 Private Placement”), pursuant to the terms and conditions of a Securities Purchase Agreement (the “Agreement”), dated July 27, 2022. In connection with the July 2022 Private Placement, the Company issued 1,015,598 shares of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 909,091 shares of common stock which were fully exercised as of December 31, 2022 and preferred investment options (the “Preferred Investment Options”) to purchase up to an aggregate of 1,924,689 shares of common stock. The Company agreed to pay the placement agent fee and management fee equal to 7.0% and 1.0%, respectively, of the aggregate gross proceeds from the July 2022 Private Placement including the exercise of the Preferred Investment Options. The Preferred Investment Options became exercisable on January 23, 2023, and are exercisable through January 29, 2026, at an exercise price of $9.65 per share, subject to certain adjustments as defined in the Agreement. As of September 30, 2024,1,001,091 Preferred Investment Options were exercised for $8.9 million, net of fees. In addition, as part of the July 2022 Private Placement, the Company issued warrants to the placement agent to purchase up to 115,481 shares of common stock. The placement agent warrants are in substantially the same form as the Preferred Investment Options, except that the exercise price is $10.31. As of September 30, 2024,79,104 placement agent warrants were exercised for which the Company has received $0.8 million.

During the nine months ended September 30, 2024, the Company sold a total of 965,911 common shares under our At-the-Market Offering Agreement with H. C. Wainwright & Co. (the “ATM Program”) for aggregate total gross proceeds of approximately $8.1 million at an average selling price of $8.37 per share, resulting in net proceeds of approximately $7.8 million after deducting issuance costs.

During the three months ended September 30, 2024, the Company sold a total of 216,573 common shares under its ATM Program for aggregate total gross proceeds of approximately $1.5 million at an average selling price of $6.96 per share, resulting in net proceeds of approximately $1.5 million after deducting issuance costs.

As of September 30, 2024, approximately $26.6 million of securities remain available for sale under the ATM Program.

NOTE 5 – SHARE-BASED PAYMENTS:

The following table summarizes the Company’s stock option activity in the Incentive Plan for the nine months ended September 30, 2024:

As of September 30, 2024, there was $15 thousand in unrecognized share-based compensation expense that is expected to be recognized over a weighted average period of 0.5 years.

Restricted Stock Awards

Restricted stock awards (“RSAs”) have been granted to employees. The value of an RSA award is based on the Company’s share price on the date of grant. The Company granted RSAs pursuant to the Incentive Plan.

The following table summarizes the Company’s RSA activity for the nine months ended September 30, 2024, as described above from the Incentive Plan:

There were 60,000,000 shares of common stock authorized as of September 30, 2024. As of September 30, 2024, and December 31, 2023,18,985,324 and 17,418,886 shares were issued andoutstanding, respectively, which includes 1,402,869 and 941,496 of unvested RSAs as of September 30, 2024, and December 31, 2023, respectively.

As of September 30, 2024, there was $3.8 million of total unrecognized compensation cost related to RSAs expected to be recognized over a weighted average period of 1.32 years.

On January 4, 2024, the Company issued 130,000 RSAs to each of Dr. Enrique Poradosu and Mr. Shay Shemesh. These RSAs vest over three years withone-third vesting on each anniversary of the date of the grant.

On January 12, 2023, the Company issued 210,000 RSAs to Mr. Ron Bentsur and 115,000 RSAsto each of Dr. Enrique Poradosu and Mr. Shay Shemesh (the “January 2023 Grants”). These RSAs vest over three years withone-

third vesting on each anniversary of the date of the grant. On January 4, 2024, the vesting of the first one-third of the January 2023 Grants were extended to July 15, 2024. On July 12, 2024, the vesting of the first one-third of the January 2023 Grants were extended to January 3, 2025.

On April 1, 2022, the Company issued 120,000 RSAs to Mr. Bentsur and 60,000 RSAsto each of Dr. Poradosu and Mr. Shemesh (the “April 2022 Grants”). These RSAs vest over three years withone-third vesting on each anniversary of the date of the grant. On January 4, 2024, the vesting of the first two-thirds of the April 2022 Grants were extended to July 15, 2024. On July 12, 2024, the vesting of the first two-thirds of the April 2022 Grants were extended to January 3, 2025.

On July 27, 2021, Mr. Bentsur, Dr. Poradosu, and Mr. Shemesh were granted 96,759 RSAs,48,399 RSAs, and 48,399 RSAs, respectively, which were not part of the Incentive Plan and excluded from the table above. On January 4, 2024, the vestings of the July 2021 grants to Mr. Bentsur, Dr. Poradosu and Mr. Shemesh were extended to July 15, 2024. On July 12, 2024, the vestings of the July 2021 grants to Mr. Bentsur, Dr. Poradosu and Mr. Shemesh were extended to January 3, 2025.

Share Compensation Expense

For the three months ended September 30, 2024, the Company recognized expenses of $0.4 million as part of general and administrative expenses and $0.7 million as part of research and development expenses. For the three months ended September 30, 2023, the Company recognized expenses of $0.5 million as part of general and administrative expenses and $0.6 million as part of research and development expenses.

For the nine months ended September 30, 2024, the Company recognized expenses of $1.4 million as part of general and administrative expenses and $2.3 million as part of research and development expenses. For the nine months ended September 30, 2023, the Company recognized expenses of $1.6 million as part of general and administrative expenses and $1.9 million as part of research and development expenses.

NOTE 6 – NET LOSS PER SHARE:

Basic net loss per share is calculated by dividing the net loss attributable to the Company’s stockholders by the weighted average number of common share outstanding.

Basic loss per share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of shares of common stock in issue during the period.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per common share because their effect would have been anti-dilutive for the periods presented:

NOTE 7 – RELATED PARTY TRANSACTIONS:

NOTE 8 – SUBSEQUENT EVENTS: