Filing Details

1	NAME OF REPORTING PERSONS
	Israel Biotech Fund II, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a)	☐
				(b)	☐
3	SEC USE ONLY
4	SOURCE OF FUNDS
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			- 0 -
		8	SHARED VOTING POWER
			27,559,308*
		9	SOLE DISPOSITIVE POWER
			- 0 -
		10	SHARED DISPOSITIVE POWER
			27,559,308*
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	27,559,308*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	71.0%**
14	TYPE OF REPORTING PERSON
	PN

 * See Item 5.

1	NAME OF REPORTING PERSONS
	Israel Biotech Fund GP Partners, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*			(a)	☐
				(b)	☐
3	SEC USE ONLY
4	SOURCE OF FUNDS
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			- 0 -
		8	SHARED VOTING POWER
			23,180,561*
		9	SOLE DISPOSITIVE POWER
			- 0 -
		10	SHARED DISPOSITIVE POWER
			23,180,561*
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	23,180,561*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	68.6%**
14	TYPE OF REPORTING PERSON
	PN

This Amendment No. 2 to Schedule 13D (this “Amendment”) amends and supplements the Statement on Schedule 13D initially filed by the Reporting Persons with the Securities and Exchange Commission (the “SEC”) on September 11, 2023, as amended by the Schedule 13D/A previously filed with the SEC on October 31, 2023  (the “Statement”) with respect to the shares of common stock, par value $0.001 per share (the “Common Stock”) of Ayala Pharmaceuticals, Inc. (the “Issuer”), a corporation incorporated under the laws of the State of Delaware. Capitalized terms not defined herein shall have the meaning ascribed thereto in the Statement.

Item 4 of the Statement is hereby amended and supplemented to add the following:

New Notes and Warrants. On November 17, 2023, the Issuer issued Senior Convertible Promissory Notes (the “New Notes”) to several investors in the aggregate principal amount of $4,000,000, including New Notes to each of IBF I and IBF II, with a principal amount of $750,000 and $1,650,000, respectively. Pursuant to the New Notes (i) Issuer shall pay interest to the holders thereof quarterly in kind (unless Issuer otherwise elects to pay interest to the holder quarterly in cash) on the principal amount of the New Notes at a rate equal to the daily simple Secured Overnight Financing Rate (SOFR) plus 7% per annum (subject to certain adjustments, as provided therein); (ii) the New Note’s maturity date is November 17, 2028, or such earlier date as the New Note is converted or required to be repaid as provided therein; (iii) the New Note is required to be senior to all the Issuer’s other indebtedness other than the permitted indebtedness as specified in the New Notes; (iv) all or any portion of the principal amount of the New Note, plus accrued and unpaid interest and any charges thereon, is voluntarily convertible at any time, in whole or in part, at the holder’s option, into shares of Common Stock, and are subject to mandatory conversion upon certain events, including a change of control transaction and certain financing transactions involving the Company, at a conversion price equal to the lower of (x) 50% of the Common Stock’s price per share as of market close on November 16, 2023, i.e., $0.40 (the “Initial Conversion Price”) and (y) 50% of the Common Stock’s price per share as of the close of market on the trading date immediately prior to the date the holder delivers a notice of conversion (the “Updated Conversion Price”), subject to adjustments as set forth therein. Accordingly, on November 17, 2023, IBF I and IBF II acquired beneficial ownership of 1,875,000 shares of Common Stock and 4,125,000 shares of Common Stock, respectively, in each case, computed based on the Initial Conversion Price in the New Notes (collectively, the “New Notes Conversion Shares”).

 

In connection with the issuance of the New Notes, Issuer issued to IBF I and IBF II warrants (the “New Notes Warrants”) to purchase 2,812,500 shares of Common Stock and 6,187,500 shares of Common Stock, respectively (collectively, the “New Notes Warrant Shares”). Pursuant to the New Notes Warrants (i) the New Notes Warrants’ expiration date is November 17, 2028; (ii) the exercise price is equal to the lower of (x) 50% of the Common Stock’s price per share as of market close on November 16, 2023, i.e., $0.40 and (y) 50% of the Common Stock’s price per share as of the close of market on the trading date immediately prior to the date the holder delivers a notice of exercise, subject to adjustments as set forth therein, which exercise may be on a cashless basis.

 

99.8

Form of A&R Notes (incorporated by reference to Exhibit 10.1 of the Issuer's Form 10-Q filed with the SEC on November 20, 2023).

 

 

 

 

 

 

Dated: November 21, 2023